Since 15 January 2018, Decree No. 09/2018/ND-CP detailing Law on Commerce and Law on Foreign Trade Management (“Decree 09”) has taken effect replacing Decree No. 23/2007/ND-CP (“Decree 23”). However, since there has not been a guiding Circular, it results in several problems arising in practical execution and application of Decree 09 causing difficulties for enterprises. Among these problems are provisions on amendment of the Business License, License for establishment of retail outlet when enterprises have change in their legal representatives. This article hereunder aims to help enterprises clarify such legal issue more.
Regarding to the Business License
Unlike Decree 23, Decree 09 states that the legal representative’s details of the enterprise is among the compulsory information to be recorded on the Business License. Accordingly, the enterprise shall be required to take the procedure for amendment of the Business License when changing its legal representative. The question comes out for the enterprise, which was granted the Business License before the effective date of Decree 09 (i.e., the Business License did not record the legal representative’s details under Decree 23) that the enterprise shall take the procedure for amendment of the Business License or application for granting a new Business License.
In relation to the above-mentioned issue, with reference to our practical experience gaining from supporting our clients in Hanoi and Ho Chi Minh City, LuatViet found differences in the instructions of competent authorities when applying Decree 09. Specifically, in Hanoi, when changing the legal representative, the enterprise shall take the procedure for amendment of the Business License in accordance with provisions of Decree 09, including the following documents as required:
- A request for amendment of the Business License;
- Certified copy of the Enterprise Registration Certificate recording amended information.
Whereas, as guided by the competent authority in Ho Chi Minh City, although the name of the procedure that the enterprise shall apply is the procedure for amendment of the Business License, the dossier is guided to prepare as same as the one for a new Business License, including:
- A request for amendment of the Business License;
- An explanatory document;
- Confirmation from the tax office proving that there are no overdue tax debts;
- Certified copies of the Enterprise Registration Certificate; the Investment Registration Certificate for the project of goods trading activities and goods trading directly related activities (if any).
As consequence of inconsistency between local competent authorities in applying Decree 09, the enterprise has met a lot of difficulties in understanding the provisions therein, that does yet mention time and expenses for preparation and/or supplementation of full application dossier.
Regarding to the License for establishment of retail outlet
Under Decree 09, the information of head of retail outlet and legal representative shall not be recorded on the License for establishment of retail outlet. Accordingly, the enterprise shall not be required to take the procedure for amendment of the License for establishment of retail outlet when changing the legal representative.
However, the problem may arise when the enterprise, who was granted the Business License and License for establishment of retail outlet before the effective date of Decree 09 has change in the head of the retail outlet cum the legal representative. Specifically:
Whereas the Business License shall record the updated legal representative, the License for establishment of retail outlet still records the head of the retail outlet cum the previous legal representative. In this case, it is necessary for the enterprise and its partners to comprehend the provisions on the content of the Business License and License for establishment of retail outlet to avoid misunderstanding. Accordingly, the Business License shall update legal representative of the enterprise and the License for establishment of retail outlet shall record the head of retail outlet (not being the legal representative of the enterprise).
Hence, to ensure the effectiveness and legal safety, the enterprise is recommended to consult lawyer for his legal advice and competent authorities for their guide in order to carry out the required procedures properly and promptly.
Hopefully, the contents offered in this article could help the enterprise understand more about issues relating to change in the legal representative under Decree 09 in relation to the Business License and License for establishment of retail outlet.
If you are interested in the content of this newsletter or you need professional legal advice, please feel free to contact with LuatViet as information follows:
Ho Chi Minh office
6th floor, Pax Sky building, 34A Pham Ngoc Thach, ward 6, district 3, Ho Chi Minh city.
Tel: +84 (28) 3824 8440 | Fax: +84 (28) 3824 8441
No 03-0A, 3rd floor, Pan Pacific Hanoi, No. 1 Thanh Nien street, Truc Bach ward, Ba Dinh district, Hanoi.
Tel: +84 (24) 371 543 05 | Fax: +84 (24) 371 543 06
Disclaimer: This article provides an overview of legal issue which you are interested in, is not our legal opinion. Due to this, no lawyer – client relationship is established and no obligation is formulated between you and us. You are recommended to consult lawyer for legal advice when any legal issue arises from your business investment before implementation.