On 27 November 2015, the National Assembly adopted the new Penal Code (the “New Penal Code”). The New Penal Code will take effect on 1 July 2016 and repeal the current Penal Code, which was issued in 1999 and amended in 2009 (the “Current Penal Code“).
The New Penal Code 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. ENTERPRISES CAN NOW BE SUBJECT TO CRIMINAL LIABILITY FOR CERTAIN CRIMES
While at present, only individuals are subject to criminal sanctions under the Current Penal Code, the New Penal Code introduced a fundamental change to the criminal laws of Vietnam; commercial legal persons can now be subject to criminal liability for certain crimes. Under the new Civil Code, which will take effect on 1 July 2016, commercial legal persons include enterprises and other organizations with a commercial purpose. That being said, criminal sanctions applied to legal persons are not identical to that applied to individuals. In particular, the penalties applied to legal persons are mainly monetary fines, forcible termination or suspension of business, ban from conducting certain business activities and ban from raising capital, for one to three years. The application of criminal liability for enterprises does not preclude the liability of relevant individuals in corresponding enterprises.
2. REMOVAL OF “ILLEGALLY CONDUCTING BUSINESS” OFFENCE
The controversial offence of “Illegally Conducting Business” is finally removed from the New Penal Code. Unless a business activity violates one of the specific business-related offences of the Penal Code (such as tax evasion, fraud in social insurance, insider trading, etc.), other violations of the law in the business arena will likely lead to administrative sanctions only.
However, for credit institutions and branches of foreign banks, among others, the act of conducting operations or business activities without the approval or necessary licenses from competent authorities will be subject to criminal liability under Art. 206.
3. CERTAIN CORRUPTION-RELATED OFFENCES ALSO APPLY IN PRIVATE SECTOR
The New Penal Code extends the application of certain corruption-related offences to those working in the private sector. These offences are (i) embezzlement, (ii) receiving bribe, (iii) giving bribe, and (iv) bribery brokerage. In regards to giving bribe, the New Penal Code also criminalises the giving of bribe to foreign officials and officials of public international organisations.
The general threshold of the amount of consideration to constitute a bribe remains VND 2 million (approx. USD95).
4. NEW OFFENCES PERTAINING TO INSURANCE AND COMPETITION
The New Penal Code provides a number of new offences, such as, fraud in insurance business, health insurance and social insurance. For instance, those who use false information to refuse paying insurance may be charged with “Fraud in insurance business” (Article 213). In addition, those who submit false information to claim more insurance benefits may be charged with “social insurance fraud” or “health insurance fraud”(Articles 214 and 215). Notably, employers who fail to fully pay social or health insurance for their employees may be charged with “Evasion of social insurance, health insurance and unemployment insurance payment for its employees” (Article 216).
In addition to the ones provided above, a new provision that criminalises anti-competitive agreements, applicable to individuals and commercial legal persons, is introduced (Article 217). The applicable sanctions for this offence are severe. Specifically, possible penalties for individuals include a fine up to VND3bn, 5 years imprisonment plus a monetary fine, and ban from holding positions or practising certain activities up to 5 years. For legal persons, applicable penalties include a fine up to VND5bn, suspension of business up to 2 years plus a monetary fine, and ban from doing certain businesses or raising capital.