NEW PENAL CODE AND OTHER LEGAL ALERTS

For this February issue, we would like to highlight some major legal changes in Vietnam relating to the new penal code, amendment of provisions on logistics services business and extension of time-limit for dealing with current accounts of organizations without legal status as follows:

NEW PENAL CODE TOOK EFFECT FROM 1 JANUARY 2018

On 30 June 2016, Vietnam’s National Assembly voted to delay the implementation of Penal Code No. 100/2015/QH13 dated 27 November 2015, which was supposed to be put into effect on 1 July 2016, due to some further amendments under consideration. On 20 June 2017, Law amending and supplementing a number of articles of the Penal Code has finally been approved by the National Assembly, putting the new Penal Code officially effective as from 1 January 2018.

One noteworthy point of the new Penal Code is that, commercial legal entities may be subject to criminal liability for certain crimes such as tax evasion, fraud in insurance business, evasion of statutory insurance payment for employees, competitive regulatory violations, etc. Nonetheless, this does not preclude the criminal liability of the individual committing the offense. Penalties applicable to commercial legal entities include monetary fines, bans from conducting certain business activities and/or raising capital, for one year to three years.

Offenses related to the provision of illegal services via computer or telecommunication networks (Article 292) were abolished since the existence thereof will become an obstacle for the development of business activities via computer and telecommunications networks. Besides, the new Code supplements offenses against the regulations of business in multi-level marketing practices (Article 217A).

 

AMENDMENT OF PROVISIONS ON LOGISTICS SERVICES BUSINESS

New Decree No. 163/2017/ND-CP dated 30 December 2017 (“Decree 163”) regulating logistics service business took effect from 20 February 2018 and replaced Decree No. 140/2007/ND-CP dated 05 September 2007 (“Decree 140”). In comparison with the old Decree, Decree 163 contains some new provisions:

  • Regulated subjects: Decree 163 is applied to all logistics service providers and relevant organizations and individuals, including foreign ones.
  • Classification of logistics services: Instead of classifying the logistics services into 3 categories including principal logistic services, logistic services relating to transportation and other related logistic services, Decree 163 classifies the logistics services into 17 specific services.
  • Business conditions:

Decree 140 required that principal logistics service providers must have adequate facilities, equipment and working facilities which ensure technical standards and safety criteria, and a team of staff who satisfy the requirements. These conditions are no longer mentioned in Decree 163. Specific conditions applied to each service shall be stipulated in specialized legal documents.

Regarding the providers that provide part or whole of logistic services on the Internet, cellular network or other open networks, in addition to satisfying the conditions that are applied to the services specified in Decree 163, such providers must comply with regulations on e-commerce.

Decree 163, with its new provisions, has been noted to be more in line with international commitments of Vietnam, which Decree 140 did not quite accomplish (Decree 140 contained some provisions being contradict to some international commitments of Vietnam, for example: the WTO Commitments on services).

 

EXTENSION OF TIME-LIMIT FOR DEALING WITH CURRENT ACCOUNTS OF ORGANIZATIONS WITHOUT LEGAL STATUS

On 12 February 2018, the State Bank of Vietnam promulgated Circular 02/2018/TT-NHNN (“Circular 02”) amending and supplementing a number of articles of Circular No. 32/2016/TT-NHNN dated 26 December 2016 (“Circular 32”) regarding opening and maintenance of current accounts at payment services providers. According to this, time-limit for banks to review and deal with current accounts of customers being organizations without legal status which were opened before the effective date of Circular 02 is extended in comparison with the one stipulated in Circular 32. Specifically:

  • Before 1 June 2018, the banks must notify its customers of the changes of the account form;
  • Within 24 months from the effective date of Circular 02, the banks must cooperate with the customers in re-concluding their agreements on opening and maintenance of current accounts for the purpose of changing to personal current account or shared current accounts or closing the accounts.

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