On June 17, 2020, the Law on Enterprise 2020 was passed by the National Assembly to replace the Law on Enterprise 2014, effective from January 1, 2021.

Some of the typical points in the Law on Enterprise 2020 are the provisions related to Pre-registration contracts. As follows:

1. According to Clause 2, Clause 3 Article 19 of the Law on Enterprise 2014:

• If the enterprise establishment is permitted, the enterprise shall keep performing the duties and rights under the concluded contracts, unless otherwise agreed by the parties.
• If the enterprise registration is not granted, the person who enters into the contract prescribed in Clause 1 of this Article shall take responsibility, or the founder of the enterprise shall take joint responsibility for the implementation of the contract.

      2. According to Clause 2, Clause 3 Article 18 of the Law on Enterprise 2020:

• When the Certificate of Enterprise Registration is granted, the enterprise shall continue exercising and performing the rights and obligations under the concluded contracts mentioned in Clause 1 of this Article, and the parties shall transfer the rights and obligations in accordance with the Civil Code, unless prescribed by the contracts.
• In case the Certificate of Enterprise Registration is not granted, the persons who conclude the contracts mentioned in Clause 1 of this Article are responsible for their execution. Any other participant in the establishment of the enterprise is also responsible for the execution of these contracts.

       3. This means that: The Law on Enterprise 2020 has added:

• Responsibilities for founding members or shareholders of a company to transfer contractual rights and obligations to the company in accordance with the Civil Code as soon as the company is established.
• Requiring all founding members or shareholders of a company (instead of just the signatories) to be jointly responsible for contracts before the enterprise registration signed in case of the company not established.

In summary, since 2000 up to now, Vietnam has had 04 versions of the Law on Enterprise (the Law on Enterprise 1999; the Law on Enterprise 2005; the Law on Enterprise 2014; the Law on Enterprise 2020). The change can be viewed from many different perspectives, both positive and negative. However, one thing is for sure, the introduction of the Law on Enterprise 2020 more or less will affect the investment and business situation of enterprises in Vietnam.

Hope the above information is helpful to The Esteemed Readers.

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