VIETNAM Law and Practice Contributed by: Tran Thai Binh and Duong Thi Minh Han, LNT & Partners
member. In the former, there is only one member, while the latter may include at least two but no more than 50 members. The members of an LLC are liable to the company limited to the propor - tion of capital contributed. A joint stock company (JSC) includes at least three founding shareholders and can be listed or unlisted. If listed, the sale of its shares will be governed by the laws on securities. As with an LLC, shareholder liability to the company is proportionate to the number of shares held. 5.3 REITs The concept of a trust does not exist in Vietnam, so there are no real estate investment trusts, or REITs, within the sector. 5.4 Minimum Capital Requirement There is no minimum capital required to set up an entity. However, if the entity is chosen to be the devel - oper of a real estate project under the Law on Investment, it must have equity capital equiva - lent to at least 20% of the total investment capi - tal in the real estate project below 20 hectares, and at least 15% in a project of more than 20 hectares. There must be proof of such capital capacity for the authority to approve the project. 5.5 Applicable Governance Requirements When an entity/individual is investing in a real estate project, the following conditions must be satisfied: • the entity must be duly established as a cor - porate under the laws of Vietnam; • it must have the role of project developer and the name of the real estate must be pub - lished;
• it/they must not be prohibited from conduct - ing real estate business, subject to temporary business suspension, or a termination order by a court judgment, or a competent state authority; • the entity must have equity capital of at least 20% of the total investment capital in the real estate project below 20 hectares, and at least 15% in a project of more than 20 hectares; and • it must have a satisfactory debt-to-equity ratio for credit and/or corporate bonds. 5.6 Annual Entity Maintenance and Accounting Compliance Foreign-invested companies must maintain financial statements and have these audited annually for submission to the tax authorities. The cost may vary depending on the complex - ity of the work required. The companies must also report periodically to the authorities on their investment activities. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time Entities or individuals will be granted the land either in the form of allocation or lease by the state for a specified period, always subject to the purpose of using the land. While the land- use term of a land lease is for a limited period, land allocation may either be for a limited period or for long-term use. The terms are extendable, subject to the discretion of the state. These primary land users may use the land, undertaking construction on it and leasing it out for a limited term under a commercial lease, but may not exceed the term granted by the state.
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