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Preventing Conflicts of Interest

August 11, 2022

Conflict of interest A “Conflict of Interest” is defined as a real or seeming incompatibility between one’s private interests and one’s public or fiduciary duties (Black’s Law Dictionary – Ninth Edition). There is no statutory definition of conflict of interest under the laws of Vietnam. Actions constituting conflicts of interest are only indirectly regulated in the form of certain prohibited activities in various legal documents such as the Law on Cadres and Civil Servants 1 or the Law on Anti-corruption 2 which governs the activities of cadres and civil servants in the Governmental system. There are also provisions in the Law on Enterprises 3 governing the activities of people holding management positions in enterprises. However, in Vietnam an employee could potentially be sanctioned under the Civil Code, the Labor Code, or even criminalized under the Penal Code for the following conflicts of interest: An employee who establishes a competing business that provides the same goods or services as those of the employee’s company in the common market; The use of the proprietary information of the company, or that obtained during employment in the company, to benefit the employee’s business or the business of his/her relatives or friends; Providing goods or services to the company’s providers or clients through the business of the employee or his/her relatives or friends; Taking advantage of the employee’s position or power in the company to do business with a third party and which is not in the company’s interests; Utilization by the employee of his/her position and power in the company to allocate key employment positions, such as managers/executives, accountants, cashiers, or storekeepers, to his relatives, friends, or others for the...

Getting to know Sesto Vecchi of Russin & Vecchi, Vietnam

July 15, 2022

Insights into the evolving landscape of Vietnam from an American lawyer who calls the country his home 1. While originally qualified in the USA, you have over 35 years of experience working in Vietnam. Can you please walk us through your journey to Asia and some career highlights from your years working on the continent? I came to Asia and Vietnam in 1964 as a Lieutenant in the US Navy. When my Navy service ended, I remained in Vietnam for nearly 10 years until the end of the war. I was already a lawyer and I, along with several other Americans, started a law firm with several offices. I practiced in our Saigon office until 1975 when the war ended. Our clients in Vietnam were Vietnamese, American, French and other foreign companies. There were individuals as well. Everything we did had an overlay involving the war. To be sure, it was an exciting time. I married Camille Cam Van. By then I felt very comfortable in Asia, and I knew I would remain. I lived and practiced law with our firm in Thailand and in New York during the next 15 years. I returned to Vietnam and reopened our office in the early 1990s. We have grown with the country, and I believe that we have been able to contribute to its growth. There are now many more complex financings, larger sums are involved, and there are more investments into companies that provide energy, healthcare, education. Vietnamese companies have begun to list abroad. 2. As a named partner of Russin & Vecchi, recognised as a top law firm in Vietnam, you will have...

Amendments to Law on Enterprises, Practical Notes on Company’s Dual Legal Representative Regime and Government’s Detailed Guidance on Implementing Investment Regulations in Vietnam

July 7, 2022

I. AMENDMENT OF THE LAW ON ENTERPRISES AND PRACTICAL NOTE ON COMPANY’S DUAL LEGAL REPRESENTATIVE REGIME On 11 January 2022, the National Assembly adopted Law No. 03/2022/QH15 on amendments and supplements to a number of articles of Public Investment Law, Law on Public-Private Partnership Investment, Law on Investment, Law on Residential Housing, Law on Bidding, Electricity Law, Law on Enterprises, Special Consumption Tax Law, and Law on Enforcement of Civil Judgment (collectively, the “New Amendment Law”). The New Amendment Law took effect on 1 March 2022. Vote-counting method at General Meeting of Shareholders (“GMS”) 1. Vote-counting method at General Meeting of Shareholders (“GMS”) Previously, Article 148 of the Law on Enterprises provided that the voting threshold of shareholders at a meeting of the GMS was determined based on the number of votes of all participating shareholders, regardless of whether these shareholders cast their votes or not. However, under the New Amendment Law, such voting threshold is now determined based on the number of votes of participating shareholders who cast their votes. 2. Requisite signature for effectiveness of the meeting’s minutes of Members’ Council (“MC”) or Board of Director (“BOD”) Pursuant to a former provision of the Law on Enterprises, the meeting minutes of MC (with respect to a limited liability company) or BOD (with respect to a joint stock company) require signatures of the chairman of the meeting and the person who prepares the meeting minutes. However, their refusal to sign did not invalidate the meeting minutes as long as other members attending the meeting have all signed the meeting minutes. This provision could result in a circumstance that any member of...

Cybersecurity Law and the Practice of Preventing Cyber Fraud in Vietnam

July 7, 2022

Concurrently with the rest of the World, online transactions over the internet have become commonplace in Vietnam and continue to expand its reach to all aspects of business. The banking and retail sectors are just two of the major industries that currently rely, at least in part, on remote transactions. This evolution also has a dark side with the development of cybercrime where a victim is fraudulently induced to provide personal or private information that the cybercriminal utilizes to appropriate assets. In this Insight, Le & Tran explores the recent developments and progression of cybersecurity law and data retention in Vietnam. Further, the regulations are applied to the real world and useful advice is provided to assist you in following the law and protecting the information of your business and your clients/customers. Existing cyber fraud situation in Vietnam Along with the development of communication networks and information technology (IT) applications, fraud conducted through the internet has grown substantially, both in quantity and sophistication. Although the authorities and media have repeatedly warned people about these fraudulent actions, the continuous evolution of methods and modus operandi of cybercriminals, combined with intimate knowledge of their victims’ hopes and desires, enables them to scam large sums of money nationwide. Cyber fraud in the past mainly consisted of scams that would target those connecting online, persons establishing friendships, or would request money transfers from victims in order to receive gifts at customs. In addition, it was common to hack social media accounts or impersonate relatives or acquaintances to ask for money or mobile scratch cards. The fraud that exists nowadays has become much more...

Enforcing a Non-compete Agreement for Employment Contracts in Vietnam

July 7, 2022

In today’s business environment, foreign companies operating in Vietnam often include a non-competition provision or agreement in their labor contracts with their employees. However, as this type of provision is somewhat rare in Vietnam as well as being unfamiliar to Vietnamese administrative agencies and Courts, there are few persons with knowledge of the effects and implications of such a provision. Therefore, in this Insight, we would like to share with you our knowledge and experience with regard to (i) the definition of what constitutes a non-compete agreement in employment, (ii) why non-compete agreements are typically compulsory provisions in most labor contracts of foreign companies operating in Vietnam (though Vietnam law does not require or regulate them), and (iii) how non-compete agreements are applied and interpreted in the context of Vietnam law. Definition of a Non-Compete Agreement During the formation and development of a company, a significant amount of useful information is collected, developed and secured by the company. This may consist of information concerning customer relationships, products, trade secrets, business know-how, price, etc. (Confidential Information). A recruited employee’s access to Confidential Information is dependent on their position and job duties with the company. A potential risk is that the employees will use such Confidential Information to create benefits for themselves, such as: Disclosure of the Confidential Information to competing companies for illicit benefits; or Employees may establish or participate in a competing company operating along the same business lines as the former company and use the Confidential Information that they obtained to compete with the business operations of the former company. For instance, the employee may use the information...

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