Reserved matters are the decisions a JV partner — usually the minority — refuses to let pass without its own affirmative vote. No article of the Law on Enterprises 59/2020/QH14 bears that name: the list is a creature of the charter and the shareholders agreement, built on top of statutory voting thresholds. The right question is therefore not how many items to list, but which items, if lost, would change the nature of the investment itself.
The three layers of a well-built list
Layer one covers corporate existence and capital structure: charter amendments, charter capital increases or reductions, issuances that dilute a partner, mergers, divisions, dissolution, and sales of assets worth 50% or more of total asset value. This is also the group for which Clause 3, Article 59 of the Law on Enterprises sets a 75% threshold in a multi-member LLC — a partner holding more than 25% already has a statutory veto, but the charter should still list the items expressly to avoid scope disputes.
Layer two is finance: approval of the annual business plan and budget, borrowing or guarantees above a stated money threshold, off-budget investments, and profit distribution decisions. Layer three is people and self-dealing: appointing or removing the General Director and the CFO, changing the auditor, and approving related-party transactions with either partner. In Vietnamese practice the three layers together usually produce 12–20 items — wide enough to protect the investment, narrow enough to let the company run.
When the list is too long: structured deadlock
The classic minority mistake is sweeping daily operations into the list: purchase contracts above a low threshold, mid-level hiring, supplier changes. Two consequences follow. First, every decision climbs to members council level and the company loses reaction speed exactly when the market demands it. Second, and worse, the majority can no longer pass anything without the minority vote, so the JV becomes forced co-management — and a single personal disagreement can freeze the whole company.
The cure is to attach a number and an exit to every item: money thresholds reviewed annually against revenue, and a deadlock ladder in the shareholders agreement — owner-level negotiation, mediation, then a put or call option over the capital stake — triggered when an item fails at two consecutive meetings. Reserved matters without a deadlock ladder are a delaying tool, not a protective one.
Where the list must live: charter or shareholders agreement?
The core of the list belongs in the charter, because the charter is the registered document that binds the company and third parties, and the yardstick by which the business registration authority, a court or an arbitral tribunal decides whether a resolution was validly passed. The shareholders agreement adds the machinery — nomination rights, consent procedures, consequences of breach — but it binds only its signatories; where charter and agreement conflict, corporate resolutions are tested first against the charter and the Law on Enterprises.
In bilingual drafting the biggest risk is terminological drift: the English text saying “approve the annual budget” while the Vietnamese text says only “approve the financial plan” invites a fight over the veto scope. The charter should carry a language-priority clause and a defined-terms table for the whole list, with every money threshold written in figures and words in both languages.
Frequently Asked Questions
1. What do reserved matters in a joint venture usually include?
Four groups are standard: structural changes (charter amendments, capital increases or reductions, dissolution, major asset sales); finance (annual budget, borrowing above a threshold, profit distribution); key people (appointing and removing the General Director and CFO); and related-party transactions plus changes of business lines, branches or subsidiaries. The exact list must be cut to the sector and the equity split of each JV.
2. Can listing too many reserved matters paralyse management?
Yes. If routine operating decisions also need a council vote with a consent requirement, the company loses speed and every disagreement escalates into deadlock. Keep only items that change the nature of the investment, attach annually reviewed money thresholds to the finance group, and always pair the list with a deadlock ladder in the shareholders agreement.
3. What is the minimum veto set a minority partner should keep?
The minimum set is: charter amendments; capital increases that dilute its stake or capital reductions; borrowing and guarantees above the agreed threshold; appointing and removing the General Director; approving related-party transactions of the majority; and profit distribution decisions. These six protect investment value without interfering in daily operations.
4. How should a bilingual Vietnamese-English reserved matters clause be drafted?
Four components: a chapeau stating the mechanism (no listed decision is effective without the affirmative vote of the member nominated by the minority), a two-column Vietnamese-English schedule with locked defined terms, money thresholds in figures and words in both texts, and a language-priority clause. The core goes into the charter; operating detail sits in the shareholders agreement.
This article has been quality-reviewed by the FLAW AI Legal Council