VietNamNet Bridge - Fifty billion dong is the sum of legal capital investors must have to be able to establish a real estate firm in accordance with the draft government decree being compiled by the Ministry of Construction (MOC).

 

 

The required minimum capital for businesses developing projects in other fields is VND20 billion.

A lawyer noted that there is only one minimum legal capital level stipulated in the Real Estate Business Law – VND20 billion. And if the government decree sets up many different minimum capital levels, it would place difficulties for business registration agencies in law enforcement.

The current laws also stipulate that investors implementing real estate development projects must ensure that stockholder equity is equal to 15-20 percent of the total investment capital of the projects.

Phan Hai Anh from Vingroup, which is considered the largest Vietnamese real estate group in the country, said only one legal capital level should be set – VND20 billion, to be applied to all real estate firms.

Lawyer Truong Thanh Duc from Basico law firm said the compilers need to reconsider the draft decree because the requirement on the minimum legal capital of VND50 billion is contrary to current laws.

“The 2014 Real Estate Business Law stipulates that the institutions and individuals trading real estate must establish enterprises or cooperatives with legal capital of no less than VND20 billion,” Duc said.

Lawyer Tran Huu Huynh, chair of the Vietnam International Arbitration Center, also said that the government does not have the right to set up new regulations on the issues fixed by the laws.

He pointed out that the minimum legal capital for all kinds of real estate firms must be VND20 billion as stipulated by the laws. 

One of the principles of law enforcement is that new laws are not retroactive. This means that the enterprises established before the time the new law takes effect with the minimum legal capital of VND6 billion will still maintain their operation.

Huynh does not think it is a good idea to give the government the right to set up minimum legal capital levels depending on the country’s socio-economic conditions.

He said that changes will cause uncertainties and confuse investors because they cannot program their business plans.

Another lawyer also noted that this would be unfair treatment to small businesses.

“Large real estate firms may lobby government agencies on the requirements for higher capital in order to prevent small businesses from joining the market,” he explained.

Infonet