Chapter III

DEPLOYMENT OF PROJECTS AND ORGANIZATION OF BUSINESS

Article 25.- Personnel and the first session of the Managing Boardof a joint-venture enterprise

After being granted the investment license, the joint-ventureenterprise must proceed with the following tasks.

1. Within 30 days after the granting of the investment license, theparties to the joint venture shall inform each other of the list of Managing Boardmembers, nominate the chairman and vice-chairman of the Managing Board.

2. Within 60 day’s after the granting of the investment license,the Managing Board shall hold its first meeting to carry out the following principaltasks:

a) Adopting the Regulation on operation of the Managing Board;

b) Appointing the General Director, Deputy General Directors and chiefaccountant (or Finance Director);

c) Determining in detail the tempo of legal capital contribution by thejoint-venture parties, the construction plan and tempo.

3. The minutes of the first session of the Managing Board shall beforwarded to the provincial/municipal Planning and Investment Service of the localitywhere the joint-venture enterprise is headquartered. For enterprises in the industrialparks, export-processing parks or high-tech parks, such minutes shall be addressed to theManagement Boards of the industrial parks, export-processing zones or high-tech parks(hereinafter referred collectively to as the Industrial Parks Management Boards) where theprojects are implemented.

4. The lists of the Managing Board members, the General Director anddeputy General Directors of joint- venture enterprises shall be registered at theprovincial/municipal Planning and Investment Services, for enterprises in the industrialparks, export-processing zones or high-tech parks, the above lists shall be registered atthe Industrial Parks Management Boards.

Article 26. - Establishment and registration of the management apparatuses ofenterprises with 100% foreign investment capital and business cooperation

contracts

The establishment of the management apparatus and nomination ofpersonnel of enterprises with 100% foreign investment capital shall be decided by theforeign investors.

The registration of the lists of staff members of enterprises with 100%foreign investment capital, representatives of the business cooperation parties and theexecutive offices of the foreign business cooperation parties (for business cooperationcontracts) shall comply with the regulations applicable to joint-venture enterprisesprescribed in Article 25 of this Decree.

Article 27. - Establishment announcement

After being appointed, the General Director of the foreign-investedenterprise, and representatives of the business cooperation parties shall publish on acentral or local daily newspaper in three consecutive issues the following principalcontents:

1. Name and address of the enterprise or the location for performanceof the business cooperation contract; names and addresses of branches, representativeoffices, executive offices (if any);

2. Names and addresses of the parties to the joint-venture or thebusiness cooperation, or foreign investors;

3. The representatives at law of the enterprise or the businesscooperation parties;

4. The serial number and date of issuance of the investment license,the investment licensing agency, the operation duration of the enterprise or the durationfor performance of the business cooperation contract;

5. The investment capital, the legal capital of the enterprise; thepercentage of capital contribution by each joint-venture party and the capital committedto disburse by the business cooperation parties;

6. Operation objectives and scope.

Article 28.- Business registration, practitioner's certificate

1. The investment license shall also be valid as the businessregistration certificate.

2. For domains or business lines which require business licenses asstipulated by law, the foreign-invested enterprises or business cooperation parties onlyneed to register with the competent State bodies for canting out the business activitiesunder the provisions in the investment licenses without having to apply for the businesslicenses.

3. For domains and business lines which require the practitioners'certificates as stipulated, before commencing operation the foreign-invested enterprisesand business cooperation parties must acquire the practitioners' certificates as providedfor by law.

Article 29.- Branches, representative offices

1. Foreign-invested enterprises and business cooperation parties mayopen branches and/or representative offices outside the provinces or cities where they areheadquartered or at the major operating locations of the business cooperation contracts inorder to carry out business activities according to the provisions in the investmentlicenses.

Where it is necessary to step up the export, foreign-investedenterprises may open their branches or representative offices overseas in order to carryout transaction, marketing and product-selling activities.

The establishment of overseas branches or representative offices mustbe considered and approved by the Ministry of Planning and Investment.

2. The foreign-invested enterprises shall be responsible for theoperation of their overseas branches and/or representative offices. The incomes ofbranches shall be included into the income of the foreign-invested enterprises and must beannually transferred to their parent companies in Vietnam and liable to the enterpriseincome tax at the rates prescribed in the investment licenses. Where foreign-investedenterprises open their branches in countries which have signed with Vietnam the agreementson avoidance of double taxation, the provisions of such agreements shall apply.

3. The Ministry of Planning and Investment shall guide the order andprocedures to open branches and/or representative offices of foreign-invested enterprisesand business cooperation parties.

Article 30.- Hiring of managerial organizations

1. For the fields of hotels, leased offices, leased apartments, golfcourses, sports, entertainment, medical examination and treatment, education and trainingand a number of other fields which require specialized management skills, foreign-investedenterprises and business cooperation parties may hire managerial organizations to managethe business activities.

2. The management hiring must not alter or exert negative impacts onthe operation objectives of the projects and the interests of the Vietnamese State asalready prescribed in the investment licenses.

3. The management hiring shall be effected through management contractssigned between foreign- invested enterprises and managerial organizations. The managementcharges shall be agreed upon by the parties in the management contracts, and accountedinto the managerial expenses of the enterprises or the business cooperation parties.

The management contracts shall take effect only after they are approvedby the investment license-granting agencies.

4. The managerial organizations shall operate in the names and use theseals and accounts of foreign- invested enterprises, or one or many business cooperationparties. The managerial organizations shall be accountable to the foreign-investedenterprises or business cooperation parties and abide by Vietnamese laws in the course ofexercising their rights and performing their obligations prescribed in the managementcontracts.

The managerial organizations shall have to pay taxes and fulfill otherfinancial obligations according to the provisions of law. Foreign-invested enterprises orbusiness cooperation parties shall have to pay on behalf of the managerial organizationsthese amounts to the Vietnamese State.

In all circumstances, the foreign-invested enterprises and the businesscooperation parties shall bear responsibility for the entire operation of the managerialorganizations before Vietnamese laws regarding matters related to the managementactivities stated in the management contracts. The managerial organizations shall bearresponsibility before Vietnamese law for their activities outside the scope of themanagement contracts.

Article 31.- Reorganization of enterprises

1. The division separation, merger, consolidation of enterprises, thechange of investment form, (hereinafter referred collectively to as reorganization ofenterprises) must be approved by the investment license- granting agencies.

A dossier requesting the reorganization of enterprise shrill include:

a) The written application for reorganization of enterprise;

b) The dossier on capital transfer (for cases of capital transfer);

c) The resolution of the Managing Board of the joint venture or theagreement reached between the business cooperation parties;

d) The Charter of the new enterprise (except the cases of conversioninto Vietnamese enterprises);

e) The report on the enterprise's financial activities before thereorganization;

f) The exposition on the reorganization of the enterprise;

g) The documents relating to the land use right;

h) Other documents when requested by the investment license-grantingagencies.

2. The exposition on the enterprise reorganization shall contain thefollowing principal contents:

a) Name and address of the representative at law; names and addressesof the enterprises before and after the enterprise reorganization;

b) Production and business objectives;

c) The labor employment plan;

d) The plan on settlement of rights and obligations of the enterprisesinvolved in the enterprise reorganization;

e) The time limit for implementation of the enterprise reorganization.

3. Within working days after the receipt of complete and validdossiers, the investment licensing agency shall issued a decision to approve theenterprise reorganization in form of granting the investment license. In case ofnon-approval, the investment licensing agency must send a written reply clearly explainingthe reasons therefor.

Article 32.- Inheritance of rights and obligations after theenterprise reorganization

After being granted the investment license for enterprisereorganization, the new enterprise shall inherit all the rights and obligations of theformer enterprise according to the plan on settlement of rights and obligations ofenterprises stated in the exposition on the enterprise reorganization stipulated in Clause2, Article 31 of this Decree.

Article 33.- Capital transfer

1. When transferring their capital, foreign-invested enterprises andbusiness cooperation parties shall register the capital transfer with the investmentlicensing agencies.

2. The dossier of capital transfer registration shall include:

a) The application for capital transfer registration;

b) The capital transfer contract;

c) The resolution of the Managing Board of the joint-venture enterpriseor the agreement of the business cooperation parties;

d) Amendments, supplements to the joint-venture contract, the businesscooperation contract, the enterprise's Charter;

e) The report on the enterprise's operation;

f) The legal status and financial situation of the capital transfereein case the capital is transferred outside the enterprise.

3. Within 15 working days after the receipt of the dossier of capitaltransfer registration, the investment licensing agency shall decide the adjustment of theinvestment license.

Article 34.- Restructuring of the investment capital, the legalcapital

1. In the course of operation, foreign-invested enterprises mayrestructure their investment capital and/or legal capital when there appear changes in theobjectives, project scale, partners, capital contribution mode and other circumstances.

2. The restructuring of investment capital and/or legal capitalmentioned in Clause 1 of this Article must not reduce the legal capital percentage tobelow the levels prescribed in Articles 14 and 23 of this Decree.

3. The restructuring of investment capital and/or legal capital as wellas the change of the percentages of capital contribution by the joint-venture partiesshall be decided by the Managing Board of the enterprise and approved by the investmentlicensing agency.

Article 35.- Transfer without compensation

Where foreign investors commit to transfer without compensation theproperty under their ownership to the Vietnamese State or the Vietnamese parties upon theexpiry of the operation term as provided for in the investment licenses, the to-betransferred property must be in the state of normal operation.

Where foreign-invested enterprises or business cooperation contractsterminate their operation before schedule due to reasons other than force majeurecircumstances and if such termination alters the commitment to non-compensation transfer,the foreign investors shall have to compensate the preferences they have enjoyed thanks tothe commitment to non-compensation transfer.

Article 36.- Temporary suspension of operation or prolongation ofthe project implementation tempo

Where there are plausible reasons to temporarily suspend operation orprolong the project implementation tempo, foreign- invested enterprises or businesscooperation parties shall have to report it to the investment licensing agencies. Exceptfor force majeure cases, the temporary suspension of operation or prolongation of theproject implementation tempo shall be effected only after it is approved by the investmentlicensing agencies.

Upon the operation suspension or prolongation of project implementationtempo, foreign-invested enterprises and business cooperation parties may be entitled tothe exemption or reduction of financial obligations, depending on each specific case.

Article 37.- Termination of operation, liquidation, dissolution ofenterprises

The termination of operation, liquidation or dissolution offoreign-invested enterprises or business cooperation contracts shall be effected in thefollowing order:

1. The investment license-granting agencies shall issue decisions toterminate the operation of foreign- invested enterprises or business cooperation contractsin circumstances stipulated in Article 52 of the Foreign Investment Law.

2. Foreign-invested enterprises and business cooperation parties shall have to set upthe Liquidation Board to liquidate the enterprises' property, liquidate the businesscooperation contracts.

3. After completion of the liquidation, the foreign-investedenterprises and business cooperation parties shall report thereon and send the liquidationdossiers to the investment licensing agencies for consideration and issuing decisions todissolve the enterprises or terminate the effect of the business cooperation contract.

Article 38.- Announcement on the operation suspension

Within 15 days from the date the investment license-granting agenciesissue the decisions on operation termination, the foreign-invested enterprises or businesscooperation parties shall have to publish on a central or local newspaper for threeconsecutive issues the termination of operation and liquidation of property of theenterprises, or the liquidation of business cooperation contracts.

Article 39. - Setting up of liquidation boards

1. Within 30 days from the date of expiry of the operation duration orthe date the decision on operation termination before schedule takes effect, the ManagingBoards of joint-venture enterprises or foreign investors (for enterprises with 100%foreign investment capital) or business cooperation parties shall have to set up theLiquidation Boards to liquidate the property of enterprises or liquidate the businesscooperation contracts. The composition of the Liquidation Board shall be decided by theManaging Board of the joint- venture enterprise, the foreign investors or businesscooperation parties.

2. Past the above-mentioned time limit, if the Liquidation Board is notset up-the investment license- granting agency shall issue a decision to set up theLiquidation Board in order to effect the liquidation of the enterprise, the liquidation ofbusiness cooperation contracts. The investment licensing agencies may inviterepresentatives of concerned agencies and organizations or experts, representatives of thelaborers and representatives of creditors to join the Liquidation Board.

3. The decision on setting up the Liquidation Board mentioned inClauses 1 and 2 of this Article must clearly define the composition functions, tasks,powers and operation land of the Liquidation Board and shall be sent to the joint-ventureparties, members of the Managing Board of the joint-venture enterprise, foreign investors,the business cooperation parties.

Article 40.- Powers and tasks of the Liquidation Boards

1. The Liquidation Board is a body assisting the Managing Board of thejoint-venture enterprise, foreign investors, and/or business cooperation parties inliquidating the enterprise, the business cooperation contract. The Liquidation Board mayuse the seal of the enterprise or of the Vietnamese party to the business cooperationcontract in service of the liquidation.

2. In the course of liquidation, the Liquidation Board shall have the rights:

a) To request the General Director, deputy General Directors and chiefaccountant of the enterprise, the representatives of the business cooperation parties, aswell as other organizations and individuals to supply dossiers, documents, vouchers..,relating to the liquidation activities;

b) In case of necessity, to invite Vietnamese of foreign organizationsand/or experts to audit and expertise machinery, equipment and workshops, and determinethe remaining value of the enterprise or the business cooperation contract.

3. The Liquidation Board shall have the tasks:

a) To inform the creditors and concerned organizations in writing ofthe liquidation of the enterprises, the liquidation of business cooperation

contracts;

b) To determine the value of assets under the lawful ownership ofenterprises of the business cooperation contracts;

c) To determine the financial obligations already fulfilled towards theState;

d) To determine amounts to be recovered, to be paid;

e) To draw up liquidation plans for approval by the Managing Boards ofthe joint-venture enterprises, foreign investors or business cooperation parties;

f) To realize the liquidation plans already approved;

g) To make reports on liquidation results and submit them to theManaging Boards of joint-venture enterprises, the foreign investors, or the businesscooperation parties.

Article 41.- Order of priority for settlement of obligations

In the course of liquidation, foreign-invested enterprises or businesscooperation parties shall have to settle the obligations in the following order ofpriority:

1. The expenses related to the liquidation activities.

2. Wages, social insurance expenses, which are still owed by theenterprises or business cooperation parties.

3. Taxes and other financial obligations of the enterprises or businesscooperation parties towards the Vietnamese State;

4. Debts;

5. Other obligations of the enterprises or the business cooperation parties.

Article 42.- Operation duration of the Liquidation Board

1. The operation duration of the Liquidation Board shall not exceed 12 months from thedate of its establishment.

2. Upon the expiry of the operation duration, even if the liquidationis not yet terminated, the Liquidation Board shall terminate its operation, for such case,the joint-venture parties, the foreign investors or the business cooperation parties shallsettle by themselves matters which have not »et been handled. In case of dispute, thesettlement thereof shall comply with the provisions in Article 122 of this Decree.

Article 43.- Mode of liquidation of assets

Assets of foreign-invested enterprises and assets used for theperformance of business cooperation contracts shall be liquidated by mode agreed upon bythe parties.

In cases where the Vietnamese parties contribute capital with the landuse right value, when the operation terminates, the land use right value of the

remaining duration shall belong to the liquidation assets of theenterprises.

Article 44.- Procedures for settlement when enterprises fall intothe state of bankruptcy

In the course of liquidation, if there are enough factors to determinethat enterprises fall into the state of bankruptcy, the Liquidation Boards shall have toreport such to the investment licensing agencies so as to terminate the liquidation andshift to the settlement according to the bankruptcy procedures stipulated in thelegislation on enterprise bankruptcy.