New banking and loan security regulations in Vietnam

Real estate projects generally demand a large amount of capital from investors, especially for housing projects. The majority of housing projects are implemented in urban areas, where land use taxes and site clearance expenses are extremely high. Thus, financing is considered the most important factor in the development and operation of real estate projects.

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In Vietnam, there are two mechanisms to finance real estate projects: mortgages and the sale of off-the-plan houses to customers. However, both options pose risks that investors, banks, and buyers are rightfully concerned about, especially in a country where the regulating legal system is not well-developed. Those risks became very real during the financial crisis earlier this decade, followed by the freezing of the real estate market. That freezing could be attributed to the dysfunction in the legal system for financing real estate projects. The laws and regulations have since been upgraded to eliminate that Achilles’s heel, but the implementation of such provisions is still proving challenging.

Mortgage of housing construction projects

A housing construction project can be wholly or partly mortgaged if the following documents are provided: the approved project’s documents and technical designs, and the certificates or decisions on land assignment and land leases from authorities. An investor can also mortgage off-the-plan residences in his/her project if the foundations of the residences have been completed and have not been previously mortgaged by the investor. Depending on their capital requirements, investors can choose the most appropriate option to finance their projects.

Investors do not necessarily need a Certificate of land use rights and ownership of houses and other land-attached assets (the “Certificate”) to mortgage their investment projects. Nevertheless, this is where potential risks appear. The laws and regulations do not provide any mechanism for banks to protect their rights in case the State recovers the land from the investors.  Pursuant to the Land Law 2014, the competent authority may seize the land if the land user fails to fulfill its financial obligations with the State. If that occurs, even if the banks take the secured assets to make up for the loan, there is not much to take because the land, which is the most crucial asset to a housing project, was already seized by the Government.

Mortgage of future acquired assets on land

The investor can also mortgage off-the-plan residences in his or her project. Circular 26 requires the mortgagor of the future acquired properties to register the mortgage at the competent authority (land registration offices and their branches). However, in order to register the mortgage, the dossier must include a Certificate. Therefore, the investor must complete all the financial obligations regarding the land. That includes paying site clearance expenses, as well as making rent payments and paying registration fees. After meeting those obligations, the investor is able to mortgage the off-the-plan residences for a loan.

Recently, some provincial Departments of Natural Resources and Environment have published lists of mortgaged real estate projects registered in their localities. These actions are motivated by The Harmony residence’s incident, where nearly 600 people are at risk of losing their apartments, because the investor has mortgaged all the land and the future acquired assets on land since 2012. In 2016, only after the bank announced its intention to seize the residence for recovery of the investor’s loan, was the truth revealed to the residents.

Currently, in order to protect the consumers, lists of mortgaged projects are being announced by the authorities. Only projects which have been granted Certificates may register their mortgages, which led to the announcement of mortgaged projects. However, from the perspective of the investors affected, the announcement of their mortgaged projects could adversely impact potential sales because the projects have to be free of the mortgages (or parts of the mortgage) before selling any off-the-plan residences.

There are two disadvantages for investors if they choose to mortgage off-the-plan residences. The first one is that they need to obtain a Certificate, which means they have already spent a large amount of money for site clearance and land rental. The second disadvantage is the public announcement of mortgaged projects, which could make customers hesitant to purchase units. Based on these factors, investors tend to choose the first mechanism (mortgaging the housing project or a part of the project for a loan). In fact, only 10% of projects in large cities such as Hanoi or Ho Chi Minh City are registered for mortgages at the authority. For example, in Ho Chi Minh City in 2016, only seventy-seven of 600 projects had their mortgages registered. The majority of housing projects must be de facto financed from banks’ loans with secured properties. Therefore, the remaining projects are likely to have mortgages over their construction projects, but not over land use rights, or future acquired assets on land. Accordingly, the investors were not required to register the secured transactions.

Bank guarantee

Article 55 of the Law on Real Property Trading stipulates that investors, in order to sell off- the-plan houses to buyers, must obtain guarantees by commercial banks in case the investors fail to transfer the buildings on schedule as committed. Article 55 creates two issues:

  • For residential megaprojects, there is a question as to which bank will make the guarantee. For example, Royal City, a VinGroup real estate project in Hanoi, has a total investment capital of 18,000 billion VND, equivalent to 700 million US dollars. That amount surpasses the charter capital of thirty of thirty-three banks listed by the State Bank of Vietnam which are eligible to provide bank guarantees for housing construction projects;
  • The banks will only issue guarantees if the investors have assets with sufficient value to secure their obligations. The investors that already spent millions of dollars on construction may not be able to meet those requirements.

Due to the above obstacles, there are those who would rather violate the laws and run away with the consumers’ money when the project is not feasible anymore. In the end, the consumers are the ones who suffer.


Real estate project finance is a complex legal field that needs to be more fully developed, even though Vietnamese legislators and executive bodies have already made great efforts to do so. Sometimes, the law benefits investors, but creates great risks for banks and customers. And sometimes the exact opposite is true. Finally, some legal requirements appear impossible to meet, creating pressure to meet them through inappropriate responses, such as violating the law.

By Quang Le and Kim-Cuong Le, LNT & Partners

Disclaimer: This article is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us at or visit the website: Http://

IFLR 1000 – Vietnam chapter

“Although Vietnam’s capital market has established more than 20 years ago, the participation of Vietnam-based law firms in the markets, both locally and internationally, is still rare.”

Dr. Net Le, Partner of LNT & Partners, has shared his opinion about current landscape for capital markets and project finance in Vietnam on IFLR 1000, Edition 2017.

If you want to learn more about the structure as well as the future of capital markets and project finance in Vietnam, please click on link below to see full article.

Link: Vietnam capital market & project finance: Its structure and future

Legal briefing February, 2016

Please click here to download our report: Legal Briefing October _ LNTpartners

I. Circular No. 20/2015/TT-BTP giving details and providing guidelines for implementation of a number of articles of the Decree 23/2015/ND-CP dated 16 February 2015 issuing copies from masters registers, certification of true copies from originals, authentication of signatures and contracts (Circular 20)

Sector: Administrative

Effective date: 15 February 2016


Circular 20 has provided the guidelines for implementation of a number of articles on certification of true copies from originals, authentication of signatures, notarization of contracts, transactions, in particular:

Decree 23 has simplified the procedure on notarization of contracts. However, due to the unfamiliarity with new administrative procedures, some of local authorities themselves invent additional provisions or require additional documents in the notarization dossier. The Circular 20 has addressed this shortcoming: in receipt and settlement of the notarization requests, the notary is not allowed to invent any additional step, or request for more documents other than those stipulated in the Decree 23. Circular 20 also regulates that if the notary fails to settle the notarization requests within 15 hours and fails in producing results within one day or having to extend the settlement schedule under Article 21, 33, 37 of Decree 23, a clear appointment letter is required to be sent to the requester.

Besides the cumbersome in notarization, Decree 23 has not also detailed the template of testimonies on document of legacy inheritance, document of legacy refusal.  Consequently, the competent authorities were confused and even refused to authenticate. Therefore, Circular 20 has given details for this matter in Article 3.1 and issued a template attached with the Circular. In addition, Circular 20 also attached a sample of authentication testimony of signatures to ensure the consistency of application of the Circular.


Circular 20 expectedly settles the problems arising from implementation of Decree 23 such as the lack of templates and inconsistency of required dossier.

II. Circular No. 59/2015/TT-BLDTBXH detailing and guiding the implementation of some articles of the Law on Social Insurance on compulsory social insurance (Circular 59)

Sector: Insurance

Effective date: 15 February 2016


Circular 59 has various remarkable points as follows:

(i) Circular 59 supplements the provision on the payment of compulsory social insurance drawing from the monthly wage, allowances (from 1st January 2016 to 31th 2017), in which such allowances are the ones to offset the factors of working conditions, the complexity of work, activity conditions, level of labor attraction for which the agreed wage in labor contract is not calculated or incompletely calculated such as allowances of position, title, responsibility, heaviness, hazardousness, dangerousness, seniority, region, mobility, attraction and the like. Besides, the monthly wage paid for compulsory social insurance shall not include the other benefits and welfare, initiative bonus, meals between shifts, gasoline, telephone, travel, accommodation and child care allowances; assistance upon the death of employees’ relatives, the marriage of employees’ relatives, employees’ birthday, subsidy to the employees in difficult situation in case of work accident, occupational disease and other allowances and assistance recorded in separate items in the labor contract.

(ii) Circular 59 provides conditions to enjoy an one-time subsidy upon birth giving as follows: (a) In case only the father participates in the social insurance, the time of payment must be from full 06 months or more within the period of 12 months before birth giving; (b) For the husband of the mother requesting surrogacy, the social insurance payment must be from full 06 months or more within a period of 12 months to the time of child receipt.

(iii) Under Circular 59, when applying monthly pension, a rate of 2% of monthly pension shall be reduced for each year of retirement prior to the prescribed age, which is higher than the rate of 1% under Circular 03/2007//TT-BLDTBXH.

(iv) The rate of entitlement to enjoy one-time social insurance of the employees having the time of social insurance payment of less than 01 year is equal to 22% of the rates of monthly wage of social insurance payment; the maximum rate is equal to 02 months of the average monthly wage of social insurance payment.


Circular 59 has provided a means for realization of the Law on Social Insurance and Decree No. 115/2015/ND-CP. The Circular is expected to protect tens millions employees and financial resources of entities engaging in social insurance.

III. Circular No. 09/2015/TTLT-BCA-BYT-BTC guiding implementation of health care insurance applicable to employees, students, relations of solider of People’s Public Security of Vietnam (Circular 09)

Sector: Insurance

Effective date: 11 February 2016


Noticeably, Circular 09 details the scope of employees whose health insurance is contributed by the local Public Security and the employee themselves, and the ones whose health insurance is contributed by state budget. Accordingly, the relations of soldier, students of Public Security cultural school and foreign students who are granted scholarship at Public Security school shall enjoy the health insurance covered by the state budget.

Regarding the contribution responsibility in special cases, Circular 09 prescribes that within the time of sick leave from 14 days onward, in which the sick leave benefit is applicable, employees and their employers are not required to contribute into the health insurance while the health insurance benefit is still applicable.

Circular 09 provides that within the time of detention, in custody or temporarily suspended from their work before being investigated or judged guilty or not guilty of their offences, ratio applicable to health care insurance contribution shall be 4.5% of 50% of the monthly salary subject to social insurance contributions as stipulated by laws. The remaining contribution shall be contributed in case it is concluded that there is no violation accordingly.

Employees who are currently living and working abroad are not subject to health care insurance contribution within the period of being aboard. The period of being abroad shall be counted as uninterrupted in application of health care insurance contribution.


This Circular has come into effect from 11 February 2016. However, the provisions on contribution level, contribution liability, and contribution method in respect of health insurance have been effective since 1 January 2015.

IV. Decree No. 11/2016/ND-CP providing guidelines for implementation of Labor Code on foreigners working in Vietnam (Decree 11)

Sector: Labor

Effective date: 1 April 2016


The scope of foreigners who are exempted from work permit is extended to include experts, individuals being the chief executive officials or those holding management positions or technicians who work in Vietnam for less than 30 days per period and the total accumulated working day in Vietnam is no more than 90 days per year. Further, method for determination of an expert, a chief executive official and management positions is also detailed in this Decree.

Confirmation of demand for use of foreign employees by Chairman of provincial people’s committee is not required in particular cases, noticeably for foreign employees with abovementioned working period in Vietnam.


With respect to the application for obtaining work permit, in case a foreigner has been residing in Vietnam, only criminal record issued by competent authority in Vietnam is required. However, there is still no further clarification for applying this provision, i.e. how to determine that a foreigner has been residing in Vietnam. In addition, processing time for the issuance of work permit is shortened from 10 to 7 working days from full submission.


Decree 11 simplifies the process of work permit and facilitates favorable conditions for foreigners working in Vietnam.

V. Circular No. 36/2015/TT-NHNN on restructuring of credit institutions (Circular 36)

Sector: Banking and Finance

Effective date: 1 March 2016


Inheriting positive points of Circular 04 and being amended, supplemented to qualify requirements on restructuring of bank system and sustainable development of credit institutions system, Circular 36 has the following notable points:

  • The Circular 36 applies to credit institutions being commercial banks and finance companies only.
  • In addition to merger and consolidation, conversion of legal form of credit institutions is also be governed as one of restructuring form. Accordingly,
  • a commercial bank or finance company may convert from a limited liability company into a shareholding company, or vice versa; and a commercial bank or finance company may convert from a single member LLC into a multiple member LLC, or vice versa.
  • In case of conversion, the credit institution must have a conversion plan approved by its competent body and satisfy other requirements in accordance with laws.

It is strictly prohibited to disperse assets in any form.


Circular 36 is expected, by supplementing regulations regarding conversion of legal form of credit institution and improving regulations regarding merge and consolidation of credit institution, to create a bank system fully complying with current market principles.

By Vietnam Law Insight

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us at

Registration of Trading Unlisted Securities – Vietnam Law Insight

Circular 180/2015/TT-BTC on Registration of trading of unlisted securities on the trading system

Circular No. 180/2015/TT-BTC on Registration of trading of unlisted securities on the trading system (“UpCom”) was issued on 13 November 2015 by the Ministry of Finance (“Circular 180”) to replace Circular 01/2015/TT-BTC.

In comparison with Circular 01/2015/TT-BTC, timeline for trading registration has been shortened under the Circular 108. In particular:

  • Public companies: 30 days as from the date of SSC’s letter officially verifying the register of public companies
  • Issuing companies which have not been listed: 30 days as from the completion date of the share public offering
  • Delisted companies: 10 days as from the effective date of delisted.
  • Merged companies established from listing companies but unqualified to be listed: 6 months as from the date of enterprise registration certificate.

Within one year as of the effective date of this Circular 180, which is 1 January 2016, companies including public companies and delisting public companies are required to complete procedure to register securities transaction on UpCom system.

Công bố toàn văn Hiệp định Đối tác xuyên Thái Bình Dương (TPP)

(MOIT) – Theo thông lệ đàm phán thương mại quốc tế, một hiệp định sẽ chỉ được công bố sau khi các Bên tham gia đàm phán đã hoàn tất thủ tục rà soát pháp lý. Tuy nhiên, trước nhu cầu tìm hiểu thông tin rất lớn của người dân và doanh nghiệp, các nước tham gia đàm phán Hiệp định Đối tác xuyên Thái Bình Dương (TPP) đã quyết định công bố toàn văn Hiệp định TPP mặc dù thủ tục rà soát pháp lý vẫn chưa hoàn tất.

Các nước TPP đã thống nhất giao Niu Di-lân (nước được giao nhiệm vụ lưu chiểu văn kiện của Hiệp định) công bố toàn văn Hiệp định vào chiều ngày 05 tháng 11 năm 2015 (giờ Hà Nội).

Bộ Công Thương xin trân trọng công bố toàn văn Hiệp định TPP (bản tiếng Anh) đã được các nước TPP thống nhất. Do quá trình rà soát pháp lý vẫn đang tiếp tục nên bản công bố lần này chưa phải là bản cuối cùng. Bản cuối cùng có thể sẽ có một số thay đổi nhưng chỉ là các chỉnh sửa về mặt kỹ thuật, không ảnh hưởng đến nội dung cam kết.

Ngoài các nội dung cam kết trong Hiệp định, trong quá trình đàm phán các nước TPP cũng đạt được một số thỏa thuận song phương. Do các thỏa thuận này chỉ liên quan đến các Bên ký kết nên sẽ được các Bên ký kết công bố riêng. Bộ Công Thương xin công bố kèm theo đây các thỏa thuận song phương mà Việt Nam đã thống nhất với một số nước TPP. Các thỏa thuận này sẽ có hiệu lực cùng thời điểm với Hiệp định TPP.

Do các nước TPP vẫn đang tiến hành thủ tục rà soát pháp lý, khối lượng tài liệu phải biên dịch lại rất lớn nên Bộ Công Thương và các Bộ, ngành chưa thể công bố kèm theo bản dịch tiếng Việt của Hiệp định TPP. Để đáp ứng yêu cầu của người dân và doanh nghiệp, Bộ Công Thương sẽ tích cực phối hợp với các Bộ, ngành nhanh chóng hoàn tất công việc dịch thuật và công bố bản dịch tiếng Việt trong thời gian sớm nhất.

Sau khi công bố toàn văn Hiệp định, các nước TPP sẽ nhanh chóng hoàn tất thủ tục rà soát pháp lý để chuẩn bị cho việc ký kết Hiệp định. Mỗi nước, theo quy định của pháp luật nước mình, sẽ dành thời gian nhất định để người dân nghiên cứu Hiệp định trước khi ký kết, dao động từ 60 đến 90 ngày. Sau khoảng thời gian này, các nước TPP sẽ tiến hành ký kết chính thức. Thời điểm ký kết chính thức Hiệp định hiện chưa được xác định nhưng dự kiến sẽ không muộn hơn quý I năm 2016. Sau khi ký chính thức, các nước sẽ tiến hành thủ tục phê chuẩn Hiệp định theo quy định của pháp luật nước mình.

Please follow the links for full text of TPP released today.

  1. Chapter Texts and Associated Annexes
  2. Market Access Offers and Country-Specific Annexes
  3. Side Instruments between Viet Nam and TPP countries


Specific links

I. Chapter Texts and Associated Annexes

II. Market Access Offers and Country-Specific Annexes

III. Side Instruments between Viet Nam and TPP countries

Theo Website chính thức của Bộ Công Thương

By Vietnam Law Insight

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us at

Legal briefing October, 2015

Please click here to download our report: Legal Briefing October _ LNTpartners

I. Decree number 84/2015/ND-CP on investment monitoring and evaluation (“Decree 84”)

Sector: Investment_ Enterprise

Effective date: 20 November 2015


Decree 84 clarifies implemented subjects and stipulates the principles of monitoring and evaluation of investment activities. In addition, Decree 78 expands its scope of application, including objects and sorts of monitored investment.

  • As of the effective date, not only investment projects, but also investment programs would be monitored and evaluated;
  • Various kinds of monitored and evaluated investment are supplemented, such as: PPP investment projects; a list of investment programs and projects using State capital- without limiting the minimum capital rate; the offshore direct investment and community evaluation now stipulated in this Decree;
  • The responsibilities of monitoring become an initial part beside the regulations on content of such activities, which are allocated to the investors, authorities and related specialized agencies; and
  • Separated chapters regarding cost and capability of organizations and individuals performing monitoring consultants in evaluation of investment projects are newly stipulated;


This Decree provides new and innovative detailed guidelines for monitoring and evaluating investment, in comparison to the old Decree No. 113/2009/ND-CP on investment monitoring and evaluation.

Such clearer regulations can practically increase the responsibilities of investors and relevant authorities; also guarantee the effectiveness of monitoring and evaluation activities.

II. Decree No. 83/2015/ND-CP on stipulation of outbound investment (Decree 83)

Sector: Investment_ Enterprise

Effective date: 25 September 2015


Following the Law on Investment 2014, Decree 83 has been issued to provide detailed guidance for outbound investment activities as follows:

  • Each investment project is granted a project number, which shall be also outbound investment certificate number;
  • Appraisal process is removed. Project registration procedure is divided into 2 types: projects subject to outbound investment policy of the Prime Minister (PM) and projects not subject to outbound investment policy of the PM. Procedure for projects required outbound investment policy of the PM is similar to appraisal process under the Law on Investment 2005. Projects not subject to outbound investment policy shall require confirmation of SBV if their capitals transferring to foreign countries are: (i) in foreign currencies, and (ii) equal to 20 billion VND;
  • Investors are entitled to transfer money, assets to foreign countries to establish investment project before receiving Investment Registration Certificate. However, the value of such money and assets is restricted to be less than 5% of project capital or 300.000 USD (whichever is smaller); and
  • Investors have to report about the implementation of projects quarterly and to more authorities.


Procedure of registration is simplified and investors can transfer capital and assets to foreign countries before receiving IRC. This shall allow investment projects to be implemented more quickly and effectively.

However, investors are now obliged to frequently report the implementation of the project in writing as well as through online update. This might create more responsibilities for the investors.

III. Decree No. 78/2015/ND- CP dated 14 September 2015 on Enterprise Registration (Decree 78)

Sector: Investment_ Enterprise

Effective date: 1 November 2015


Decree 78 provides guidelines for enterprise registration procedures under the Law on Enterprise 2014. Some notable points of the Decree are as follows:

  • Online registration is now available. As such, the entire procedures for registering the formation of an enterprise or the changes in enterprise information may be carried out at the National Business Registration Portal (
  • The timeline for enterprise formation registration and for registration of changes in enterprise information is significantly reduced (from 5 to 3 working days).
  • The registrar agency must not request the enterprise to submit additional documents other than registration documents prescribed by laws.


Decree 78 is expected to significantly remove the administrative burdens from the backs of the investors and enterprises and improve the investment climate of Vietnam

IV. Decree No. 76/2015/ND-CP providing detailed regulations on the implementation of a number of articles of the law on real estate business (Decree 76)

Sector: Real estate

Effective date: 01 November 2015


Below are some salient points of Decree 76:

  • Legal capital required for real estate trading is minimum VND20 billion for all types of projects. Financial statement or bank acknowledgement is no longer required to prove the financial capacity with respect to the fulfilment of legal capital;
  • Model contracts for key real estate transactions are enclosed in the Decree for the parties to follow; and
  • Regarding transfer of the entirety or part of the project, procedures and detailed forms for application dossier and timeline for the approval process are specified.


Procedures for registration of the real estate business and project transfer are simplified and less time-consuming

The model contracts, while causing no restriction to freedom of contract, will help reduce disputes in the market.

V. Decree No. 82/2015/ND-CP dated 24 September 2015 regarding visa exemption for Vietnamese people residing overseas and foreigners who are spouses, children of Vietnamese people residing overseas or of Vietnamese citizens (Decree 82)

Sector: Civil

Effective date:15 November 2015


Decree 82 provides detailed guidance for procedures of issuance of visa exemption certificates and its conditions:

  • Regarding conditions for visa exemption, the applicant’s visa or equivalent document must be valid for at least one year;
  • Regarding the format of certificate, it shall be granted in the passport or a detached certificate in some certain circumstances;
  • The competence and processing procedures of authorities are more detailed than before. For example, processing procedure of overseas authority is separated from the Immigration Administration; and
  • The duration of certificate of temporary residence for people using certificates of visa exemption is extended to 6 months.


Although the processing time stays the same as Decision 135/2007/QD-TTg on the promulgation of the regulation on visa exemption for Vietnamese residing overseas, the procedure is now much clearer for applicants to follow.

The extension of certificate of temporary residence from 90 days to 6 months is considered to be a big support for Vietnamese people residing overseas to come back home country.

VI. Decision No. 41/2015/QD-TTg on selling shares in blocks (Decision 41)

Sector: Governmental management/ Corporate

Effective date: 15 September 2015


Decision 41 deals with withdrawal of state capital of unlisted public companies from joint-stock companies that have not been listed or registered on Upcom (Hanoi Stock Exchange), the ownership of which is represented by Ministries, ministerial agencies, Governmental agencies , People’s Committees of central-affiliated cities and provinces, state-owned corporations, and companies whose 100% charter capital is held by the State. The striking features of Decision 41 can be summarized as follow:

  • the sales of shares in blocks must be implemented via Stock Exchange by audit method with the following information: number and price of each block, status of investors attending audit, solutions in case of an unsuccessful audit. Each block must not be less than 5% of the company’s charter capital;
  • Starting price of the block, which is determined by a valuation organization, equals to the starting price of a share multiplied by the quantity of shares in a block; and
  • According to the Decision to approve the plan for selling shares in blocks issued by a competent authority and regulations on selling shares in blocks, the owner’s representative agency, the Chairperson of the Board of members, the President of the enterprise shall request the representative to cooperate with Stock Exchange in formulating the enterprise’s own statute on selling shares in blocks.


Decision 41 sets out a clear procedure and conditions for the withdrawal of the state in joint-stock companies, which is considered to be a concession of the Government in intervening into the market. As a result, a free market without control of the Government is constructed step-by-step.

VII. Decree 79/2015/ND-CP on  penalties for administrative violations against regulations on vocational training (Decree 79)

Sector: Administrative

Effective date: 01 November 2015


Decree 79 provides detailed regulations of administrative fines upon the violations related to: vocational school establishment; organization of vocational education quality control; vocational education organizations, student recruitment, program syllabus, class size, bridge programs and educational association in vocational education; test, examination; issue and utilization of certificates, degrees.

  • The limitation for the maximum fine is maintained at 75,000,000 VND for individuals, 150,000,000 VND for organizations;
  • There are not many changes in the rate of fines imposed on the violation of regulations, except for some certain violations in registration of vocational activities, maintenance of ratio of full-time teachers/ lecturers, and others; and
  • Beside a number actions which are newly added to the scope of administrative fine application, Decree 79 provides more remedial measures applicable to the violators, such as transferring illegal benefits obtained from the violations, cancellation of the decisions on admission, returning collected amounts to learners.


Financial penalties seem not to be strong enough to prevent individuals and organizations from violating regulations on vocational training. Hence, Decree 79 imposes more intensive preventative measures to violators to enhance the protection for the rights of learners as well as vocational education organization.

VIII. Circular No. 139/2015/ TT –  BTC providing guidance on guarantee for foreign loans on lent by the Government (Circular 139)

Sector: Banking and finance

Effective date: 01 November 2015


Circular 139 provides detailed guidance on the procedures for guarantee of loans, settlement of secured assets, and responsibilities of relevant Parties concerning the  foreign loans on-lent by the Government with the following remarkable regulations:

  • The execution of a guarantee contract depends on the involvement of the Ministry of Finance (MOF). If the MOF directly undertakes on-lending, a credit institution satisfying certain conditions set out by this Circular shall be nominated by the obligor to act on behalf of the Ministry of Finance (MOF) to perform loan guarantee operations. Upon approval by the MOF, a Security Service Agreement shall be executed between the MOF, the obligor and the credit institution.  If the MOF authorizes an on-lending agency to perform on-lending, the loan guarantee contract shall be signed between such agency and the obligor under the scope of on-lending authorization between the MOF and the agency;
  • The total value of secured assets must be equivalent to 100% of the loan; and
  • A loan guarantee contract must be registered with competent authority by the obligor regardless of the secured assets not required to be registered by the laws. If the obligor fails to register, either the disbursement process might be suspended or the total loans might be immediately recovered before the due date.


Decree 78/2010/ND-CP on on-lending of the Government’s foreign loans took effect as of 2010 with only one article on the loan security causing numerous issues during its implementation. On the other hand, Circular 139 offers solutions for this issue by forming a detailed legal basis for guarantee for foreign loans on-lent by the Government.

IX. Circular No. 15/2015/TT-NHNN guiding foreign currency transactions on foreign currency market for credit institution permitted to make foreign currency transactions (Circular 15)

Sector: Banking and Finance

Effective date: 05 October 2015


Circular 15 replaces a numbers of decisions providing guidance on foreign exchange transaction to regulate the exchange rates, terms, means and documents of the transaction, form of the transacting agreement as well as the responsibility of the authorized credit institutions and departments belonging to the State Bank of Vietnam concerning the foreign exchange transactions.

The most important point of the new Circular is the stipulation on the latest payment date of foreign exchange transactions. Particularly, regarding the spot transaction in swap transaction, the parties could agree on the payment date which is subject to be within two days from the transacting date. Meanwhile, regarding the forward transaction in the swap transaction, the payment date must not be later than the last date of transacting term which lasts from 3 to 365 days from the transacting date.


Circular 15 shall deter the foreign exchange hoard in financial market.

X. Decree No. 85/2015/ND-CP providing detailed regulation on a number of articles of the Labor Code on policies for female employees (Decree 85)

Sector: Labor

Effective date: 15 November 2015


Decree 85 provides in details state policies on female employees, which requires employers employing multiple female employees to conduct necessary works with the purpose of improving the working conditions, healthcare and also supporting female employees in taking care of their children.

In return, employers may enjoy notable policies as follows:

  • Employers investing in building nurseries, kindergartens and healthcare facilities which meet statutory requirements may be entitled to enjoy incentives under the current policies encouraging socialization in education, occupational training and medical health as provided by the laws, e.g. exemption of land lease fees or corporate income tax incentives (tax rate, tax exemption and reduction);
  • Employers may also be entitled to incentives as stipulated in the Law on Residential Housing if investing in constructing residential housing for employees; and
  • Additional expenses for female employees may be included in deductible expenses for income tax purposes as provided by the laws.


Decree 85 shows the effort of the Government in encouraging employers to practically ensure and improve working conditions for female employees, through which employers may receive preferential support from the State of Vietnam, by ways of. tax incentives, upon satisfaction of certain conditions stipulated by the laws.


By Vietnam Law Insight

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us at

Simplify Procedures for Foreign Investors in Vietnam Securities Market

Circular No. 123/2015/TT-BTC on providing guidance of foreign investment activities in Vietnam securities market.

The Ministry of Finance issued the Circular No. 123/2015/TT-BTC (“Circular No. 123”) regarding Vietnam securities market. This Circular No. 123 shall take effect on 01 October 2015.

Circular No. 123 stipulates detailed procedures and guidance on dossiers for foreign investors in terms of registering the online securities transaction codes. In addition, Circular No. 123 shall simplify the procedures for market participation of foreign investors in Vietnam stock market, by minimizing the number of required dossiers; abolishing the procedure of legalizing consular records with documents and English documents not necessarily translated into Vietnamese, among others.

Additionally, Circular No. 123 provides detailed procedures or manual records to public companies regarding increasing the percentage of ownership of foreign investors as stipulated in Decree No. 60/2015/ND-CP.

Circular No. 123 is expected to create favorable conditions for foreign investors in securities market of Vietnam. It can help listed companies in mobilizing capital from foreign investors.

With the issuance of Circular No. 123, an important reform shall be inherently created. Not only does the reform improve the attractiveness of Vietnamese stock market in comparison to other neighboring stock markets to facilitate foreign investors to enter in the Vietnamese stock markets but also the effort will go hand-in-hand with the regulations allowing foreign investors to obtain more ownership in accordance with Decree 60/2015 that will enter into force on 01 September 2015. Circular No. 123 shall also contribute to forming an attractive stock market for foreign investors.


By Vietnam Law Insight (LNT & Partners)

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

The Most Important Documents Regulating Bank Guarantee

Circular No. 07/2015/TT-NHNN on Bank guarantee

On 25 June 2015, the State Bank of Vietnam issued Circular No. 07/2015/TT-NHNN on bank guarantee which is considered as one of the most important documents regulating bank guarantee applied to domestic credit organizations, branches of foreign banks for foreign customers. The Circular is to replace the previous one, namely Circular No. 28/2012/TT-NHNN on 03 October 2012 issued by the State Bank of Vietnam on bank guarantee.

The Circular No. 07 has formulated a full and basic legal framework on procedures for, and dossiers on activities of bank guarantee of credit organizations and branches of foreign banks.

The Circular is also expected to create a new legal framework to ensure that the international standards on bank guarantee are met as well as to help appropriately synchronize with other relevant laws and to minimize limitations and weaknesses of the current operations on bank guarantee. Furthermore, the Circular is to enhance the effectiveness, safety and smooth operations of bank guarantee activities of credit organizations and branches of foreign banks operating in Vietnam.

The Circular has a number of progressive contents. First of all, it supplements the definition of “symmetry guarantee party” and “guarantee confirming party” in order to specifically regulate those parties, including foreign credit organizations. In addition, the Circular gives the definition of “customer” to determine clearly which party customers are in guarantee relationship. From that, it is easier to calculate guarantee issuing balance, symmetry guarantee, guarantee confirming and as basis for considering conditions and requirements to customers for accepting bank guarantee.

Secondly, the Circular abolishes the provision that required the acceptance by the State Bank of Vietnam in bank guarantee.

Relating to supplying forex services, in order to conform to Circular No. 21/2014/TT-NHNN, Circular No. 07 has amended the relevant content. Accordingly, branches of foreign banks are not allowed to give guarantees in foreign currencies for customers operating overseas, except in case of that customers are guaranteeing party and symmetry guaranteeing party that are overseas credit organizations and guaranteed party doing business in Vietnam.

In real estate business, the Circular has clarified the Law on real estate business and Law on residential housing in terms of bank guarantee that are assigned the authority for detailing to the State Bank. To be more specific, the Circular requires the investor of a real estate project to undertake that the guarantee for selling, leasing future residential houses will be effective at least 30 additional days since the date of the delivery of the houses, basing on the agreement between the investor and customer. However, Mr. Tran Thai Binh, Lawyer of LNT & Partners, on an article published on Vietnamnet Online Newspaper, believes that many questions are not appropriately answered. For instance, such questions are; whether banks pay penalties for customers, if the housing sales and purchase agreement mentions; Or according to the Circular No. 07, guarantee agreement comes into effect to the time of at least ending 30 days since the date of the delivery of housing, but the customer is still awaiting (or not bewaring), leading to that those 30 days are overdue, then, this customer loses his/her rights for claiming guarantee. Many people say that a period of 30 days is short.[1]

In light of this Circular, there are a number of side-effects arising. Therefore, understanding provisions are necessary to avoid unfavorable consequences in doing business in general.

The Circular will come into effect on 09 August 2015 and replaces the Circular No. 28/2012/TT-NHNN granted on 03 October 2012. Hopefully, after its promulgation, the Circular will establish a solid legal framework for all domestic credit organizations, branches of foreign banks and customers in bank guarantee activities.

[1] Real Estate Guarantee: Questions awaiting guidance,–ban-khoan-cho-huong-dan.html, retrieved on 25 August 2015.

By Vietnam Law Insight (LNT & Partners)

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

Satisfy Demand for Securities Investment by Foreign Investors

Content of the new Law

On 26 June 2015 the Government issued Decree No. 60/2015/ND-CP (“Decree 60”) amending and supplementing certain provisions of Decree No. 58/2012/ND-CP, on the detailing and guiding the implementation of selected provisions of this, and the Law on Securities, which is considered as good news to foreign investors, since the long-awaited provisions will allow for majority ownership and control of public companies by foreign investors.

In this Decree, the foreign ownership ratio is extended to the Vietnamese securities market. Currently, a foreign investor may purchase up to 49% of total shares of a public joint stock company (JSC) or a listed company.  Beginning on the 1st of September 2015, this general restriction will be removed and instead, the new restriction will be subject to the WTO commitments or other specific domestic laws (e.g., the 30% cap in the banking sector). If there is a specific restriction under domestic law that has yet to be specified, then the rule of thumb is 49%.

When there is no restriction under domestic law (e.g., for production companies, or distribution companies), then there is no limit for the foreign shareholding ratio. This rule also applies to equitized SOEs, with the aim of attracting more foreign investment in the privatization program.

As for securities companies (or investment banks), those who are eligible to establish 100% foreign owned securities companies are allowed to buy up to 100% equity of local securities companies. Those who are not eligible can acquire up to 51% total shares.

Decree 60 also lifts all restrictions to foreign investors to purchase bonds. With respect to share certificates or derivative products of stocks of JSCs, the restriction will be relaxed as mentioned above. For this purpose, open funds or securities funds that have foreign shareholding more than 51% equity will be deemed as foreign investors. Decree 60 also addresses many other functions of foreign investment in public companies, along with other key aspects related to securities investment for foreigners.

Implications for Foreign Investors

The Decree is expected to act as a catalyst for more foreign investment in the private and State-owned sectors in Vietnam. It is intended to add vitality to the Vietnam securities markets and an extra boost to the equitization of State enterprises, as part of a plan to upgrade Vietnam from “frontier” market classification to “emerging” market classification at MSCI. It is reported that the shares with strongest liquidity on the Vietnamese stock exchanges are shares of issuers for which the 49% foreign equity quota has been used up. As such, the Decree is expected to act as an impetus to further foreign investment in Vietnam’s capital markets, both in equity and in debt markets

The Decree takes effect on September 1, 2015, and replaces Prime Minister Decision No. 55/2009/QD-TTg (15 April 2009) on the ratio of foreign investor’s participating on the Viet Nam securities market.

By Vietnam Law Insight (LNT & Partners)

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

New Legal Framework to Streamline Licensing and Set up of Commercial Banks

The Content of the new Framework

On June 30th, 2015 the Government issued Circular No. 08/2015/TT-NHNN (Circular 08) in lieu of Circular No. 40/2011/TT-NHNN (Circular 40) for the issuance of licenses and the organization and operation of commercial banks, foreign bank’s branches, representative offices of foreign credit institutions, other foreign organizations that have banking activities (Commercial Banks)  in Vietnam.

This Circular 08 has formulated a full and basic legal framework on procedures for, and dossiers on amendments, supplementation regarding operation contents of Commercial Banks. Furthermore, the formality of proposal dossiers for operational licensing and new establishment license template of Commercial Banks are also regulated in such a new circular.

Besides the new licensing issuance procedure in Circular 40, Circular 08 is expected to add three more new licensing procedures for Commercial Banks, including license replacement issuance, supplementation issuance of operation content to present license and supplementation issuance of operation content associated with license replacement issuance. With respect to the principle of building licensing dossiers, the non-notarized counterpart of documents are duly accepted, provided that those are obtained along with original copy for reference; while the referring person shall sign for confirmation and shall be responsible for the documents’ accuracy. The new establishment license template has the operation content part specifically noting that all banking functions which Commercial Banks are entitled to conduct are in accordance with Law on Credit Institutions and others activities approved by the State Bank.

Business implications

With respect to changes in the State Bank’s licensing activities applied to Commercial Banks in Vietnam, the impact on business will specifically be in banking sector. Accordingly, all approval for changes in registration for the operation of credit institution shall be noted in the Operation License by license replacement issuance. In the event of an amendment or supplementation in the operational content without need for a replacement license, Commercial Banks shall still conduct the proposal procedure on supplementing operation content via the approval instruments of the State Bank. Approval for non-notarized documents in the application dossier shall benefit from a more prompt and efficiently implemented licensing procedure. The more detailed and obvious the licensing procedures is, the more conveniently credit institutions can implement their business.

Our Recommendation

In light of this, we would recommend that commercial banks, branches and representative offices of foreign banks should update their Operation License by implementing the license replacement issuance procedure. The above-mentioned action shall result in owning a kind of detailed and unique valid instrument as a basis of banking operation. With efforts to comply with such new provisions, Commercial Banks shall benefit from good, efficient performance that will positively develop their business.

The Circular No. 08/2015/TT-NHNN will come into effect on August 13th, 2015.

By Vietnam Law Insight (LNT & Partners)

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

New Legal Framework for Vietnam’s Nascent Derivative Securities Market

The Law

On 5 May 2015, the Government issued Decree No. 42/2015/ND-CP on derivative securities and the derivative securities market, which is considered as the very first legal framework for the derivative securities market of Vietnam to come into operation in 2016.

This Decree recognizes futures contracts, options and forward contracts of which objects are underlying assets being securities and/or other assets used as the basis for fixing the value of the derivative securities as derivative securities. There will also be other kinds of derivative securities as recognized in accordance with guidelines of the Ministry of Finance. These newly recognized derivative securities may be traded on the derivative securities market as provided by the laws.

In principle, any organization or individual may invest in derivative securities on the derivatives market, except for certain organizations, such as securities companies, fund management companies, credit institutions and State-owned companies, which must satisfy certain requirements before investing in the market.

Furthermore, for the purpose of conducting derivative securities trading and/or providing derivative securities clearance and payment services, an organization will need to obtain a certificate of satisfaction of conditions for the respective activities issued by the State Securities Commission. To obtain this certificate, in general and subject to activities registered to be conducted, the organization must satisfy a number of conditions, such as financial conditions, i.e. minimum charter capital; conditions on business results, ratios of available capital, professional rules and/or relevant requirements to be provided by the Ministry of Finance; and other conditions as provided.

What does this mean for businesses?

Through there has been a legal framework for securities trading in Vietnam since the introduction of the Law on Securities (70/2006-QH11), Decree 42/2015/ND-CP allows for more diversified securities products in the Stock Exchange, thus boosting liquidity in the securities market which will be great news for businesses that are increasingly using the Stock Market as a capital channel. Accordingly, Decree 42/2015/ND-CP is expected to support the securities market of Vietnam, increase competitiveness and help to narrow the gap between securities market of Vietnam and of other countries all over the world.

Decree 42 will take effect on 1 July 2015.


By Vietnam Law Insight.

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

The purchase of shares in Vietnamese credit institutions by foreign investors

Decree No.01/2014/ND-CP (“Decree 01”), which sets out regulations on the purchase of shares in Vietnamese credit institutions (“VCIs”) by foreign investors, was passed by the Government on 3 January 2014 and took effect on 20 February 2014.

The new Decree 01 replaces Decree No. 69/2007/ND-CP, which governed the same area.

Specifically, Decree 01 governs the acquisition of shares by foreign investors in joint-stock VCIs and VCIs undergoing equitization.

According to Decree 01, there are three forms of share acquisition:

  1. Purchase of shares in joint-stock VCIs;
  2. Purchase of shares in the event joint-stock VCIs sell their shares to increase charter capital or sell treasury shares; and
  3. Purchase of shares in the event VCIs transform their legal form into a joint-stock VCI.

Decree 01 further sets a limit on foreign ownership in VCIs, which varies from 5% to 30% of the VCI’s charter capital, depending on the type of investor (foreign individual, foreign organization or foreign strategic investor).

Decree 01 also lists out conditions that are applicable to foreign investors purchasing the shares when the resulting shareholding would be more than 10%, as well as general conditions against strategic investors. On the other side of the transaction, the Decree specifies conditions against VCIs for selling their shares.

Accordingly, Decree 01 sets out the relevant rights and obligations to which the foreign investors acquiring a VCI’s shares are entitled.

By Vietnam Law Insight, LNT & Partners.

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

Vietnam Structuring an Appropriate Transfer Pricing Policy

Compared to other countries, the Vietnamese tax authorities do not have extensive experience on dealing with transfer pricing.

However, transfer pricing recently has become one of the main concerns of the National Assembly (i.e. the Vietnamese Parliament) due to three factors.

The first factor is the increase of foreign investment in Vietnam, which according to official sources reached USD 30 billion in June 2008. The second is due to tax incentives and the rather underdeveloped tax regime in Vietnam. Last but not least, in preparation of Vietnam’s accession to the World Trade Organisation on 11 January 2007, the government liberalized the market and abolished trade barriers, such as the regulations on minimum prices for imported products.

These deregulations created various opportunities for multinational companies to do tax planning, whereby a correct transfer pricing policy is becoming more and more vital.

In 2007, the Ministry of Finance (MOF) reported that the tax collected from foreign invested enterprises (FIE) in 2006 missed its projected target by USD 122 million. Many sectors, such as automotive or pharmaceuticals, where the market price in Vietnam is higher than elsewhere in the Asian region, have actually reported losses. The MOF suspected that a large volume of business profits were shifted abroad due to transfer pricing issues. The fact that the British Virgin Islands (BVI), a tax haven, is among the top 5 “biggest foreign investors” in Vietnam is only one example.

As the Government suspects profit shifting by FIEs, transfer pricing becomes a challenge for multinational companies. However, transfer pricing regulations in Vietnam are not very clear, and therefore what might appear to be a correct transfer price on the date of conducting a transaction might later, in case of an audit, result in heavy tax penalty.

The Government is trying to catch up. The MOF has published transfer pricing examples and clarified its position on key topics. Circular 117/2005/TT-BTC dated 19 December 2005 (Circular 117) contains guidelines on how to calculate market prices in business transactions between affiliated parties.

By Vietnam Law Insight, LNT & Partners.

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://