Subject to related-party transactions in Vietnam ?
In case, Mr. A is a member contributing more than 50% of the charter capital, has the right to vote to control the financial and operational policies of Company X, and is also the General Director of Company Y. In 2021, the two companies engaged in transactions of buying and selling goods and providing services with each other. Are those transactions subject to related party transactions within the scope of Decree No. 132/2020/ND-CP dated November 5, 2020 ?
DMS Law office in Danang, Vietnam advise about subject to related-party transactions in Vietnam ?
Related parties:
Transactions of buying, selling, transferring goods and providing services between related parties, except business transactions for goods and services subject to the State's price adjustment scope shall comply with the provisions of the law on prices, are within the scope of this Decree (Clause 2, Article 1 of Decree 132/2020/ND-CP dated November 5, 2020).
Related parties are parties that have a relationship in one of the following cases:
The parties are directly or indirectly jointly managed, controlled, contributed capital or invested by another party (Point b, Clause 1, Article 5 of Decree No. 132/2020/ND-CP dated November 5, 2020).
The related parties in Clause 1 of this Article are specified as follows:
Enterprises are controlled by an individual through the individual's capital contribution to that enterprise or directly participating in the management of the enterprise (Point i, Clause 2, Article 5 of Decree No. 132/2020/ND-CP dated November 05, 2020).
Therefore, in the event that Company X is directly or indirectly controlled through capital contribution or investment of Mr. A (a member contributing more than 50% of the charter capital with voting rights), Company Y is subject to Mr. A's direct management (as General Director); in 2021, the two companies had transactions of buying and selling goods and providing services with each other, those transactions are related party transactions within the scope of Decree No. 132/2020/ND-CP dated November 5, 2020./.
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(Signed)
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