VietNamNet Bridge - Foreign limited liability firms struggling to meet a looming deadline to convert into shareholding companies, or re-register themselves under the new Investment and Enterprise laws, can breathe a sigh of relief. A senior official from the Ministry of Planning and Investment (MPI) said the deadline, July 2008, or two years after the enforcement of the two laws, might be too strict and no longer suitable.
“The deadline may be extended to 2010. It might even be removed all together. It would possibly be better if there is no time restriction so foreign investors can determine a suitable time-frame for their re-registration or conversion under the new laws,” Pham Manh Dung, head of the MPI’s legislative department told Vietnam Investment Review.
The new unified Enterprise Law and common Investment Law are considered breakthroughs in Vietnam’s legislative reform process as they lay firm foundations to create a level playing field for both foreign and domestic companies.
Dung said most existing foreign- invested firms wanted to convert into shareholding entities so they could mobilise capital and list on the bourse.
Alain Cany, chairman of the European Chamber of Commerce in Vietnam, said the limited time frame was impossible for the huge number of existing firms to re-register or implement the conversion.
“Many of the approximately 6,000 foreign-invested companies that have already been established in Vietnam will probably wish to re-register under the new Investment Law, while a number will wish to convert into shareholding companies.
“Others will want to expand their production, business scope or even increase chartered capital to suit the new context,” he said.
Under the existing process for re-registration and conversion into shareholding companies, foreign investors must submit a set of dossiers along with a document of refreshed corporate rules to the provincial planning and investment departments.
However, Cany said: “In practice, while it should be straightforward to convert a 100 per cent foreign-owned company into a shareholding company, it is often extremely difficult to re-register a joint venture company as a limited liability company or to convert it into a shareholding company.
“Investors are experiencing delays in re-registration and conversion partly as a result of difficulties with joint venture partners and partly as a result of delays with the licensing authorities which are coming under an increasing administrative burden as applications increase,” he said.
Dung said that if there appeared to be any administrative problems relevant to process of re-registration or conversion, foreign investors might lodge their concerns with the MPI.
“Difficulties in agreement between foreign and Vietnamese partners in joint ventures for re-registration or conversion is natural and should be settled,” he said, adding that commonly after conversion into shareholding companies, the party who holds the majority of stakes will have the decisive voice, so the inferior did not want for conversion.
Regarding the EuroCham’s proposal on the implementation of an automatic conversion procedure within a certain time limit, Dung said: “It is impossible. Foreign investors have to comply with the existing law.”
Dinh Van An, head of the MPI’s Central Institute of Economic Management, said that some specific guidelines would be released soon to facilitate enterprises.
(Viet Nam Net) | 
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