On 12 January 2015, the Government issued the draft Penal Code for public comments (the “2015 Draft“). The 2015 Draft is expected to repeal the current Penal Code, which was issued in 1999 and amended in 2009 (the “Current Penal Code“).

The 2015 Draft brings about significant changes to various aspects of the Current Penal Code, the most notable of which are set forth in the following paragraphs.

1. Amendment to the “Illegally Conducting Business” offence

Article 204 of the 2015 Draft on “Illegally Conducting Business” offence reflects the newly-adopted freedom of business principle under the new Enterprise Law, which was promulgated in November 2014. Accordingly, under the Current Penal Code, those who do not conduct business in accordance with its business registration will be considered as a criminal offence. However, in recognizing the more liberal view of the new Enterprise Law, the 2015 Draft considerably amends the Current Penal Code and provides that, only those (i) conducting forbidden business, or (ii) conducting conditional business but has not satisfied the relevant conditions, will be criminalized under the Code.

2. Enterprises can now be criminalized

While at present, only individuals can be subject to criminal sanctions under the Current Penal Code, the 2015 Draft introduces a fundamental change to the criminal laws of Vietnam, that is, it proposes to criminalize juridical person. That being said, the criminal sanctions applied to juridical persons are not identical to that for individual. In particular, the penalties applied for juridical person are mainly monetary fines, forcible termination of business, and forcible revocation of business license. (Article 34)

3. Certain offenses related to corruption can apply in private sector

In addition, the general threshold of the amount of consideration to constitute a corruption-related offence is increased from VND 2 million to VND 5 million (approx. USD100 to USD250). This change is also included in many other offences.

4. New offences pertaining to insurance and competition

he 2015 Draft presents four new offences in relation to insurance business, health insurance and social insurance. In particular, those who, for instance, use false information when an insurance event occurs may be charged with “Illegally seeking profit in insurance business” offence (Article 221). In addition, those who submit wrongful information to claim for more insurance benefit may be criminalized as “social insurance fraud” or “health insurance fraud” offence (Articles 222 and 223). Notably, employers who fail to fully pay social or health insurance for their employees may be subject to the “Evasion of social insurance, health insurance payment for its employees” offence (Article 224). In addition to the above, a new provision that criminalises competition law infringements, applicable to economic entities only, has been introduced (Article 203). Generally speaking, economic entities who, amongst others, conduct an anti-competition act that either repeatedly or causes serious consequences, will be fined an amount ranging from 10% to 50% of its previous year’s turnover. 

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