The United Nations Development Programme (UNDP) finalised its recommendations for Vietnam’s draft of the Unified Business Law, on January 25.
A compiling board at the Central Institute for Economic Management will consider the recommendations before passing them to the planning and investment minister next week.
The new law is an effort to combine the existing Enterprise Law, the Law on Foreign Investment, the State Enterprise Law and the Cooperative Law to make them conform to international laws.
The ultimate goal of the current draft must be transparency and ease of registering and dissolving enterprises, said international trade professor and UNDP representative Willian Kosar in a conference on January 25.
However, Kosar noted that the draft law still contained articles that will increase the cost of doing business in Vietnam and decrease the international competitiveness of Vietnamese enterprises.
One problem, Kosar noted, was that the law requires all businesses to have a supervisory board, which could place an unnecessary burden on smaller companies.
Kosar also said requiring joint stock companies to have a management board was unnecessary and should only be required for companies listed on a stock exchange.
Also, Kosar said requiring new companies to post a notice in the newspaper was unnecessary given that most people do not read legal notices.
In addition, one of the attractive characteristics of liability-limited and share-holding companies is that they do not require regular meetings.
However, the current draft states that all members must meet once a quarter at the company’s headquarters, which could be difficult for investors residing outside of Vietnam.
“An annual meeting should be sufficient and it can be held at locations other than the head office and in some cases even outside of the country,” Kosar suggested.