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.

One of the typical points in the Law on Enterprise 2020 is the provision on prolonging the capital contribution term of capital with assets contributors/founding shareholders, specifically as follows:

According to Clause 2 Article 48 of the Law on Enterprise 2014:  Every member must contribute capital properly in terms of sufficiency and type of assets as agreed within 90 days from the day on which the Certificate of Business registration is issued. 

According to Clause 2 Article 47 of the Law on Enterprise 2020:  The members shall contribute sufficient and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration. The time needed to transport or import the contributed assets and for completing ownership transfer procedures will be added to this 90-day period. 

This means that: The Law on Enterprise 2020 allows founding members/shareholders, if they contribute capital with assets, it is allowed to subtract the time of transporting, importing assets to contribute capital, performing administrative procedures to transfer ownership of assets when determining the time limit for capital contribution out of the time limit of 90 days from the date of being granted the Certificate of Enterprise Registration.

In terms of advantages: This approach of The Law on Enterprise 2020 has solved a practical problem that is: Contributing capital with assets often requires a longer time.

In terms of disadvantages: Despite progress, this regulation has not clarified some of the following legal issues:

+ Firstly, the subjects are allowed to extend the capital contribution period: The regulations do not specify whether such extended period applies only to members/shareholders contributing capital with assets or also applies to members/Shareholders contribute capital in cash.

+ Secondly, the maximum time limit for capital contribution: The regulations do not give any restriction on the time limit necessary to transport, import, carry out administrative procedures to transfer the ownership of property. This can lead to a large management gap in the issue of capital contribution to the enterprise, members/shareholders of capital contribution may intentionally delay the capital contribution by not doing timely.

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.

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