Law gets tougher on recalcitrant bosses

The Government issued Decree No 92/2011/ND-CP on October 17, regulating fines for administrative violations in the field of health insurance.

Enterprises and organisations that do not pay insurance premiums for the whole applicable employees shall be fined at least VND500,000 for up to 10 employees, VND1-5 million (US$50-250) if the number of applicable employees is from 11 to 50, and no more than VND30 million ($1,600) if the number of applicable employees is over 1,000.

The violating enterprises and organisations will also be required to pay the back premiums for the entire number of applicable employees, plus interest, into the social insurance fund, as well as pay the costs of examination or treatment incurred by employees who were unable to enjoy insurance benefits to which they were entitled. The decree takes effect on December 1.

Tightened rules on issuing corporate bonds

The Government issued Decree No 90/2011/ND-CP on October 14, regulating the issuance of corporate bonds. The decree provides a general and comprehensive regulation which covers both domestic and international bond issues. More specific regulations governing companies in the banking and securities field would continue to be regulated by more specific provisions elsewhere, which would take precedence over the default provisions in this decree.

The decree sets higher requirements for companies issuing bonds and aims at enhancing corporate responsibility when issuing bonds. An issuing company must guarantee a minimum rate of owner’s capital of 20 per cent of total investment capital.

A company domestically issuing non-convertible bonds must meet specific conditions. The company must have operated for at least one year from the date of establishment, and operations for the year preceding the year of issuance must have been profitable according to audited financial statements. The audited financial statements must be accompanied by an unqualified opinion by the auditor.

When a company issues bonds before April 1 and cannot yet provide financial statements for the year before, they can be replaced by financial statements of the year previous, with profitable results certified by the company’s board of management (or board of members in the case of a limited liability company) or chairman.

A company issuing bonds internationally must have operated for at least three years from the date of establishment, and operating results for the three years prior to the year of issuance must be profitable according to audited financial statements. Those companies must also register a foreign loan with the State Bank of Viet Nam and comply with regulations on foreign loans.

This decree takes effect on December 1, 2011.

Representative offices for trade promotion agencies

The Government issued Decree No 110/2011/ND-CP on October 28, regulating the establishment and operation of representative offices of trade promotion agencies. Under the decree, a foreign trade promotion agency is entitled to establish no more than one representative office in one province or centrally-administered city. A representative office, as a dependent agency of the trade promotion agency, must register with a competent registrar.

A foreign trade promotion agency will be licensed if it meets two conditions: it is a legally established organisation under foreign law and it has a charter and operating principles that comply with Vietnamese law.

A representative office can function as a contact agency and promote the activities of a foreign company, including assisting the foreign enterprise in exploring the domestic market, performing market research and providing economic, trade and market information to foreign companies and organisations.

However, a representative office cannot directly conduct profit-making operations in Viet Nam.

The decree will take effect on December 15. Any representative office constituted before that time will be allowed to continue its operation and conduct registration procedures for the issuance of an establishment certificate in accordance with this decree within six months. – VNS

Tags: Vietnam insurance, Vietnam insurance industry, Vietnam insurance market, Vietnam Life insurance