Factors Affecting the Current Legal Status of Business Registration in Vietnam

83 Enterprises named "Binh Minh"

“According to Deputy Minister of Justice Hoang The Lien, the phenomenon of confusing or completely duplicated business names is increasing. Nationwide, there are 8 businesses named “Phuong Dong Company Limited”, 6 businesses named “Phuong Dong Private Enterprise”, 12 businesses named “Binh Minh Company Limited” and 83 businesses with the word Binh Minh in their names that have registered for business… The initial management of the State in business registration work still shows many weaknesses when the General Department of Taxation recently discovered that in Ho Chi Minh City, an individual had established and registered for business up to 6 businesses in Ho Chi Minh City, Dong Nai and Binh Duong. Or a subject who is wanted for the crime of abuse of trust in Hai Duong province has established 01 business in Gia Lai.

Mr. Lien said that the reason for this situation is that the management of business registration is only limited to localities. “These types of operations must be considered at the national level, but with the current organization of business registration agencies, even at the provincial level there is not enough information to ensure the accuracy of registered contents,” Mr. Lien said.

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These problems create disputes and complaints between enterprises and the business registration agency, between enterprises with each other. If they continue to last, the number of disputes will increase, the business environment will be disrupted, causing waste of time and costs for enterprises. According to Mr. Lien, if the State management of business registration does not have enough authority to impact the business, then that activity will only be of an advisory nature"... [41].

(Vietnam Net Newspaper, November 10, 2003, can be downloaded from www.vietnamnet.vn )

The business registration agencies also have many limitations in managing and supervising enterprises and business households. Meanwhile, the inspection and examination of enterprises by some business registration agencies is noted to cause many inconveniences for enterprises and business households. The post-inspection mechanism of the agencies

Business registration is rarely implemented and is often an opportunity for officials to cause trouble for businesses rather than actually inspecting business operations.

The establishment of district-level business registration offices is not in accordance with the requirements of the law. The conditions for establishing district-level business registration offices are not specific, leading to many districts in many places that are qualified to establish a business registration office but still do not establish it, but still assign a specialized department under the People's Committee to establish enterprises. Some places even assign this task to the economic department, while others assign it to the statistics and planning department, leading to the system of business registration agencies at the district level being an inconsistent and incomplete system.

Currently, according to the regulations of the regulatory documents, the business registration system is implemented for each type of enterprise with its own business registration regime. The business registration regime of enterprises is usually implemented at the Business Registration Offices under the Department of Planning and Investment, business registration of business households and cooperatives is implemented at the Business Registration Offices or specialized departments under the People's Committees at the district level. Currently, the provisions of the Law on Cooperatives stipulate that cooperative founders have the right to choose a suitable business registration agency. Therefore, basically, the distinction of the authority of the current business registration agencies is not clear and this will be very difficult to change once cooperatives and cooperative unions are not subject to the Law on Enterprises and the Law on Cooperatives 2003 also clearly stipulates the right to choose of cooperative business registrants (Article 14 of the Law on Cooperatives 2003).

2.1.8. Resolving disputes regarding business registration

Disputes regarding business registration can be divided into two types: disputes between individuals and organizations related to business registration and disputes between individuals and organizations with the Business Registration Authority, business registration officers and civil servants.

Disputes over business registration are mainly secondary disputes, disputes between individuals and organizations involved with business registration officers or business registration agencies. According to current regulations, these disputes will be resolved according to the provisions of the law on complaints, denunciations and procedures for resolving administrative cases. Disputes over business registration in court are relatively few, mainly disputes over administrative decisions and administrative acts of business registration officers and business registration agencies. A typical business dispute is the following case:

Table 2.14. Dispute resolution on business registration

Chua Huong Cable Car and Tourism Services Joint Stock Company (HuPaCo) was established under license No. 289/1998/GP-UB dated March 23, 1998 of the People's Committee of Ha Tay province and was granted a business registration certificate No. 055739 by the Department of Planning and Investment of Ha Tay province. Due to the difficult business situation, the founding conference of HuPaCo Company held a shareholders' meeting and unanimously agreed to allow some members to withdraw capital from the company and elected Mr. Lam as General Director. In this position, Mr. Lam completed the procedures to change the business registration to change the name of the Company to Chua Huong Cable Car Joint Stock Company, represented by himself, which was granted a business registration certificate by the Department of Planning and Investment of Ha Tay province. However, due to complaints from some former members of the Company, on July 15, 2002, the Business Registration Office of the Department of Planning and Investment of Ha Tay province issued Notice No. 483/TB-DKKD on the revocation of the Business Registration Certificate No. 055739 issued to Chua Huong Cable Car Joint Stock Company, of which Mr. Lam is the director. At the same time, the Business Registration Office of the Department of Planning and Investment of Ha Tay province issued Business Registration Certificate No. 0303000076 to Chua Huong Cable Car and Tourism Services Joint Stock Company, of which Mr. Bui Van Suong is the legal representative.

On July 15, 2003, Mr. Ngo Ngoc Lam, General Director of Chua Huong Cable Car Joint Stock Company, filed a lawsuit against the Business Registration Office of the Department of Planning and Investment of Ha Tay province, represented by Mr. Ngo Minh Hoat, requesting the Business Registration Office to cancel Notice No. 483/TB-DKKD regarding the revocation of Business Registration Certificate No. 055739 issued to the Company.

Chua Huong Cable Car Joint Stock Company. At the same time, Mr. Lam also requested to cancel the Business Registration Certificate No. 0303000076 issued to Chua Huong Cable Car and Tourism Services Joint Stock Company.

At the first instance trial of the People's Court of Ha Tay province, the Trial Panel determined that the issuance of Business Registration Certificate No. 0303000076 by the Business Registration Office of the Department of Planning and Investment of Ha Tay province to Chua Huong Cable Car and Tourism Services Joint Stock Company was contrary to the provisions of the Law on Enterprises on documents and procedures for business registration. This was also reaffirmed by the appellate judgment.

However, the Court of First Instance and the Court of Appeal did not accept Mr. Lam's request to cancel Notice No. 483/TB-DKKD regarding the revocation of Business Registration Certificate No. 055739. Therefore, Mr. Lam must re-register his business according to the provisions of law [43].

( Appellate Judgment No. 13/HCPT dated January 18, 2005 of the Court of Appeal - Supreme People's Court in Hanoi )

The above dispute originated from internal conflicts among the members of the Company, especially between the members who withdrew capital from the Company and the remaining members. However, if there had not been illegal intervention by the Business Registration Office of the Department of Planning and Investment of Ha Tay province through the cancellation of the old Business Registration Certificate and the issuance of a new Business Registration Certificate, there would have been no dispute between Mr. Lam and the Business Registration Office of the Department of Planning and Investment of Ha Tay province. The first instance and appeal judgments of the Court were basically in accordance with the provisions of current law on Business Registration. However, the Court did not cancel the Notice of revocation of the Business Registration Certificate on the grounds that the statute of limitations had expired according to the provisions of law on procedures for handling administrative cases, which was legal but unreasonable. The failure to declare the cancellation of the above Notice of revocation of the Business Registration Certificate forced Mr. Lam and the enterprise to re-conduct the Business Registration procedures that should not have been re-conducted.

2.4. Factors affecting the current legal status of business registration in Vietnam

In this section, the author attempts to understand the basic factors that have affected the process of building and implementing the law on business registration in Vietnam today. The factors mentioned in this section are factors that have actually had negative impacts on the building and application of legal regulations on business registration. Therefore, identifying these factors will be meaningful in contributing to providing effective solutions to reduce the above situation.

2.4.1. The political foundation is not really supportive of private enterprises.

It is easy to see that the problems in business partly originate from the shortcomings in thinking and political awareness of the people's right to freedom of business. There have been and are being selfish interests in political desires for the community's interests, the state's interests and personal interests. These characteristics in the political foundation of Vietnam have led to the impossibility or distortion of policies and laws, because policies and laws are often far from the interests and aspirations of the people.

Although there have been commitments to promote stronger reforms from the highest levels, here and there throughout the system there are still many lingering and behaving according to the old mechanism. In order for policies and laws to benefit the people, there needs to be correct awareness and actions from the entire political system regarding the people's right to freedom of business and the interests that need to be prioritized for protection. Only the people have the right to do everything that is not prohibited by law and state power is limited within the framework.

By law, the State and state officials may only do what the law permits.

2.4.2. Underdeveloped and unstable economy

After more than twenty years of renovation, in general, Vietnam's economy is gradually shifting to a market economy, the whole country is still basically underdeveloped, the country has not yet completed the reform process according to the socialist-oriented market economy. Basic markets in the economy such as capital, labor, real estate, science and technology markets have not been established and operated synchronously. The principles of the market economy have not been fully operated, the remnants and inertia of the planned economy are still too heavy [27, pp. 3, 4]. The State has not yet built a development model that keeps up with the integration trend of the economy. The above characteristics of the whole economy have affected the economic sectors, types and fields of operation of enterprises. Important markets of the economy have not been formed, leading to the freedom of business of the people in these fields sometimes being limited. The instability of the macro economy makes people lack confidence in the market, thus limiting investment and business. The market manipulation of some enterprises, agencies and organizations has caused many difficulties for genuine enterprises, people do not dare to invest and do business because there is no market or it is difficult to access the market.

2.4.3. Cultural characteristics that hinder the birth and development of businesses

Looking at the characteristics of the market economy, the differences between traditional culture and the market economy are huge. If traditional culture values community, disregards commerce, and lives a lifestyle

respect for sentiment, often based on acquaintances, social management according to village customs and national laws [45, p. 577]. The market economy is characterized by promoting individualism, valuing commerce, having a lifestyle that complies with the law, and people acting according to economic laws such as the law of price, the law of supply and demand, the law of interest... When the State is determined to build an economy that operates according to the laws of the market, encouraging all people to freely do business and proactively integrate into the international economy, the new economy will certainly have some "collisions" with traditional culture, not to mention the gains and losses for the country's culture, but in the immediate future, the characteristics of traditional culture will be a significant obstacle to the goal of building 200,000 businesses and more than 80 million people with a business mindset.

Although Vietnamese culture is characterized by flexibility and high adaptability to all situations and changes, that only means making the process of accepting the market economy easier, not reducing the difficulties of the process. Especially the process of accepting new things such as types of enterprises or multinational corporations. The habit of behaving arbitrarily, not being used to living and acting according to the law among the people, only being used to doing business in a small, quick production style in the village and local style is still very common. The people still lack confidence in public agencies, some tend to run to ask for their own rights and benefits rather than fighting for everyone to enjoy [37, p. 2].

Meanwhile, state agencies still use the management style of the subsidized economy when managing the market economy without truly trusting the people, without starting from the interests of the people; officials still maintain an authoritarian attitude, issuing policies to the people when performing public duties without forming awareness and a mentality to support people in doing business. The friendly attitude and support for businessmen to do business according to the law is still very sparse in localities.

The economy is still based on arbitrary relationships and law enforcement that lacks rigor and fairness.

In today's Vietnamese society, the conflict between freedom of business, respect for individual freedom, protection of absolute ownership, protection of freedom of contract and the cultural habits of the Vietnamese people is quite fierce. To promote freedom of business and market economy, we cannot only rely on the flexible and dynamic behavior of each citizen, but there must be a change in awareness and thinking to encourage freedom of business expressed in policies, laws and actions of the entire political system and each state official.

2.4.4. The legal system is not consistent and has many shortcomings.

In a market economy, the law will play the role of a tool to support and protect business entities and the State will be an institution to encourage and serve all people in business. However, the legal regulations applied in our country in the past have shown many dark spots and few bright spots. In general, the legal system and economic development policies are both inconsistent and lacking in synchronization; there are too many sub-law regulations, regulations are both redundant and lacking; regulations are often complicated, inconsistent and frequently changing. There is a brief and quite accurate comment on the current legal system of Vietnam through the introduction of six shortcomings of the legal system: " lack of transparency, lack of consistency, lack of synchronization, lack of stability, lack of predictability and lack of feasibility" [37, p. 4].

In addition, the legal regulations on property law, access to capital, resources, and labor are really costly and difficult to access for business development. Administrative procedures still bear the shadow of the subsidy mechanism, heavily relying on application procedures, which are obstacles in establishing businesses. In particular, the post-business registration process is still complicated and costly.

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