Vietnam

Market Overview

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Formal name: The Socialist Republic of Vietnam.

Population: 101.452.341 million (approximately).

Average annual population growth: 0.62 %.

Political capital: Hanoi.

Major cities: Hanoi City, Ho Chi Minh City, Hai Phong City, Da Nang City, Can Tho City, and Hue City .

Official language: Vietnamese (for business purposes English, French, Mandarin, Cantonese and Japanese are also spoken).

Currency: Vietnamese Dong (VND). VND26,377= approx. US$1 as at 1 January 2026.

Per capita income: Approximately US$5,026 in 2025.

Foreign investment: As of the end of 2024, the accumulated foreign direct investment (FDI) capital in Vietnam was estimated at US$322.5 billion, accounting for approximately 64.1% of the total registered capital of US$502.8 billion. In terms of geographical distribution, Ho Chi Minh City, Hanoi City, and Quang Ninh province are among the top localities attracting the largest volumes of FDI.

Foreign invested projects in 2025 by sector: Foreign investors poured capital into eighteen (18) out of twenty-one (21) economic sectors, with processing and manufacturing taking the lead, accounting for nearly 66.9% of total FDI. Real estate ranked second with 16.5%, followed by power production and distribution and wholesale and retail with 7.2%. Notably, wholesale and retail recorded the highest number of new projects (34.7%) and share acquisitions (40.9%), while manufacturing dominated in capital expansion (63.8%).

VIETNAM’S POLITICAL SYSTEM

Vietnam’s political system is based on the principle of unified State power, with a clear division, coordination, and mutual oversight among the legislative, executive, and judicial branches. The 2013 Constitution, the supreme legal instrument, establishes the foundation of the country’s political and institutional framework.

Vietnam is a socialist one-party State under the leadership of the Communist Party of Vietnam, which operates within the Constitution and the law. The Party provides comprehensive leadership over the political system, including strategic direction, legislative orientation, socio-economic development, and national defence and security. The National Assembly is the highest organ of State power, exercising constitutional and legislative authority, deciding on matters of national importance, and overseeing the State apparatus. The President, elected by the National Assembly, serves as Head of State, represents Vietnam domestically and internationally, and acts as Commander-in-Chief of the armed forces. The Government is the highest executive body, accountable to the National Assembly, while the judicial system, comprising the People’s Courts and People’s Procuracies, is responsible for adjudication and supervision of legal compliance.

In 2025, Vietnam is undergoing a comprehensive reform of its political system aimed at streamlining the organisational structure and enhancing the effectiveness and efficiency of State governance. Key reform measures have already been implemented, including the restructuring of the central Government through the merger of six (6) ministries, thereby reducing the total number of ministries and ministerial-level agencies from twenty-two (22) to seventeen (17) ((fourteen (14) ministries and three (3) ministry-level agencies). At the local level, provincial departments and agencies are undergoing similar consolidation to eliminate overlapping functions and mandates. In parallel, an administrative reform is being rolled out nationwide to reduce the number of provinces and municipalities from sixty-three (63) to thirty-four (34) and to restructure the local government model from a three-tier (province – district – commune) to a two-tier (province – commune) system.

VIETNAM’S LEGAL FRAMEWORK

Vietnam is a country of civil law tradition and was strongly influenced by French civil law. The legislative function in Vietnam belongs to the National Assembly, which is the highest State authority in Vietnam and the only body vested with constitutional and legislative powers. Most members of the National Assembly and members of the Government are members of the Party.

The information below summarises the hierarchy and types of legislative instruments in Vietnam, as well as the relevant State bodies empowered to issue them.

Hierarchy Issuing body

Laws/Codes National Assembly

Ordinances Standing Committee of National Assembly

Resolutions National Assembly/Standing Committee

Orders President

Decrees Government

Regulations Government/Prime Minister/Ministries

Directives Government/Prime Minister/Ministries

Circulars Ministries

Decisions Prime Minister/Ministries

Notices Ministries/Government Departments

WTO AND FREE TRADE AGREEMENTS

Vietnam’s relations with the rest of the world have undergone a rapid transformation since 1989, with Vietnam adopting an “open door” policy to foreigners and encouraging the development of political and economic ties with all countries, regardless of their past or present political affiliations.

A major milestone was achieved in 2007 with Vietnam’s accession to the World Trade Organization (WTO). Since then, Vietnam has continued to change and ameliorate its legislation in order to meet international standards and expectations, and to progressively open up its markets to foreign investors.

International treaties have also been used by Vietnam as a crucial tool for bolstering its integration into the global economy, and ultimately have a huge impact on any proposed foreign investment. They include some major regional and international free trade agreements, all of which provide for substantial tariff reductions and the removal of investment barriers. The most important free trade agreements, to which Vietnam is a party, include:

  • the ASEAN Economic Community (AEC), which was formally established on 31 December 2015;
  • the EU-Vietnam Free Trade Agreement (EVFTA), which came into force in Vietnam on 1 August 2020;
  • the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which came into force in Vietnam on 14 January 2019;
  • the Regional Comprehensive Economic Partnership (RCEP), which came into force in Vietnam on 1 January 2022;
  • the ASEAN – Hong Kong Free Trade Agreement (AHKFTA), which came into force in Vietnam on 11 June 2019; and
  • the United Kingdom - Vietnam Free Trade Agreement (UKVFTA), which came into force in Vietnam on 1 May 2021.

CISG (UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS)

On 1 January 2017, the United Nations Convention on Contracts for the International Sale of Goods (also known as Vienna Convention or CISG) entered into force in Vietnam. The CISG provides a uniform set of rules governing cross-border sales of movable goods. There are currently 97 CISG’s contracting States (including the United States of America, People’s Republic of China, Japan, South Korea, Australia, most EU countries and, now, Vietnam), and it is calculated that its provisions govern over two-thirds of international trade in goods worldwide. Vietnam’s ratification of the CISG is undoubtedly contributing to further integrate Vietnam into the global trade system.

FORMS OF DOING BUSINESS

OVERVIEW
According to the WTO Commitments, the Law on Enterprises 2020 (as amended by the Law Amending the Law on Enterprises 2025) (Law on Enterprises) and the Law on Investment 2020, which together constitute the legal backbone regulating foreign investment activities in Vietnam (noting that the Law on Investment 2020 will cease to be effective as from 1 March 2026 and will be replaced by the Law on Investment 2025), the commercial presence of a foreign investor in Vietnam may be established in accordance with the following forms:

  • establishment of an enterprise with foreign owned capital;
  • capital contribution or purchase of shares in a domestic enterprise;
  • establishment of a representative office or branch of a foreign business entity.

In addition, certain foreign investments can be carried out in the form of a public private partnership (PPP) or in the form of a business cooperation contract (BCC).

Depending on the specific business activities which the foreign investor wishes to engage in, the establishment of an enterprise with foreign owned capital is often the most common market entry strategy in Vietnam. Subject to the commercial strategy of a foreign investor, a newly established company can be either (a) in the form of a joint venture enterprise between the investor and a Vietnamese entity/individual or (b) in the form of an enterprise with 100% foreign capital (100% FOE). Please note however that the establishment of a foreign invested company in certain key sectors is either prohibited or subject to specific restrictions.
ESTABLISHMENT OF AN ENTERPRISE WITH 100% FOREIGN CAPITAL
The establishment and operations of enterprises in Vietnam are regulated by the Law on Enterprises and related implementing legislation. According to the Law on Enterprises, enterprises (including 100% FOEs) can be established pursuant to one of the following forms:

  • a limited liability company with one member (LLC1);
  • a limited liability company with two or more members (LLC2); or
  • a joint stock company (JSC).

Other forms of enterprise (such as partnership companies, private companies, etc.) are also available, but they are rarely used by foreign investors for a number of reasons, and are therefore not analysed here.

Depending on the specific circumstances, in the case where a foreign investor wishes to establish an enterprise under its sole management control, a LLC1 is often considered the most suitable and straightforward form. There are however several ownership, management, corporate and governance factors to consider when deciding whether to structure a 100% FOE in the form of an LLC1, LLC2 or JSC.

GOVERNMENT APPROVALS

REGULATORY PROCEDURES
There are two separate and distinct regulatory applications which need to be filed for establishing a 100% FOE, namely:

  • an application for the issuance of an Investment Registration Certificate (an IRC), which, once issued, will authorise the implementation in Vietnam by the investor of an “investment project with foreign capital” in the form of the establishment and ongoing operation of the 100% FOE (the Investment Project); and
  • an application for the issuance of an Enterprise Registration Certificate (an ERC), which, once issued, will evidence the due and proper establishment and existence of the 100% FOE.
  • In addition, once duly established, the 100% FOE could then be able to register one or more branches in other locations in Vietnam.

Of note, the new Law on Investment 2025 (effective on 1 March 2026) permits the establishment of a 100% FOE, as evidenced by the issuance of an ERC, to be carried out prior to obtaining an IRC for the implementation of an investment project in Vietnam. It should also be noted that, while the government approvals listed above are required for every 100% FOE to be established in Vietnam, foreign invested companies may have to obtain additional licences or specific permits for operating in certain specific sectors or for undertaking particular business activities (e.g. telecommunications licences, real estate brokerage certificates, etc.). The relevant licensing requirements, and the conditions and procedures for obtaining them, are usually provided for under the applicable laws, ordinances and decrees regulating the specific investment sector.

It is important to note that this standard procedure does not apply to certain highly regulated sectors, such as insurance and banking, which are governed by separate, specialised licensing frameworks.
CONDITIONAL INVESTMENT SECTORS FOR FOREIGN INVESTORS
As part of its WTO Commitments, starting from 2007, Vietnam has removed most (but not all) of the foreign ownership restrictions previously applicable to many industries and service sectors.

As a general rule, while under the WTO Commitments there are no limitations on market access concerning the commercial presence of foreign investors with respect to certain specific services, it means that a foreign investor from a WTO member country is allowed to establish a 100% FOE or to acquire shares in an existing company in Vietnam.

However, certain key sectors (such as telecommunications, transportation, financial services, press and publishing, etc.) are still restricted to foreign investors, and are subject to full or partial foreign ownership caps (therefore requiring foreign investors to form a joint venture with local companies and to maintain their ownership in a joint venture within the limits permissible under the relevant laws).

In addition, a number of other limitations remain in place with respect to sectors and businesses in which investment is qualified as ‘conditional’. A specific list of 198 industries and trades in which investment is conditional is set out in Appendix 4 to the new Law on Investment 2025. The applicable investment conditions are to be stipulated in applicable laws, ordinances, decrees, and international treaties regulating that particular business sector.
OTHER FORMS OF DOING BUSINESS
Establishing a 100% FOE is not the only form of doing business in Vietnam. Depending on the specific circumstances and on the business activities intended to be carried out, other forms of market entry might be advisable or, in certain cases, required.

INVESTMENT IN A DOMESTIC ENTERPRISE

ACQUISITION OF A VIETNAMESE COMPANY
Foreign investors intending to establish a presence in the Vietnamese market often will do so by acquiring an interest in (or, where permitted under the applicable laws, the entire ownership of) an existing Vietnamese company.

Vietnam law expressly recognises the rights of investors (both domestic and foreign) to purchase from existing:

  • shareholders of JSCs, fully paid-up shares; or
  • members of LLCs, fully contributed charter capital.

When a foreign investor purchases a percentage, but not the totality, of the ownership of the target company, the jointly owned JSC or LLC is often referred to as a “joint venture” between the foreign investor and the Vietnamese partner.

It is common for the shareholders of existing and new entities to enter into contractual arrangements between themselves regulating their respective roles, rights and obligations in relation to the company.

These shareholders’ agreements (together with the company charter) play a crucial role in determining the management structure of the target company and in protecting the interests of the foreign investor (especially when the foreign investor is only a minority shareholder).

In addition, once a foreign investor has acquired or otherwise established a domestic company in Vietnam, purchasing the assets of other Vietnamese companies can also be a useful way for increasing its market presence.
DUE DILIGENCE
Conducting an accurate due diligence exercise over the target company is naturally the first step for any foreign investor considering an investment in a domestic enterprise. Despite some systemic challenges, conducting legal due diligence investigations, to a degree of detail similar to what is customary in more developed jurisdictions, is now commonplace.
M&A APPROVAL AND PROCESS
Domestic target companies are often required to obtain the issuance of an “M&A Approval” from the relevant licensing authority as a condition precedent to an M&A transaction involving a foreign purchaser, subject to the regulatory requirements under the Law on Investment 2020 (as from 1 March 2026, the Law on Investment 2025) in certain cases.

The statutory processing time for an M&A approval is 15 business days, but in practice it may often take longer.

In addition, the changes in the corporate structure connected with an M&A transaction may require the amendment of the enterprise registration certificate and/or investment registration certificate held by the target company or its investors (which are normally completed as a condition subsequent to the M&A transaction).

Finally, depending on the industry in which the target company operates and on the particular business activities being carried out, there might be further sector-specific regulatory approvals that must be obtained. A careful case-by-case analysis of the necessary approvals is therefore of paramount importance.

An alternative option, to be considered when the relevant target company is already held by an offshore entity, is for the foreign investor to purchase the shares of the offshore entity rather than those of the Vietnamese company. In this case the M&A transaction would be consummated entirely offshore. A careful analysis should be conducted in order to determine which deal structure could be more advantageous for the foreign investor.
REPRESENTATIVE OFFICE
It is possible for foreign investors to set up a representative office in Vietnam as an alternative to incorporating or acquiring a Vietnamese company. However, the scope of activities that can be performed by a representative office (RO) on behalf of the foreign entity that it represents is limited to the following:

  • acting as a liaison office;
  • conducting market research; and
  • promoting business investment opportunities for the foreign entity.

The Commercial Law expressly stipulates that a RO is not allowed to conduct business activities for profit-making purposes. Setting up a RO is therefore most suitable for a foreign entity seeking to simply establish a presence in Vietnam to survey and monitor the Vietnamese market and promote its brand name.

Notwithstanding the above limitations, a RO is able to open a local bank account, purchase office equipment and enter into labour contracts with both Vietnamese and foreign employees. Further, the RO is not subject to corporate income tax since it does not generate any income in Vietnam.
PUBLIC PRIVATE PARTNERSHIP (PPP)
The term ‘public-private partnerships’ (PPP) describes a form of investment conducted on the basis of a contract between an authorised State body and an investor and/or project company in order to implement, manage and operate an infrastructure project or to provide public services.

In Vietnam, PPP investments are governed by the Law on Investment in the Form of Public–Private Partnership No. 64/2020/QH14 dated 18 June 2020, as amended by Law No. 57/2024/QH15 dated 29 November 2024 (the PPP Law), together with its implementing Decree No. 243/2025/ND-CP dated 11 September 2025. The PPP Law establishes a unified legal framework for PPP projects and replaces the previous regulatory regime.

Under the PPP Law, PPP projects are limited to sectors involving public investment for infrastructure development and the provision of public products and services, and exclude projects subject to State monopoly or relating to national defence, security, social order and safety.

Investors are generally selected through open tendering, with competitive tendering or direct appointment permitted in specific circumstances prescribed by law. Alternative investor selection methods may be applied subject to the Prime Minister’s approval where necessary to safeguard national interests. These rules apply to both domestic and foreign investors, provided that the relevant sector is open to foreign investment and does not involve national defence, security or State secrets.
BUSINESS CO-OPERATION CONTRACT (BCC)
A business cooperation contract (BCC) is a form of investment in which the parties (being foreign investors and/or domestic investors) enter into an agreement for the purpose of cooperating to operate one or more specific business activities. In a BCC investment, the foreign investor shall operate in accordance with the contract and does not set up a new business entity.
CROSS-BORDER SUPPLY OF SERVICES
Under Vietnam’s WTO Commitments, foreign service providers in most sectors (including architectural services, engineering services, computer services, legal services, accounting services, advertising services, etc.) are allowed to supply their services to customers in Vietnam even without establishing a commercial presence. This mode of supplying services is known as “cross-border supply”, because in this case only the service crosses the national frontiers.

Prior to establishing a legal presence in Vietnam, foreign investors should therefore carefully consider whether such establishment is actually required under Vietnamese law with respect to the business activities they intend to carry out, and whether other options (such as cross-border supply) might be preferable from a commercial perspective.
FOREIGN CONTRACTORS
Under Vietnamese law, a foreign-domiciled company supplying goods or services into Vietnam, or deriving income from Vietnam as a result of contracts or agreements with organisations or individuals in Vietnam, is defined as a “foreign contractor”. Compliance with Vietnamese law is mandatory, in connection with all supplies of goods or services within Vietnam.

Withholding tax (known as foreign contractor’s tax) is payable (generally) on services fees at various rates according to the nature of the activities performed (and is generally withheld by the customer and remitted to the State by the customer before payment to the foreign contractor is remitted out of Vietnam) – but, this is subject to double taxation avoidance treaties and other possible exemptions.

Special rules apply for foreign contractors in the construction industry, according to which the foreign contractor (which can be a general contractor, a main contractor, a partnership contractor or a sub-contractor) may conduct construction activities in Vietnam only after being issued with a construction activities licence (also known as a foreign contractor’s licence) by the State administrative agency for construction.
FRANCHISING
Under Article 284 of the Commercial Law, “franchise” is a commercial activity, whereby the franchisor permits and requests the franchisee to sell and purchase goods or supply services on his/her own, on the condition that:

  • such sale and purchase of goods and/or supply of services must follow the method of business organisation indicated by the franchisor and be associated with the trademark, trade name, business know-how, business mission statements, business logo and advertising of the franchisor; and
  • the franchisor is entitled to control and offer assistance to the franchisee in the conduct of the business.

Franchise activities are governed by the Commercial Law and its implementing legislation, including Decree 35/2006/ND-CP regarding Franchising (Decree 35). The IP Law is relevant as well when the franchisor also transfers to the franchisee the right to use certain industrial property during the franchise period.

Under Article 17 of Decree 35, a foreign service provider intending to enter into a franchising agreement in Vietnam is required to first register with the Ministry of Industry and Trade (MOIT) before undertaking any such franchising activities with a franchisee in Vietnam.

TOP TIPS TO TAKEAWAY “WHAT TO KNOW BEFORE INVESTING”

FINANCIAL ISSUES

TAXATION
Vietnam has numerous kinds of taxes and duties, including (without limitation): (i) corporate income tax (CIT), (ii) personal income tax (PIT), (iii) value-added tax (VAT), (iv) foreign contractor withholding tax (FCT), (v) import-export duties, (vi) special consumption tax, (vii) property tax, (viii) environmental protection tax, (ix) tax on use of agricultural land and (x) tax on use of non-agricultural land.

Projects located in industrial zones (IZ), export-processing zones (EPZ), economic zones (EZ), high-tech zones (HTZ), or concentrated digital technology zones (CDTZ) may enjoy preferential tax treatment. Beginning 1 March 2026, which is the effective date of the Law on Investment 2025, this preferential tax scheme will also expressly apply to projects situated in industrial clusters, hi-tech agricultural zones, free trade zones, and international financial centers.
REPATRIATION OF PROFITS
Vietnamese laws allow a foreign invested enterprise to remit abroad the profits gained from its business activities in Vietnam.

The remittance of the profits may be in cash or in kind, and may be made annually or at the termination of the investment project. If it is in cash, it is allowed to be made in a freely convertible currency at the exchange rate at the commercial bank of the investor’s choice. However, there are some restrictions on the remittance of profits out of Vietnam:

  • first, the foreign investor has to discharge fully its financial obligations to the State of Vietnam prior to the remittance, i.e. subsequent to the discharge of all taxation or other sums due to the State including social insurance, contributions, penalties or other sums; and
  • secondly, the amount of profits shall be determined based on the audited financial statements of the company. Therefore, the company may only remit its profits overseas subsequent to the submission of the audited financial statements and the declaration of finalisation of CIT for the relevant financial year to the tax authorities.

Another important point to note is that a foreign investor is not permitted to remit overseas profits distributed or received from direct investment activities in Vietnam for the year in which such profit arises if the financial statements of the foreign invested enterprise for the year in which the profit arises still includes accumulated losses, after carrying forward losses in accordance with the Law on Corporate Income Tax.

In addition to profits, Vietnamese laws allow the foreign investor to remit abroad the payments received from the provision of technology, services and intellectual property; the principal of, and interest on, foreign loans; invested capital and proceeds from the liquidation of investments; and other sums of money and assets lawfully owned by the investor.
FOREIGN EXCHANGE CONTROLS
As a general principle, all transactions, payments, listings, advertising, quotations, setting prices and recording prices in contracts and agreements and other similar forms within the territory of Vietnam must be carried out in the domestic currency being the Vietnam Dong.

Exceptions to the above rule include, among others, capital contributions for the purpose of foreign investment projects in Vietnam; price quotations in contracts of import and export entrustments, and hotel and tourism services, salary packages and payments to foreign employees; transfers between non-residents.

The law further allows the purchase of foreign currency from licensed credit institutions for certain permitted transactions for specific purposes, such as payments for imports and services abroad, repayment of certain loans and the payment of interest accrued thereon and repatriation of investments from Vietnam.
TRANSFER PRICING RULES
According to current Vietnamese laws, transfer pricing is governed by the regulations relating to business transactions between associated parties (Associated Transactions). If a taxation authority determines that an Associated Transaction was not conducted on an arm’s length basis resulting in the transfer price being less than the fair market price it may determine prices to be used for tax declaration and calculation and impose additional taxes.

Enterprises are responsible for declaring their Associated Transactions at the time of making settlement for CIT. The deadline for making this declaration is also the same time as for CIT finalisation. Under the current regulations, enterprises shall select random transaction(s) to compare with its Associated Transactions for the purposes of determining taxation.
INTELLECTUAL PROPERTY
Protection for IP (including trademarks and inventions) is provided under the Law on IP as well as under various international treaties entered into by Vietnam such as the Paris Convention for the Protection of Industrial Property.

Once they have been registered with the Intellectual Property Office of Vietnam (IP Vietnam), trademarks and inventions will be protected in Vietnam. Contracts for the assignment of industrial property rights (including trademarks and inventions) must be registered with the Provincial-level People’s Committees. Licences of industrial property are not required to be registered to be valid between the parties. However, the license agreements, except for trademark license agreements, shall be registered to be enforceable against third parties.

Inventions may be protected by way of a patent, granted by the IP Vietnam. The term of patent protection is 20 years from the filing date with no extension upon the expiration of protection. Meanwhile, the term of trademark protection is 10 years from the filing date with the possibility to be extended for further periods of 10 years.

The law provides intellectual property right holders whose rights are infringed with a variety of remedies: civil (including termination of infringing acts, public apologies and rectifications, fulfilment of civil obligations as well as compensation for damages caused by infringement), administrative (including confiscation, warnings or fines), criminal (including imprisonment in serious cases) and customs remedies (provisional suspension of customs procedures for imported or exported goods suspected of infringing intellectual property rights).
STATE OWNED ENTERPRISES AND EQUITISATION
Equitisation means the conversion of a State-owned enterprise (SOE) into a joint stock company. It is a form of corporatisation and often leads to what are, known as privatisations in other jurisdictions. The Vietnamese government is planning to intensify its programme of equitisation of SOEs and to accelerate the divestment of State capital from businesses in the next few years, with a view to increasing the efficiency and competitiveness of the Vietnam economy. In order for an equitisation to be implemented, however, the SOE must not fall within the category of enterprises in which it is “necessary for the State to hold 100% of the charter capital”, as determined by the Prime Minister from time to time.
STOCK MARKET
The Vietnam Exchange, a limited liability company wholly owned by the State, has two (2) subsidiaries, which are the two (2) leading stock exchanges: the Ho Chi Minh City Stock Exchange (HOSE) and the Hanoi Stock Exchange (HSX). Foreigners are allowed to invest in both the HOSE and the HSX, although several restrictions apply in certain sectors with respect to foreign shareholdings.

The State Securities Commission is the government body under the Ministry of Finance with the responsibility to administer and supervise the operation of the stock exchanges, securities trading centres, security depository centres, and other subsidiary institutions, and to issue, extend and withdraw licences and certificates relating to securities activities and the securities market.
COMPETITION
Vietnamese Law on Competition (LOC) applies to every organisation and individual conducting business in Vietnam, including enterprises engaged in production or supply of public utility products or services, enterprises conducting business in sectors subject to State and overseas enterprises operating in Vietnam, industry and professional associations operating in Vietnam and relevant domestic and foreign agencies, organisations, and individuals. The LOC covers two (2) main aspects: competition restraint practices and unfair competition practices. Competition restraint practices include (i) anti-competitive agreements; (ii) abuse of dominant market position/monopoly position; and (iii) economic concentrations activities

COURT SYSTEM AND JUDICIAL RECOURSE

COURT SYSTEM
Vietnamese law provides for a court system, which comprises:

  • Supreme People’s Court;
  • Provincial People’s Courts;
  • Regional People’s Courts.

In addition, there will be the Specialised Court of the International Financial Centre (IFC), which will be located in Ho Chi Minh City and hears disputes related to the IFC as provided in the relevant laws.

The Vietnamese court system is based on a two-tier system to guarantee that the rulings of a lower court can be appealed to a higher court. The higher court then may either uphold or reverse the ruling from the lower court. Usually cases are initially brought to the regional court level, and may then be appealed to the higher court level.

With the reformation of the court system, most disputes shall be heard by regional court at first instance. The recognition and enforcement of foreign judgments and foreign arbitral awards shall fall within the jurisdiction of regional court, except for cases which fall within the jurisdiction of the Specialised Court.
ARBITRATION
Arbitration as a method of dispute settlement in the commercial sector is becoming increasingly common in Vietnam. Both domestic and foreign arbitration are recognised in Vietnam. As a general rule, however, a foreign arbitral award is only capable of being enforced in Vietnam following the recognition and issuance of an enforcement order by a Vietnamese Court.

For arbitration to take place there must be a clause in a contract or a separate arbitration agreement in which the parties agree to resolve a certain dispute through arbitration. The arbitration agreement must be in writing and entered into by the parties prior to, or after, the dispute occurs.
RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS
Vietnam is a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), and therefore the recognition and enforcement of foreign arbitral awards in Vietnam shall happen in conformity with the rules of the New York Convention. Accordingly, a foreign arbitral award, which is recognised and enforced by a Vietnamese Court, has the same legal effect as a legally valid decision made by a Vietnamese Court.

The Civil Procedures Code provides the regulations on the recognition and enforcement of foreign arbitral awards.

First and foremost, the Civil Procedures Code clarifies that the party opposing the recognition and enforcement of a foreign arbitral award has an obligation to prove the grounds for refusal. This is a key principle, because it means that the burden of proof for obtaining the recognition does not lie on the petitioner. Petitioners only need to submit the originals or certified true copies of the foreign arbitrator’s award and of the relevant arbitration agreements.

Secondly, the Civil Procedures Code provides for additional clarifications with respect to the suspension of examination of the petition. In particular, during the suspension period, the judges are responsible for supervising and speeding up the elimination of all suspension causes and, when the suspension causes no longer exist, the judges shall issue a decision to continue the examination proceeding.

Finally, the decision to recognise or refuse to recognize the arbitral award can be appealed. The appeal panel is entitled to revise or cancel the decision of the first-instance court.

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Hogan Lovells berät Kommunalkredit Austria bei einer AkquisitionsBrückenfinanzierung für ein Photovoltaik-Portfolio von PARQ energy

23. Oktober 2025 – Unter Leitung von Partnerin Dr. Carla Luh und Associate Tobias Ulbrich hat die globale Wirtschaftskanzlei Hogan Lovells die Kommunalkredit Austria AG bei einer AkquisitionsBrückenfinanzierung für ein Portfolio von Photovoltaik-Projekten der PARQ energy GmbH beraten. Die Finanzierung ermöglicht den Erwerb eines Photovoltaik-Portfolios mit einer Gesamtleistung von ca. 80 MWp, das sich über ganz Deutschland erstreckt. Die Transaktion ist ein weiteres erfolgreiches Projekt von Kommunalkredit und PARQ energy, das von Hogan Lovells begleitet wurde. Hogan Lovells hat die langjährige Mandantin Kommunalkredit Austria umfassend bei der Strukturierung und Durchführung der Finanzierung in allen rechtlichen Aspekten beraten. Carla Luh und ihr Team betreuen regelmäßig die größten Projekte im Infrastruktur- und (Erneuerbare)- Energie(n)-Sektor und zählen zu den führenden Beratern in diesem Bereich. Hogan Lovells Team für Kommunalkredit Austria AG Dr. Carla Luh (Partner) Tobias Ulbrich (Associate) Edris Zewari (Associate) Stipe Bojanic (Counsel)
Hogan Lovells Cadwalader - October 24 2025

Balancing Risks and Responsibilities in Providing Medical Services

Global Vietnam Lawyers would like to introduce our valued readers to an article by Mr. Do Duc Anh titled “Balancing Risks and Responsibilities in Providing Medical Services” published in The Saigon Times, No.42-2025 (1.818) on October 16, 2025. *** In an era where the “win-win” approach to business cooperation is widely embraced, some enterprises still opt for a self-serving path—securing benefits for themselves while shifting risks onto others. A common method of risk shifting involves one party drafting an agreement and persuading the other to sign it. Once signed, the latter often bears the brunt of any potential disputes. For example, in the field of medical service provision, many patients report being asked to sign documents before undergoing surgery, stating they must accept full responsibility for any risks and waive the right to sue the doctor or medical facility. In some cases, patients are presented with pre-written medical service agreements containing complex clauses, which—according to their understanding—seem to favor the healthcare provider. Key points to know about medical service agreements Under the 2023 Law on Medical Examination and Treatment, there is no legal requirement for patients to sign a medical service agreement. Any such agreement may be made on the voluntary basis and governed by the provisions of the 2015 Civil Code. Here are some important considerations for patients in case they need to make a decision. What if a patient does not agree to sign a medical service agreement? This is a matter that healthcare providers should clearly communicate to their customers. Specifically: Will the medical facility refuse to provide the service if no contract is signed? Or, in the absence of a signed contract, will both parties proceed with the treatment based on the posted service fees and the provisions of the Law on Medical Examination and Treatment and its guiding regulations? If time and health conditions permit, patients are encouraged to ask the medical facility for clarification on these points. Are there any regulations releasing healthcare practitioners from professional liability? Yes, there are. Medical practitioners are protected by law and will not held liable for adverse medical events if they have followed all legal and professional regulations[i]. Is it legally required that a patient must sign a waiver accepting full responsibility before surgery? No. Vietnamese law does not require patients to do so to accept surgical risks in order to undergo surgery. However, informed consent is required for invasive procedures, as stipulated in Article 65 of the 2023 Law on Medical Examination and Treatment. The Ministry of Health’s Circular 32/2023/TT-BYT provides a form titled “Consent Form for Surgery, Procedures, and Anesthesia”, which includes two clear options for patients to choose and write down: (i). Agree to undergo surgery, procedures, and anesthesia, and use this form as evidence. (ii). Decline surgery, procedures, and anesthesia, and use this form as evidence. This form requires signatures from three parties: the surgeon, the anesthesiologist, and the patient. Importantly, the form does not contain any clause requiring the patient to accept personal liability for health damages, nor does it require a commitment not to file complaints or lawsuits.[ii] If a patient signs the written commitment to accept full responsibility and waive the right to file lawsuits, is this commitment form valid? To determine whether the commitment holds legal weight, we must clarify if the patient has signed this document of his/her own free will? Did the patient have an opportunity to negotiate or discuss the terms with the medical facility beforehand? What was the patient’s physical and mental conditions during the signing process? And many other factors. However, there are certain legal provisions to note: a written commitment (essentially a civil transaction) may be deemed invalid if it does not meet the requirement of being “made voluntarily” or if the person making the commitment lacks awareness or control over their actions at the time of signing.[iii] What happens if a patient refuses to sign the commitment form? This is a point that healthcare facilities should clearly explain to patients. Also, patients have the right to request clarification on the following points: (i). Can the medical facility add extra content to the commitment form beyond what is prescribed in official templates? (ii). According to the law, which commitments are mandatory for patients? (iii). Which commitments are optional for patients? A transparent, two-way discussion helps both parties understand each other better, streamlining paperwork and allowing the treatment process to begin promptly. When a patient arrives at the hospital with a willingness to fulfill their legal obligations—such as respecting hospital rules, complying with procedures, and covering treatment costs[iv]—then both the medical facility and the patient should prioritize what truly matters: delivering and receiving quality healthcare. In closing It’s difficult to guarantee that full consensus will be reached in every case. When that happens, patients themselves should assess their health conditions before making decisions. If they have read the “Consent Form for Surgery, Procedures, and Anesthesia” issued under Circular 32/2023/TT-BYT by the Ministry of Health, they can use that as a reference—clearly stating which parts they agree to when signing. From a broader perspective, state management agencies should conduct regular audits to ensure that healthcare facilities apply commitment forms and agreements in a consistent and standardized manner. It is crucial that no unauthorized content is added that could disrupt the balance between a patient’s right to receive medical care and a provider’s right to legal protection. [i] Article 42.1 The 2023 Law on Medical Examination and Treatment [ii] https://thuvienphapluat.vn/phap-luat/ho-tro-phap-luat/mau-giay-cam-ket-chap-thuan-phau-thuat-thu-thuat-va-gay-me-hoi-suc-01bv2-theo-thong-tu-322023ttbyt-136369.html [iii] Articles 117, 122, 128 The 2025 Civil Code [iv] Article 17 The 2023 Law on Medical Examination and Treatment
- October 20 2025

LAW ON PROTECTION OF AUTHOR RIGHTS IN WORKS GENERATED BY ARTIFICIAL INTELLIGENCE (AI)

Global Vietnam Lawyers would like to introduce our valued readers to an article by Mr. Le Quang Vy titled “Law on protection of author rights in works generated by Artificial Intelligence (AI)”. This article was originally published in The Saigon Times, issue No.37-2025 (1.813) on September 11, 2025. *** Amid the stormy development of Artificial Intelligence (AI) in this modern material world, the intellectual property laws in countries around the world in general and Vietnam in particular are facing regulatory gaps. These gaps pose a multitude of challenges for lawmakers in protecting intellectual property rights. Unlike rights in rem (the owner's rights over their tangible property) or rights in personam (the creditor's rights over the debtor), intellectual property rights concern intangible assets — specifically, the author rights over inventions and innovations. The value of intangible assets lies in what is derived from human creative activity. Can a work generated by AI be protected by law in terms of its author rights? If so, who would be the rightful holder of such rights? Vietnam is developing a National Strategy for Development and Application of Artificial Intelligence with vision to 2030, as outlined in Decision No. 2259/QĐ-BTTTT dated December 7, 2022 by the Ministry of Information and Communications. This strategy aims to develop AI for use in various sectors, including healthcare, education, finance, agriculture and etc. Therefore, establishing a legal framework to govern AI-generated works is now one of the most urgent issues. Current laws Vietnam’s Intellectual Property Law (IP Law) of 2005 has undergone three amendments (in 2009, 2019, and 2022). However, it still does not contain any provisions addressing AI or AI-generated works.  Under the current IP Law, a protectable work must be created by a human author in a direct manner, and its author rights come into existence at the moment the work is created and comes to exist in a determined material form. Regarding the holder of author rights, the law stipulates that only the author (a person), co-authors (several persons), or the organization (be it a legal person or non-legal person) that gives assignments to or enters into contracts with an author may be recognized as the holder of author rights. Even international treaties such as the Berne Convention only protect works created by human authors. Similarly, the TRIPS Agreement contains no provisions related to AI-generated works. In the United Kingdom, the law does provide protection for computer-generated works. However, the author behind such works must be a human, i.e. the person who writes the program. That being said, authors of computer-generated works are not entitled to certain author rights, such as the right to be identified as the author when the work is copied or disseminated, or the right to protect the integrity of the work. Computer-generated works are protected for only 50 years from the date of creation, rather than the lifetime of the author plus 70 years from his/her death as is the case with traditional artistic works. Thus, the UK law partially recognizes works generated by machines under humans’ command, but such works do not give rise to the full spectrum of author rights afforded to the works created directly by human authors.  The U.S. law only protects the works created by humans; works independently generated by AI are not eligible for legal protection. Specifically, the Court of the District of Columbia has ruled in the case of Thaler v. Perlmutter that a work created by AI without human creativity does not give rise to any author right. This decision aligns with the guidance issued by the U.S. Copyright Office regarding author right registration, which states that a work must be the result of direct human authorship in order to be protected. Accordingly, both Vietnamese laws and the prevailing international practice continue to affirm that creativity must involve a human element. Identifying legal issues The first question is: Can AI be considered as an author? Under the current IP Law, it can be definitively stated that AI is not a human being and therefore cannot be recognized as the author of a creative work, nor can it be the holder of author rights. The second issue concerning AI-generated works is the need to clearly define the roles of the individuals involved — such as the programmer, the system administrator, and the prompt engineer. Among these individuals, who should be considered as the author? The third issue concerns originality. AI-generated works are typically derived from pre-existing datasets. Therefore, can such works be regarded as creative works by themselves? Can they be considered as original works? Finally, with respect to legal liability, if an AI-generated work contains offending contents or AI unlawfully uses copyrighted data, who will be held liable? Currently, in the United States, there is a "high-profile" lawsuit between The New York Times and Open AI & Microsoft. Accordingly, The New York Times alleges that Open AI & Microsoft used millions of copyrighted articles from The New York Times to train GPT without permission nor paying, and that there are contents coming out almost verbatim from the original articles, even cases of patchwork resulting in falsified information. In a rebuttal to The New York Times, Open AI & Microsoft pretends that the data used by Open AI & Microsoft are publicly available, meaning that the data are neither intercepted, nor require logging in or paying. The contents in question are not copied but have been transformed, meaning that the data has been synthetized into a new work, not reprinted or copied. In addition, Open AI & Microsoft also claims that they are entitled to the fair-use exception under US copyright law. Similar to US law, Article 25 of the Vietnamese IP Law stipulates exceptions that are not considered as copyright infringements, such as fair use of a work for scientific research, teaching, commenting, writing, illustration in one's own work, etc. However, fair use must not negatively affect the original work. Reverting to the above lawsuit, although the verdict is yet to be pronounced, it can be considered as a typical AI lawsuit whose verdict will be valuable experience in shaping the legal framework on copyright for works created by AI. Amending the IP Law to keep up with the development of AI In the AI ​​era, the law needs to clarify the concepts of "author" and "rights holder". Should AI be recognized as a creative subject? If not, who will be recognized as the author of the work created by AI? the programmer? the administrator or the prompt engineer? Or is it necessary to establish a “co-authorship” mechanism for AI works? If, in case of the author right, the law provides for the interaction and sharing of benefits between the author right and related rights (performers; record producers; broadcasting organizations) for audio and video recordings, then for AI-created works, should the law also stipulate a regime of sharing rights between subjects participating in the process of creating AI works such as data providers, programmers, managers, especially in consideration of the The New York Times versus Open AL & Microsoft lawsuit. The law needs to clearly set up a mechanism for protecting input data used to train AI models such as: in which cases using copyrighted data for training is an offense and which cases would be considered as reasonable exceptions (fair use). In addition, the law needs to establish a mechanism for tracing the origin of content, specifically the obligation of the organization providing the AI ​​platform to keep track of input data and generated contents; provide information to competent authorities when there is a dispute. Develop a separate registration mechanism for artificial intelligence works such as allowing registration to establish rights to AI-created works on the basis of honest and public disclosure of human contributions. And last but not the least, a legal liability mechanism should be created for a clear definition of the responsibilities of the owner, the programmer and the exploiter and operator of the AL system. In short, Vietnam still does not have clear legal provisions related to intellectual property rights for AI. Legal issues related to AI-created works must be based on the current protection framework (author right, patent, trademark). However, in the context of AI being a core technology, building a legal framework on IP for AI is extremely urgent in the coming time. It is time to (i) Have a legal definition of "AI-created works"; (ii) Expand the mechanism on author right holders; (iii) Establish a legal liability mechanism between parties involved in the process of programming - operating management - exploiting AI systems.
- September 19 2025
Corporate Governance, Corporate Law, Compliance

VIETNAM ENHANCING TRANSPARENCY OF BENEFICIAL OWNERSHIP: FROM LEGISLATION TO IMPLEMENTATION

Ms. Tran Minh Nguyet & Ms. Le Thi Ngan Global Vietnam Lawyers Global Vietnam Lawyers would like to introduce our valued readers to an article by Ms. Tran Minh Nguyet and Ms. Le Thi Ngan titled “Vietnam enhancing transparency of beneficial ownership: From legislation to implementation”. This article was originally published in The Saigon Times, issue No.31-2025 (1.807) on July 31, 2025 and is shared here with permission from the publisher. On July 1st 2025, the Law on amending and supplementing a number of articles of the Enterprise Law dated June 17th 2025 ("Enterprise Law 2025") and Decree No. 168/2025/ND-CP dated June 30th 2025 on enterprise registration ("Decree 168") entered into forced, making the first time that the concept of “beneficial owners” (BOs) has been regulated in Vietnam’s enterprise legislation. This represents a significant advancement in promoting transparency of business operations, particularly regarding individuals who actually control and benefit from the enterprise. This move not only demonstrates Vietnam's commitment to implementing Financial Action Task Force (“FATF”)’s recommendations regarding anti-money laundering (including the requirement for disclosure of the information of BOs of legal entities), but also serves as a crucial key in facilitating Vietnam’s removal from the Increased Monitoring List (or Grey List) and protect the country against the potential of being placed on the FATF List of High-Risk Jurisdictions subject to a Call for Action (Black List) . Why are BOs important to Vietnam? The inclusion of Vietnam on the Grey List could lead to a serious repercussion for the economy, especially impacting the private sector and other sectors attracting foreign investment. International investors tend to be cautious or withdraw from monitored markets, leading to a significant decline in FDI inflows. Not to mention that individuals and entities in the Grey List countries will also be subject to stricter scrutiny by the global banking system. The consequences could be even more severe if Vietnam is placed on the Black List, e.g. Vietnamese financial institutions could be barred from establishing their branches or representative offices abroad. The regulation of BOs in the enterprise law is anticipated to faciliate Vietnam’s timely exit from the FATF Grey List. So, how to identify a BO and what should enterprises do when the regulations on BOs officially come into effect? Identifying the beneficial owner of a legal entity The concept of BOs, although newly introduced in the Enterprise Law 2025, has been utilized for an extend period in the field of anti-money laundering. Specifically, this concept has already appeared in the Anti-Money Laundering Law 2012 and remains relevant to be used in the Anti-Money Laundering Law 2022. The purpose is to assist financial institutions in verifying the identity of institutional customers. The concept of BOs in the Enterprise Law 2025 is well aligned with the provisions outlined in the Anti-Money Laundering Law 2022. The characteristics/identification criteria of BOs and how they are categorized under the enterprise law are presented in the following diagram:     The diagram above indicates that: Firstly, a BO must be an individual. This is consistent with the FATF Recommendation 24 and established international practices, which aims to clearly identify the actual controller of an enterprise. If a “legal entity” qualifies as a BO, the disclosure mechanism fails to effectively trace to the ultimate individual controlling the enterprise, and therefore impairing the system of monitoring, preventing and combating money laundering, tax evasion or terrorist financing. Secondly, in respect of criteria for identification of a BO: An individual qualifies as a BO when he/she meets either: criterion (1) Have actual ownership of the enterprise's capital; OR criterion (2) Have control over that enterprise. Regarding criterion (1), as described in the diagram, capital ownership can be established through the form of "direct ownership" - i.e. individuals who are listed as members or shareholders of an enterprise and own the Prescribed Ratio in that enterprise, OR through the form of "indirect ownership" - i.e. individuals who own capital at the Prescribed Ratio in an enterprise THROUGH ANOTHER ENTITY. Concerning the "Prescribed Ratio" - from 25% of the charter capital or total voting shares, this is a threshold widely applied in many countries globally. According to a survey, 39 out of 63 countries (including 55 United Nations members and ASEAN countries) currently apply this ratio. Several countries implement a lower threshold, such as Colombia, the Philippines and Myanmar choosing a level as low as 5% to enhance control over BOs. In Vietnam, the Prescribed Ratio has actually been recognized since 2019 under Decree 87/2019 on anti-money laundering, and it remains in effect as outlined in Decree 19/2023, which elaborates on a number of articles of the Anti-Money Laundering Law 2022. Regarding the form of “indirect ownership” through another entity, the entity serves as a member/shareholder of the enterprise, while the individual is a member/or shareholder of that entity. For criterion (2), as the diagram indicates, an individual is deemed to have control over an enterprise if they possess the ability to vote for or against at least one of the Material Matters of the enterprise, even if their status is limited to that of a member or shareholder with a capital contribution or shares lower than the Prescribed Ratio. Control over an enterprise often arises from provisions in “shareholders’ agreements” or “members’ agreements”, in which a certain member or shareholder holds only a minority capital ratio yet retain the ability to influence decisions on the Material Matters of the enterprise, due to the binding terms of such agreements. Categorizing BOs and illustrative scenarios: understanding for accurate declaration compliance Individuals who “directly own” the Prescribed Ratio according to criterion (1), or who have control over an enterprise according to criterion (2), are categorized as Direct BOs. Meanwhile individuals who “indirectly own” the Prescribed Ratio according to criterion (1) are categorized as Indirect BOs. This way of categorization facilitates enterprises to fulfill the obligations for declaring and providing information of BOs to the provincial business registration agency, as presented below. To make it easier to understand, let's analyze the following scenarios: The following 03 scenarios will be analyzed in relation to BOs of joint stock companies ("JSC") and limited liability companies ("LLC"). In each scenario, you can visualize how to identify the actual BO and then refer to the corresponding declaration obligations stipulated by law: No. Company Shareholder/Member BO Grounds for identification Direct BOs Indirect BOs   1.        JSC 1   03 shareholders:   Individual A1: 20% Individual B1: 25% Company C1: 55%   C1 is a one-member LLC owned by Individual X1   B1 X1   B1 is a Direct BO because he is an individual/shareholder who owns 25% of the charter capital/total voting shares (Prescribed Ratio) of JSC 1.     C1 is not a BO because C1 is not an individual. So we must identify the individual owning C1, in this case X1.   X1 is an Indirect BO because X1 through C1 indirectly owns 55% (100 x 55%) of the charter capital/total voting shares of JSC 1 – meeting the Prescribed Ratio.   2.        JSC 2 03 shareholders:   Individual A2: 20% Individual B2: 25% Company C2: 55%   A2 has a shareholders’ agreement with B2 and C2, stipulating that any amendment/supplement to the charter or the reorganization/dissolution of JSC 2 can only be approved by the shareholders representing at least 65% of the total votes of all shareholders attending the meeting AND WITH A VOTE OF APPROVAL FROM A2.   C2 is a LLC with 02 members, including X2 and Y2, with the capital ownership ratio being 80% and 20% respectively.   A2 B2 X2  B2 is a Direct BO, similar to the explanation for B1.     A2 is a Direct BO because A2 is an individual/shareholder who can exercise control over a number of Material Matters of JSC 2 (including amendment/supplement to the charter)     X2 is an Indirect BO, similar to the explanation for X1. Accordingly, X2 through C2 holds 44% (80x55%) of the charter capital/total voting shares of JSC 2 – meeting the Prescribed Ratio.   3.        LLC 1 The one-member LLC is owned by Company C3. (C3 is a one-member LLC owned by Individual X3) None X3  C3 is the sole owner of LLC 1, but is not a BO because C3 is not an individual.    X3 is an Indirect BO, similar to the explanation for X1. X3 through C3 holds 100% of the charter capital/total voting shares of LLC 1 - meeting the Prescribed Ratio.   So, what should enterprises do next? Basically, depending on the form of the BO, the enterprise will have corresponding obligations. Specifically: Subjects performing obligations Obligations regarding BO information Direct BO Indirect BO LLC    Declare and notify the INFORMATION ABOUT Direct BO to the provincial business registration authority.   Declaration time: At the time of establishment of the enterprise and when there is a change in BO information or declared ownership ratio.    Keep the List of declared beneficial owners of the enterprise, notify the provincial business registration authority in the form of paper documents or electronic documents.     Partnership     JSC     Declare and notify the INFORMATION TO DETERMINE Indirect BO   Declaration time: At the time of establishment of the enterprise and when there is a change in the declared information     Keep the List of declared beneficial owners of the enterprise, notify the provincial business registration Authority in the form of paper documents or electronic documents.   Note: For enterprises established before July 1, 2025, the addition of information on the enterprise's BO (if any), information to determine the enterprise's BO (if any) is carried out[1]:     at the same time as the enterprise carries out the procedure for registering changes to the enterprise registration content, notifying the most recent change to the enterprise registration content, or     at an earlier time as requested by the enterprise.   As stated in the table above, JSCs have an additional obligation to declare “information to determine” Indirect BO instead of directly declaring the identities of these individuals. This represents a distinctive aspect of the Vietnamese legal system in contrast to international practices, as illustrated by the following two points: First, rather than mandating that enterprises identify and disclose the identities of Indirect BO themselves, the existing enterprise legislation only requires enterprises (specifically only requiring JSCs) to declare “information related” to Indirect BO to assist authority in identifying these individuals. This related information pertains to be “organizational shareholders” of a JSC, specifically when such shareholders possess a captial stake that reaches the Prescribed Ratio threshold in that JSC. The process of gathering information regarding “organizational shareholders” of a JSC serve as a foundational data source, assisting the authorities gradually clarify the identity of the individuals behind - the Indirect BO of the JSC. Second, the obligation to declare information to determine the Indirect BO is applicable sole to JSCs, excluding LLCs or partnerships. This issue may stem from the current enterprise registration data system’s lack of a mechanism to store complete information regarding all shareholders of a JSC - except for founding shareholders and shareholders who are foreign investors . Meanwhile, the system has effectively managed information on members of LLCs and general partners of partnerships, including information at the time of establishment and changes throughout the operation process . All information about shareholders of a JSC, on the other hand, is exclusively recorded in the shareholder register, which is a record maintained and preserved by the JSC itself , from its establishment until each change. This information will remain unchanged at the business registration agency (except for information about founding shareholders and shareholders who are foreign investors). The reduction in the scope of subjects and types of information required for declaration related to Indirect BO at this initial phrase represents a reasonable adjustment by the legislator, aiming to balance the demands of transparency and the ability to implement in practice of the enterprise. Thus, based on the above provisions, JSC 1, JSC 2 and LLC 1 in the illustrative situations will have to fulfill the following declaration obligations: Enterprise Direct BO Indirect BO JSC 1 Declare and notify information about B1   Declare and notify information about C1, including organization name, enterprise code/establishment decision number, date of issue, place of issue, head office address, ownership ratio of total voting shares in JSC 1   JSC 2 Declare and notify information about A2 and B2   Declare and notify information about C2 similarly to JSC 1   LLC 1   Challenges arising from Nominee Arrangements: A Loophole in BO Transparency? Despite advancement in the law, the concept of “nominee arrangements” – a type of “disguised” investment – remains to pose significant challenges in identifying the actual BO. Accordingly, a domestic individual or organization may act on behalf of a foreign investor to establish an enterprise and be recorded as a shareholder or capital contributor, while all actual control, benefits and decision-making rights are retained by the foreign investor. Consequently, even when enterprises declare members and shareholders of companies to identify the actual BO, the concealed investors may still exist without being disclosed and there is currently no effective mechanism to detect or control such arrangements. This issue reflects complexities within the market, especially those involving property ownership and intricate investment structures that currently fall outside the direct purview of enterprise laws. Therefore, in the immediate future, the enterprise laws only require declaration of basic information, aiming to ensure initial compliance to international commitments. Conclusion and prospects The official incorporation of the concept of BOs and obligation to declare BOs into Vietnam’s enterprise legal framework marks a significant milestone in enhancing transparency in corporate ownership, corporate governance, and anti-money laundering efforts. To ensure full compliance with new regulations and mitigate potential legal risks, enterprises should proactively review their organizational structure, clearly identify their BOs, and promptly update information with the business registration authority. Such declarations serve as a foundation for the authority to progressively establish a more comprehensive and coordinated monitoring data system in the near future, contributing to the enhancement of Vietnam's investment environment reputation on the international arena.
- August 12 2025