ICHAM - Newsletter N1/2016 (English)

N1/2016 APRIL 2016

www.icham.org

VENETO TRADE MISSION TO VIETNAM 2016 (P.8-9)

Roles & Responsibilities of Legal Representative in VN (P.17-18)

ICHAM Annual General meeting 2016 (P.7)

B2B MEETINGS WITH EMILIA ROMAGNA COMPANIES

(P.6)

2

BUSINESS FORUM:

"VIET NAM - GLOBAL OPPORTUNITIES FOR SUSTAINABLE LOCAL DEVELOPMENT" financial products and international cooperation with partners from outside the country.

On 4th December 2015, Mr Pham Hoang Hai Executive Director of ICHAM was invited to attend Business Forum following the 104th IIB (International Investment Bank) Council Meeting: "Viet Nam - Global Opportunities for Sustainable Local Development" which was held at Sheraton Hotel, Hanoi, chaired by Governor of the State Bank of Vietnam Nguyen Van Binh and Chairman of IIB Nikilay Kosov.

The IIB celebrates its 45th Anniversary this year, supporting the economic development of its member states and shareholders - currently Bulgaria, Cuba, Czech Republic, Hungary, Mongolia, Romania, Russia, Slovakia and Viet Nam - for almost half a century. The Bank acknowledges the development challenges in Asia, and the venue of the 1041h lIB Council Meeting reflects lIB's efforts to expand significantly its operations in Vietnam, represented in the Bank's Council by the SBV. In addition to providing development solutions, the IIB also serves as a platform for Vietnam's interaction with other IIB member states, creating additional opportunities for trade and economic growth.

The Forum began with the Open Session of the IIB Council, giving participants an opportunity to learn more about the IIB and its partners. The Forum's main sessions dedicated to some of Viet Nam's key priorities, examining opportunities and challenges in relation to the development of the SME sector and Vietnam's regions and cities. The aim is to identify the problems and discuss possible solutions, especially in the form of tailor-made

The event attracted a broad range of local and foreign speakers including public officials and representatives of commercial banks, international development institutions and the corporate sector. The invited guests also included: the World Bank Director in Vietnam Victoria Kwakwa and Director of the Asian Development Bank ADB in Vietnam Eric Sidgwick.

3

On his visit to Italy in January on 18-19 January, ICHAM Executive Director Mr Pham Hoang Hai had meetings with some of long-term partners in Italy.

With The Trento Chamber of Commerce

Trento is one of the key economic regions of Italy. The Trento Chamber of Commerce is part of the 105 Italian Chambers of Commerce system, configured network, which interact and integrate to offer companies a privileged channel of access to the global economy and advanced services.

In January, the Chamber of Commerce of Trento,

collaborated with ICHAM to hold a meeting to discuss in details the trade promotion planning for regional enterprises. The meeting has resulted in a positive feedback and strengthened long-term corporation between the 2 chambers.

The event was attended by Mauro Leveghi – General Secretary of Trento Chamber of Commerce, Renata Diazzi - International Business Development Manager Trentino Sviluppo, Luca Trentinaglia – Director of Foreign Trade Service, Raffaele Farella Director International Affairs Province of Trento, Luisa Bernardi - Coordinator of Foreign Trade of Trento Chamber, representative of ICHAM Executive Director Pham Hoang Hai.

With Rizoma Mr Pham Hoang Hai also had a meeting with Rizoma - one of the world's leading companies specialized in components for powerful motorcycle.

Rizoma is the important partner of many famous motor brands such as MV Agusta, Ducati, Aprilia, Honda, Yamaha, Kawasaki, Suzuki, etc.

4 With Banca Popolare Emilia Romagna in Verona On this occasion, ICHAM also organized together with Banca Popolare Emilia Romagna

(BPER) a conference about Vietnam in Verona .

ICHAM Executive Director introduced to the Bank’s corporate clients about different opportunities the Vietnamese market can offer to Itaian companies.

BPER and the Italian Chamber of Commerce in Vietnam (ICHAM) established a strategic partnership in recent years in which ICHAM will conduct the research of potential partners as well as provide investment consulting services for BPER’s corporate clients.

With Fiera Milano Fiera Milano is the leading exhibition Group in Italy and one of the top in the world. In recent years, Fiera Milano has become an important partner of ICHAM through the exhibitions such as HOST, HOMI, Tuttofood.

During his visit to Italy, Mr. Hai met with the representatives of Fiera Milano to discuss the overall scope and direction of a cooporation in 2017 and 2018.

With Studio Tarasconi

From the idea of the founder Ms Donatella Tarasconi, Tarasconi firm was founded in 1987 in the heart of Parma with the aim of creating a highly qualified professional enviroment that could contact the clients with its own professional philosophy. The firm has been collaborating with ICHAM in many missions over the past few years.

On January 19, ICHAM representative visited the Studio and had a discussion with the founder Ms Donatella Tarasconi, as well as providing consulting for Tarasconi’s clients about how to access the Vietnamese market.

5

Workshop on Vietnam for Veneto companies

V

ietnam is among the most attractive emerging markets which have been obtaining impressive economic growth in the last decade. The country has completed 2 important tasks: Firstly, signing the Free Trade Agreement (FTA) with the European Union which will exempt nearly all taxes on trading goods between the 2 economies; Secondly, completing the negotiation of Trans-Pacific Partnership (TTP) with Trans-Pacific countries including the USA and Japan.

As Vietnam is growing more interesting to foreign investments and international trade, on the 20th January at Marghera (Venice) the Veneto Region, in collaboration with Veneto Promozione and the Italian Chamber of Commerce in Vietnam (ICHAM) organized an economic roundtable to discuss business potentials and new investment opportunities offered by the Vietnamese market to regional enterprises.

Qualified experts talked at the event including: - Dr. Pham Hoang Hai - ICHAM Executive Director - Mr. Fabrizio Alvisi - Responsile for Marketing and Promotion - Mr. Federico Vasoli - Lawyer of de Masi Taddei Vasoli law firm - Mrs Antonella Piva - Manager of Veneto Promozione At the end of the roundtable, Mr. Pham Hoang Hai participated in the B2B section providing market entry consultancy to regional enterprises.

Year-end Reception at Department for Foreign Affairs of provinces on February 3rd 2016

Lunar New Year Celebration at HCMC People's Committee

The People’s Committee of HCMC had a cordial meeting with representatives of consulates and foreign organizations to celebrate the Lunar New Year 2016. The meeting took place on 1st February at Rex Hotel.

(From right to left) Mr. Nguyen Hoang Long - Acting Director Foreign Affairs Department & Mr. Pham Hoang Hai - ICHAM Executive Director

ICHAM President Michele D'Ercole with Chairman of HCMC People’s Committee Nguyen Thanh Phong

6 Meeting EU Ambassador with Chairmen of Bussiness Associations & EU Delegations In the joyful atmosphere of the first days of the Lunar New Year, on February 17th, European Union Ambassador in Vietnam H.E Bruno Angeletti had a warm meeting at his residence in Hanoi with the Chairmen of European Chambers of Commerce together with the representatives of Eurocham and the EU delegation for a very constructive exchange on the cooperation between the parties, especially on how to implement the supporting activities for the Free Trade Agreement FTA.

B2B MEETINGS WITH EMILIA ROMAGNA COMPANIES

F

ollowing the success of Project "Vietnam Destination I", in March ICHAM continues to collaborate with Unioncamere Emilia Romagna and ICE to organize a Trade Mission to Vietnam. Participating in this mission are 5 companies from Emilia Romagna region, all of which are leading companies in packaging.

The mission takes place from 29/02 04/03, including a B2B section on 29/02 where Italian enterprises came to introduce their innovative technologies to Vietnamese counterparts, and a seminar on the same day featuring topic "Italian Food Processing and Packaging Technologies".

These 5 companies are also exhibitors at Propak Vietnam 2016 (01-03/03/2016) in HCM city.

List of 5 Italian Companies: SACMI Group Website:http://www.sacmi.com/Default.aspx?LN=en-US OCME s.r.l Website: http://www.ocme.com/website/default.aspx Tropical Food Machinery s.r.l Website:http://www.tropicalfood.net/default.asp?lang=en Magnoni s.r.l Website: http://www.magnonisrl.it/ Unifill s.r.l Website: http://www.unifill.it/

7

ICHAM ANNUAL GENERAL MEETING 2016

O

n Monday 29th February 2016, ICHAM organized successfully the Annual General Meeting at two offices in Hanoi e Ho Chi Minh City. The Assembly summarized all activities in 2015 as well as forecast financial situation and upcoming events in 2016.

During 2015 ICHAM organized a large number of business missions for Italian entrepreneurs in Vietnam and Vietnamese entrepreneurs in Italy in full respect of the strategy for the development of bilateral trade between the two countries.

The meeting also elected the new Board of Directors for the term 2016-2017.

The election result is as follow: 1. President: Michele D’Ercole 2. Vice-President: Riccardo Papa 3. Treasurer: Francesco Dominici 4. Councillor: Cesare Bargellini 5. Councillor: Matteo Lenardon 6. Councillor: Mauro Spizzo 7. Councillor: Federico Caliri The new Board of Directors then assessed the current situation of the Chamber, including missions and activities that will take place in 2016, and also underlined its intention to provide continued support to all members.

8

VENETO TRADE MISSION TO VIETNAM 2016 This year ICHAM in collaboration with Veneto Promozione organized another Veneto trade mission to Vietnam from 5 to 12 March in Hanoi & Ho Chi Minh City. 8 Italian enterprises met with potential Vietnamese customers in more than 100 b2b meetings.

This is one of the trade missions for Vietnamese and Italian companies held by ICHAM in 2016, with the aim of promoting trade between Vietnam and Italy in general, and with Veneto Region in particular.

I

CHAM Executive Director Pham Hoang Hai said that on this occasion there are 8 companies coming from Veneto region that operate in sectors: Décor, Lighting, Office furniture, Furnishing and Contract Solutions, Equipment for large community (Ho.Re.Ca.), Machinery, Equipment and Materials for the Building Industry, and the Agro-industry.

Veneto is one of the 6 key economic zones of Italy, with a population of over 4 million people. GDP in 2015 reached 170 billion euros, accounting for 9.1% of Italy's GDP while the export value accounted for 54.1 billion euros. Veneto’s strong points lie in technology and machinery for textile industry, seafood and vegetable processing industry, and Décor.

9

Seminar: Economic & Investment Cooperation in Da Nang

between Italy and the fast-growing central Provinces of Vietnam.

In this framework, a seminar on economic and investment cooperation with Da Nang Authorities took place on Thursday 3rd March. The initiative is promoted in cooperation with Icham and the Ministry of Foreign Affairs of Vietnam – Department of External Relations of the Provinces and falls within the scope of the Memorandum of Cooperation signed by the parties on the occasion of the visit of H.E. The President of the Italian Republic last November.

From the 2nd to the 4th of March 2016, the Embassy of Italy to Vietnam, the Consulate of Italy in HCMC, the Italian Trade Commission and Icham jointly paid an official visit to Hue and Da Nang. The mission aims at further exploring opportunities of economic, educational and cultural cooperation

According to Mr Hai, trade promotion is the top priority of the Italian Government and this year will see more direct contacts between the enterprises of both sides.

There are nearly 100 Vietnamese enterprises participating in this trade mission with the aim of searching right partners for long-term cooperation. Mr. Hai also said that Italian enterprises are very interested in the Vietnamese market, especially since the negotiations of the Trans Pacific Partnership (TPP) and the European Union – Vietnam Free Trade Agreement (EVFTA) came to a conclusion. Since then, Italy has not

The round table involved both the Italian delegation and the representatives of local authorities, sector Department, associations and businesses. Da Nang authorities, in particular the Department of Planning and Investment, presented the cit y’s development plans, focusing on commercial and investments projects of potential interest to Italy and Italian companies.

only increased trade with Vietnam but also with other countries in the TPP and EVFTA. With favorable economic conditions and incentives, Vietnam is among the most attractive markets for Italian investors in the near future.

However, the Italian enterprises also have concerns when investing in Vietnam, especially the issue of legal framework which is not yet clear, the issue of intellectual property protection as well as support from the financial and banking system for enterprises to get access to capital.

10 19 companies from 9 European countries and about 200 Vietnamese companies in food &beverage, equipment for Ho.Re.Ca, food industry machinery took part in the “Agrofood Trade Mission” from 15th to 18th March in Hanoi and Ho Chi Minh City.

The event was organized by Eu - Vietnam Business Network (EVBN), project funded by EU. As one of EVBN’s five main partners, ICHAM supported the mission by finding potential partners for 4 companies: Centrale di Latte di Torino (Italy), SDK Group (Bulgaria), Dairy Master (Ireland), Sofrimar (Ireland).

The event was a good occasion for European companies to introduce products and knowhow directly to Vietnamese counterparts.

New Year Meeting 2016 between Ho Chi Minh City Leaders and FDI enterprises On March 16th the People’s Committee of HCMC organized the “New Year Meeting 2016 between City Leaders and FDI enterprises”. The meeting included a report on the City’s socio-economic achievements in 2015 and perspectives for 2016, including foreign investment situation in 2015; directions and plans for foreign investment attraction in 2016.

ICHAM President Michele D'Ercole and Secretary of HCMC Party Committee Dinh La Thang

In the meeting, FDI enterprises attended a dialogue with HCMC’s leaders which was chaired by HCMC Party secretary Dinh La Thang and People’s Committee chairman Nguyen Thanh Phong.

Speaking at the dialogue, the city’s Party chief said the city would look into the problems mentioned.

11

Claudio Maffioletti, Secretary General of IICCI, declared: “ The Italic community represents a huge market whose potential is not fully acknowledged. There are certainly several aspects that require a more in-depth consideration: what are the characteristics of an ‘Italic product’ or an ‘Italic company’? What synergies can be generated among products ‘Made in Italy’ and ‘Made by Italics’? How to exploit the driving effect of ‘Italian sounding’ products? Also, in this context, what can be the role of the 79 Italian Chambers of Commerce Abroad (ICCA)? Being present in 54 countries, the ICCA represent around 18,000 associated companies, 88% of which are local enterprises that consider Italy a relevant partner for their business and investments. With their nature of being deeply rooted in their territories but also strictly connected to Italy, ICCA are the natural point of reference for this community.”

T

he Indo-Italian Chamber of Commerce and Industry (IICCI) has hosted on 17-20 March 2016 in Mumbai the annual Area Meeting of the Italian Chambers of Commerce Abroad (ICCA) in Asia & South Africa, which comprise India, UAE, Qatar, Thailand, Singapore, China, Hong Kong and Macao, South Korea, Vietnam, Japan, The Philippines and South Africa.

On this occasion, a Panel Discussion titled “ The Italics – A New Frontier for the Italian Global Business Communities ” was held on 18 March. Italics is a global community comprising not only Italian citizens, but also people having a special connection with Italy and sharing the values of the Italian lifestyle. It is estimated that the Italic community consists of 250

million individuals all over the world: it is an exceptional network of professionals and entrepreneurs connected by their love of Italy. The ICCA, which act as a catalyst of the Ita lia n bu sine ss community worldwide, represent the natural platform to bring together, engage and activate this outstanding network.

On March 19 the internal work of the Asia South Africa Area took place coordinated by the representative of Area Michele D'Ercole. All of the chambers outlined their main activities during 2015 and the budget for 2016. The meeting also widely discussed on the topic of "Italic" after listening to considerations made by President Bassetti via Skype.

The discussion started with the screening of a video from Piero

Bassetti, President of Fondazione Globus et Locus and former President of Assocamerestero, who was the first to introduce and describe the meaning of Italics concept. The video was followed by a debate involving 4 key panellists, who represent very well the Italic Identity: Ramesh Bulchandani, CEO Atlas Brands Pvt. Ltd. (Bangalore), Dario Dezio, MD Ararella Food Pvt. Ltd. (Pune), Simrita Dhillon, Ow ne r G olm aa l (Mu m b a i), Devendra Khandelwal, President Marco Polo Jewellers (Jaipur) and the Moderator Cesare Saccani, Vice President IICCI. The reflections led to consider seizing business opportunities offered by a potential market of over 250 million "Italics" without neglecting the importance of "ensuring" "Italic" products from

12 those that could hide fraudulent practices. Therefore, it's important to qualify the companies and products that actually have every right to appeal to the Italian spirit from those that try to exploit it fraudulently.

Ospitalità Italiana 2015-16 Award Ceremony

The Italian cultural and gastronomic traditions represent an ideal and effective instrument to communicate the values of Italicity.

Therefore, the discussion was followed by the Award Ceremony of Ospitalita’ Italiana project 2015-16, which aims at identifying and certifying the truly authentic Italian

EUROCHAM ANNUAL GENERAL MEETING 2016

O

restaurants in the world. This year 16 Italian restaurants in India have been certified with the excellence brand Qualita’ Italiana, with the presence of the Consul General of Italy in Mumbai, Mr. Ugo Ciarlatani.

n Thursday, 24th of March, EuroCham organized its annual general meeting (AGM). Attending the AGM apart from its corporate members were also representatives from Eurocham’s individual Business Associations and representatives of European Diplomatic Missions.

The Executive Committee 2016 was elected by a quorum of Eurocham’s members (with 363 participants registered and 313 ballots issued) and audited by PWC. The new Board consists of 09 elected members and 06 representatives proposed by Business Association.

Chair and Vice Chairs will be elected during the first meeting of the New Executive Committee. At that time, individual responsibilities will be assigned, in accordance with Eurocham’s working group structure.

Furthermore, the financial reports of 2015 and the budget for 2016 as well as the EuroCham-EVBN consortium partnership were also approved at the AGM.

A warm welcome to our new members:

14

MARKET INFO

15

C By: Dezan Shira & Associates Editor: Ellena Brunetti

Vietnamese CIT:

orporate Income Taxation (CIT) is a constant for companies of all sizes, regardless of their jurisdiction. Although difficult to avoid entirely, even the slightest changes in percentages due can have substantial impacts on the profitability of a company’s operations. With this in mind, the following article outlines the manner in which corporate taxation is currently applied within Vietnam. We take a look at the laws governing Corporate Income Tax (CIT), the enterprises liable for CIT, the determination of income within Vietnam, as well as the various corporate income rates applied within Vietnam.

Although this article provides a broad approach to understanding taxation within Vietnam, it is strongly recommended that government officials or professional services be consulted should any questions or confusion arise.

1.

Legal Framework Within Vietnam, a number of laws, governmental decrees, and circulars collectively dictate the treatment of corporate taxation within Vietnamese boarders. Current and prospective investors should, at minimum, ensure a clear understanding of the following:  Law No. 14/2008/QH12 Law on Enterprise Income Tax (LEIT)  Law No. 32/2013/QH13 Amending and Supplementing LEIT  Law No. 71/2014/QH13 Pursuant to compliance with these laws, companies should also be sure to follow up to date

guidance issued in Government’s Decree 12/2015/ ND-CP of February 12, 2015, and Circular 96/2015/TT-BTC of the 22 of June 2015.

In addition, investors should be aware of relevant letters issued by the Ministry of Finance, which provide guidance on more detailed aspects of those regulations.

2. Liability for Corporate Income Tax Taxpayers within Vientnam include business entities domestic and foreign – in all economic sectors including all professional organizations with production, trading or servicing activities in within the country.

Thus, the key criterion in determining whether a company is liable for corporate income taxation is not tax residency, but the source of income.

2.1 Consolidation It should be noted that Vietnamese tax law currently does not allow for tax consolidation or implementation of grouping regimes, and thus, the offset of profits and losses between companies belonging to the same group isn’t allowed.

3. Taxable income 3.1 Determination of gross income Under recent ammendments to Circular No. 78/2014/TT-BTC, taxable income within a tax period includes income from the production and trading of goods and provision of services and other incomes.

3.2 Service Invoicing Up to date guidance recognizes serives upon full or progressive completion only. Accordingly, revenue recognition – based on invoice issuance – in which the date of the invoice is made

16 before initiation of service will not be applied. Application will only take place from the start of service.

4.Determination of Net Income To determine net income, which serves as the basis for calculating corporate income tax, some expenses incurred by the company may be deducted from gross income tax.

As a result, the net taxable income derived from activities of or related to the production and trade of goods or provision of services represents the turnover from these activities minus applicable deductible charges. It should be noted that the process for claiming deductibles involves invoicing and the provision of supporting documentation.

Fortunately, circulars issued in 2015 have made great strides in the simplification of this process.

4.1 Deductible Expenses:  Activities of employees  Transfers of capital  Expenses incurred during occupational training  Interest expenses from loans pertaining investment into other companies  Life insurance expenses for employees, uniforms and per-diems for business trips, and advertising and promotion expenses are fully deductible, and not subject to any deductibility cap as it used to.

4.2 Depreciation of Assets In addition to the expenses listed above, depreciation of assets can be taken into account when making deducting from gross taxable income. It should be kept in mind that tax depreciation may differ from accounting depreciation as depreciation in excess of the rates specified in tax regulations is not deductible.

Before claiming depreciation deductions, enterprises must notify the direct managing tax agencies of the method by which they will calculate depreciation (for example: straight-line depreciation, or accelerated depreciation). The ability to use a specific method of calculation is subject to approval based upon the type and conditions of a given business.

Note: In the special case of land use rights, long-term land use rights may not be depreciated and amortized to deductible expenses for determining taxable income, unlike termed land use rights.

4.3 Losses Finally, provisions, including to prevent losses that could result of bad debts, are deductible if the provision is made in accordance with the guidance by the Ministry of Finance.

Besides the expenses, depreciation and other provisions, losses incurred in previous years or resulting from previous tax years must be taken into account at the stage of determining the basis of taxation, as they can be carried over to the following years.

Note: Losses cannot be carried over for more than 5 years.

Furthermore, carrying-back of losses are not permitted.

4.4 Exempted income Certain incomes are temporary exempted from CIT, such as those earned from scientific research and technological development contracts until expiration of that contract, and the income derived from the sale of products that are results of new technologies and are applied in Vietnam for the first time.

5. Tax rates Within Vietnam, corporate

income tax is based on a flat rate. An enterprise that conducts various business activities subject to different tax rates should calculate the income for each activit y separatel y, multiplying income from each activity by the corresponding tax rate.

While the standard tax rate is, in theory, to be applied evenly to all parties within Vietnam, a number of rates are utilized within the country and may be available to investors. The following rates -most commonly utilized within Vietnam should be noted: 5.1 Standard Rate Previously standing at 22%, Vietnam’s Standard rate of taxation has been reduced to 20% as of January 1st, 2016.

5.2 Preferential Rate Prior to 2016 and pursuant to De c re e 2 18/ 2 013/ ND -C P , Companies whose annual profits were under 20 billion VND (equivalent to approximately US$1 million) could benefit from a preferential rate of 20%.

As of January 1st, 2016, this has been further reduced to 17%.

In addition to reduced rates, Industry and geography based incentives are also available for investors in areas deemed of importance by Vietnamese authorities.

5.3 Special Rates A higher rate is applied to some industries including many of the extractives industries such as mining and oil.

6. Compliance requirements In order to ensure compliance with up to date CIT guidance, declaration and payments should be made every three months and at the end of the fiscal year.

17

By: Dezan Shira & Associates Editor: Steven Elsinga

E

very company in Vietnam is required to have at least one Legal Representative.

The Legal Representative engages in transactions that bind the company, acts as the company’s representative in legal proceedings, and exercises all other rights and obligations under the law.

Having the sole power to bind and represent the company, the Legal Representative is in

many ways similar to the Director or Board of Directors in Western companies.

With the Legal Representative being the primary person to represent the company, most government documents need a signature from the Legal Representative in order to be valid.

The Legal Representative’s full name and details are recorded on the Business Registration Certificate and the company

charter. Government entities therefore often don’t accept signatures of individuals that are not printed on the Business Registration Certificate.

Under the previous legal regime, the Legal Representative had to also be either the General Director, or the Chairman of the Board of Members (the Board of Members being the collective shareholders). However, when the Law on Enterprises went

18 into force in July 2015, this system was abolished. The founders of the company may now appoint more than one Legal Representative, and these no longer need to hold other positions in the company.

Normally, the Legal Representative has the supreme power to bind the company, commence or take part in legal proceedings and sign government documentation. Since this could cause difficulties or confusion if there is more than one Legal Representative, in such a case the company charter will have to further specify the rights and obligations of the Legal Representatives.

One of the reasons the law now allows multiple Legal Representatives is that previously, the Legal Representative had to permanently reside in Vietnam and was not allowed to leave.

Obviously, this can become rather impractical if the company has any foreign dealings, or if the Legal Representative is a foreigner.

If there is more than one Legal Representative, at least one of them must reside in Vietnam at any given time. The company can authorize another individual to assume the position in absence, until the Legal Representative has returned.

Difference with the Director Apart from the Legal Representative, Limited Liability Companies in Vietnam also have a Director. The Director is appointed and dismissed by a Board of Members resolution. Since cha n gin g t he L e gal Representative requires an amendment of the company charter and a renewal of the Business Registration Certificate, the Legal Representative has far more power and autonomy vis-à-vis the Board of Members.

Obviously, the Board of Members is also authorized to change the company charter, but this is a far more time consuming matter than simply adopting a resolution to dismiss the Director.

Also, the powers of the Director are limited to those listed in the Law on Enterprises, whereas the Legal Representative in principle has unlimited power to act on behalf of the company. The Director’s powers are:  Conduct the company’s daily affairs and operations  Implement resolutions of the Board of Members  Implement business and investment plans  Sign contracts on behalf of the company  Hire employees  Submit plans for profit designation

 Submit annual reports to the Board of Members To put it briefly, the Director’s duties are geared more towards daily management of the company, whereas the Legal Representative is exclusively authorized to deal with regulatory matters and major company decisions.

For instance, the signature of the Legal Representative is required in the following cases:  Company creation (application for a Business Registration Certificate)  Establishment of branches or representative offices  Company dissolution  Make changes to the Business Registration Certificate  Record asset contribution to the company’s registered capital  Adjustments to the registered capital  The list of members or shareholders maintained by the company  Registration for an offshore loan  Application for licenses  Tax returns  Opening a bank account Given the crucial role the Legal Representative plays in a Vietnamese company, foreign investor would be well-advised to carefully consider whom to appoint to this pivotal role.

06/20

16

Time & Venue: coming soon