Scenario: a Singapore investor contributes 70% of the capital of a two-member LLC in Binh Duong. The company charter is a three-page template downloaded from the internet. Two years later, the Vietnamese partner (30%) quietly transfers its stake to a third party; the legal representative — appointed by the Vietnamese side — signs a VND 50 billion loan contract the Singapore investor never heard of. When the dispute erupts, the charter contains no protection mechanism for the majority contributor. This article identifies the 10 clauses foreign investors most often omit when drafting a company charter in Vietnam.
Legal basis: the company charter under the 2020 Enterprise Law
The charter is the foundational document governing a company’s organization and operation. Clause 2, Article 24 of the Enterprise Law No. 59/2020/QH14 lists 14 essential contents a charter must cover, from point (a) to point (n): the company’s name and head office; business lines; charter capital; information on members, founding shareholders and capital contributions; rights and obligations of members and shareholders; the management structure; the legal representative; decision-making procedures and principles for resolving internal disputes; remuneration of managers; the right to request redemption of capital contributions; distribution of after-tax profits; dissolution and asset liquidation; and charter amendment procedures.
Law No. 76/2025/QH15 (passed 17 June 2025, effective 1 July 2025) amends several provisions of the 2020 Enterprise Law — adding the beneficial owner concept (Clause 35, Article 4) and adding the “ID card” to personal legal documents — but does not amend Clause 2, Article 24. The charter contents listed above remain fully valid as of the writing date (19 October 2026).
Key point: the charter is filed with the enterprise registration dossier (Article 21 of the Enterprise Law), but the business registration authority does not review its substance — it only checks formal completeness. Every gap in the charter is the investor’s own risk.
The 10 most commonly omitted clauses
1. Number of legal representatives and signing limits. Point (g), Clause 2, Article 24 requires the charter to set the number, titles, powers and duties of legal representatives and how powers are divided when there is more than one (Articles 12 and 13 of the Enterprise Law). The classic mistake: a single legal representative appointed by the Vietnamese partner, with no cap on the value of contracts they may sign. Recommendation: appoint two legal representatives (one per side) and require co-signature for transactions above a threshold. Note Clause 3, Article 13: the company must always have at least one legal representative residing in Vietnam.
2. A suitable management structure. Point (e), Clause 2, Article 24. A multi-member LLC is organized as a Members’ Council; a joint-stock company may choose a model with or without a Board of Supervisors. Foreign investors often accept the default without assessing their real control under each model.
3. Pre-emptive rights on capital transfer. Article 52 of the Enterprise Law requires a member wishing to transfer its stake to first offer it to the remaining members pro rata on the same terms; only if they do not purchase all of it within 30 days of the offer may it be transferred to an outsider on the same terms. The charter should spell out the offer procedure, the valuation method, and may extend the pre-emption period so existing investors have time to arrange financing.
4. The right to request redemption — the exit mechanism. Point (k), Clause 2, Article 24 and Article 51: a member who voted against amending the charter on members’ rights and obligations, or against a company reorganization, may demand in writing within 15 days that the company redeem its stake; the company must redeem within the next 15 days at market price or under the charter’s valuation principles. The charter should also add contractual exit tools such as tag-along and drag-along rights.
5. Supermajority voting for critical matters. Point (h), Clause 2, Article 24. The law sets minimum voting thresholds, but the charter may raise them for critical matters: capital increases or decreases, borrowing above a ceiling, sale of major assets, merger or dissolution. This is the single most important shield for a foreign minority investor against majority decisions.
6. After-tax profit distribution and loss handling. Point (l), Clause 2, Article 24. The charter should state clearly: conditions for distribution (only after tax and financial obligations are settled), the dividend policy, the ratio of retained earnings for reinvestment, and the timing and form of payment. Profit-distribution disputes are among the most common causes of joint-venture breakdowns.
7. Internal dispute resolution and deadlock mechanisms. Point (h), Clause 2, Article 24 requires principles for resolving internal disputes. For a 50-50 structure, the charter should set an escalation path — negotiation, mediation, arbitration or court — plus a deadlock breaker such as a buy-sell (shotgun) clause. The law provides no default deadlock mechanism: without it in the charter, a deadlock simply drags on.
8. Remuneration of managers and Supervisors. Point (i), Clause 2, Article 24. The charter must define who sets the General Director’s and legal representative’s pay, preventing the operator from setting their own salary — a classic conflict of interest in foreign-invested companies.
9. Charter amendment procedures and “entrenched” clauses. Point (n), Clause 2, Article 24. List the provisions that may only be amended with 100% member or shareholder consent (e.g., supermajority thresholds, pre-emptive rights, exit mechanisms). Otherwise the majority side can amend the charter to neutralize the very clauses protecting the minority investor.
10. Charter language and dissolution provisions. In practice FDI charters are bilingual (Vietnamese–English); state which version prevails in case of conflict — the Vietnamese version is recommended, as it is the filed version applied by Vietnamese courts. On dissolution: point (m), Clause 2, Article 24 together with Articles 207 and 208 — the charter should cover dissolution triggers, the liquidation sequence and the payment order; a company may only be dissolved after all debts and asset obligations are settled.
The charter in the registration dossier: the investor bears the responsibility
Under Article 21 of the Enterprise Law, an LLC registration dossier comprises the registration application, the company charter, the member list, and copies of members’ and the legal representative’s legal documents. From 1 July 2025, the dossier also includes the list of the company’s beneficial owners (Clause 8, Article 1 of Law No. 76/2025/QH15).
In practice, registration officers do not read your charter closely — they check formal completeness. A thin charter will still be accepted and licensed, leaving all the risk with the investor. Having the charter reviewed by counsel before signing and filing is the cheapest investment in the entire project.
Pre-signing action checklist
1) Cross-check every point (a)–(n) of Clause 2, Article 24 — leave none blank. 2) Fix the number of legal representatives, co-signature thresholds, and the Vietnam-resident representative. 3) Detail the offer and valuation procedure for capital transfers. 4) Set supermajority thresholds and a deadlock mechanism, especially for 50-50 structures. 5) State the prevailing language and entrench minority-protection clauses against amendment.
Frequently Asked Questions
If the bilingual charter’s English and Vietnamese versions conflict, which prevails?
Whichever the charter’s own language clause designates. If the charter is silent, Vietnamese authorities and courts will in practice apply the Vietnamese version — it is the version filed in the registration dossier. Recommendation: state expressly in the charter that “in case of discrepancy, the Vietnamese version shall prevail”.
Can the charter restrict capital transfers more strictly than Article 52 of the Enterprise Law?
Yes. Article 52 sets a minimum member protection (a 30-day pre-emptive right); the charter may add further conditions — a longer pre-emption period or Members’ Council / General Meeting of Shareholders approval — as long as it does not violate the law or eliminate a member’s lawful right to transfer.
We forgot a deadlock clause and the two 50-50 sides are deadlocked. What now?
The Enterprise Law has no default deadlock breaker. Once deadlocked, the parties can only negotiate or go to arbitration or court — costly and slow, while the company is effectively paralyzed. Fix: amend the charter while the parties still agree, adding a buy-sell mechanism or arbitration clause.
Can the foreign parent impose the group’s charter on its Vietnamese subsidiary?
No. The Vietnamese subsidiary is an independent legal person whose charter must comply with the 2020 Enterprise Law and its guiding documents. Group governance policies may only be referenced in the charter where they do not conflict with Vietnamese law.
