The law provides a unified legal framework for common business operations of both foreign-invested and domestic enterprises. Both foreign-invested and domestic enterprises are governed by the new law terms of form and operation.

The ownership of capital is no longer determinative, and the concept of a separate form of State-owned enterprise becomes obsolete under the new law.State-owned enterprises must be privatised and converted into liability limited or joint stock companies within 4 years from the effective date of the law. This may end up being too short a time period, as the process of equitising these companies has been moving slowly, and it is necessary to ensure that companies which survive equitisalion are solvent.In comparison to the 1999 Law on Enterprises, under which a single-member limited liability company must be run by an organisation, a new form of single-member limited liability company is authorised by the 2005 Law on Enterprises, allowing an individual to operate a single-member limited liability company. The new law also gives partnerships legal entity status, although the practicality of this provision remains unclear due to the fact that partnerships, by definition, do not have independent assets separate from those of the partners, an element heretofore necessary to prove legal entity status.Foreign investors under the new law have more options in determining their form of investment form and can select any form of business organisation defined in the new law, such as limited liability company, joint stock company, or partnership. The new law also simplifies administrative procedures for establishing and registering a business entity. The most important change is that the time for processing and issuing a business licence has been decreased to 10 working days from the previous 15 working days. The legal documents required for establishment and registration are provided in detail in the law (Articles 16-20), eliminating the need for additional regulatory guidance in the form of a decree or circular.The new law has also clarified the management structure of the enterprise, more strongly protecting legal rights of members and shareholders in an enterprise. The law has clearly set forth duties and responsibilities of managers, especially those who hold positions of board member or director. Under Article 57, the general director must represent at least a 10-per-cent ownership of shares and possess strong skills in management.The law also increases the powers of the Audit Committee (Article 121 to Article 127), while Article 46 provides that the legal representative of the enterprise must permanently reside in Vietnam so that he may be subject to service of process. The law guarantees the rights and interests of members and minority shareholders. Under the 1999 Law on Enterprises, by comparison, the capital share of members or member groups having the rights to call a meeting of the Board of Management was 35 per cent. The new law lowers this to 25 per cent.Article 79 stipulates that the shareholder or group of shareholders owning holding more than ten (10) per cent of total ordinary shares for a consecutive period of six months or more, or holding a smaller percentage as stipulated in the charter of the company, shall have the right to nominate candidates for the membership on the Board of Management and the Audit Committee; to call a General Meeting of Shareholders; and to request the Audit Committee to inspect any particular issue considered necessary and relating to the management of the company.Source: Viet Nam News