Internal Corporate Restructuring

Internal corporate restructuring: who is it for?

• Groups and corporations with multiple legal entities in Vietnam wanting to consolidate into one or a few entities to reduce administration, accounting, audit and compliance costs.
• Enterprises with multiple business lines wanting to spin one line off into a separate entity — to raise capital more easily, sell part of it, or isolate legal risk from the core business.
• Enterprises wanting to convert from LLC to joint stock company (or vice versa) to prepare for share issuance, ESOP, IPO or a leaner governance structure.
• Enterprises owing banks and suppliers and needing to restructure capital — restructuring debt alongside reorganising legal entities.
• FDI enterprises needing to reorganise Vietnamese subsidiaries to fit the overseas parent group’s strategy.
• Family businesses and domestic companies preparing generational transfer or reallocating ownership among members.
• Investors who acquired an enterprise and need to “clean up” the legal entity structure after takeover.

Mergers, consolidations, divisions, separations

The Enterprise Law 2020 (No. 59/2020/QH14), Chapter IX on enterprise reorganisation, provides four forms of legal-entity restructuring, each with different consequences for the existence of the companies involved:

• Merger (Article 201): one or more companies transfer all assets, rights, obligations and lawful interests to another existing company; the merged company terminates existence.
• Consolidation (Article 200): two or more companies consolidate into a new company; the consolidated companies terminate existence.
• Division (Article 198): dividing an existing company into two or more new companies; the divided company terminates existence.
• Separation (Article 199): an LLC or joint stock company transfers part of its assets, rights, obligations, members and shareholders to establish one or more new companies without terminating the prior company’s existence; the separated company must register changes to charter capital and member/shareholder numbers corresponding to the reduced portion.

All four forms share a third-party notification duty: merger and consolidation contracts must be sent to creditors and notified to employees within 15 days of adoption.

Details on each form: company mergers in Vietnam · company consolidation in Vietnam · company division in Vietnam · company separation in Vietnam.

Entity conversion (LLC ↔ joint stock company)

Entity conversion is the lightest reorganisation form because the legal entity does not terminate: the converted company automatically inherits all lawful rights, obligations and interests of the pre-conversion company:

• Converting an LLC into a joint stock company (Article 202) — when preparing share issuance, ESOP, raising capital from multiple investors or listing.
• Converting a joint stock company into a single-member LLC (Article 203) — usually after one investor acquires all shares.
• Converting a joint stock company into a multi-member LLC (Article 204).
• Converting a private enterprise into an LLC, joint stock company or partnership (Article 205).

Enterprises often miss two things when converting: reworking the entire ownership structure (numbers and classes of shares, voting ratios of each former member) and checking contracts and licences tied to the old entity type.

Details: converting an LLC into a joint stock company · converting a joint stock company into an LLC.

Enterprise registration changes in restructuring

After internally adopting the reorganisation plan, the enterprise must complete enterprise registration for the state to record the change. From 01/7/2025, Decree 168/2025/ND-CP replaces Decree 01/2021/ND-CP on enterprise registration (simultaneously replacing Decree 122/2020/ND-CP on coordinated, interlinked procedures), becoming the sole applicable procedural framework.

Practical notes when registering for a restructuring project:

• Each reorganisation form has a different registration dossier: consolidation, merger, division, separation and conversion each have their own dossier composition; preparing the wrong dossier is a common reason for returns.
• Divided, consolidated and merged enterprises must complete termination registration, while the newly established company or the surviving merged company registers under the corresponding entity type.
• Online registration uses electronic identification accounts on the National Enterprise Registration Portal; electronic dossiers carry the same legal value as paper dossiers.
• The enterprise code doubles as the tax code: changing legal entities changes the tax code, triggering tax finalisation, e-invoice and counterparty notification obligations.
• For FDI enterprises, obligations relating to the investment project (if investors or investment capital change) should be handled in parallel from the start.

Checklist of common risks during restructuring: risk checklist for corporate restructuring.

Capital restructuring and debt composition

Reorganising legal entities without simultaneously addressing capital structure and debt leaves the project unfinished. Work that commonly arises at the same time:

• Charter capital adjustments: increasing capital to meet conditional business line requirements or prepare new fundraising; reducing capital after dividing or separating part of the assets into a new entity; handling unpaid contributed capital or asset contributions needing revaluation.
• Debt recomposition: when a legal entity terminates (merger, consolidation, division), bank loans, bonds and supplier debts must transfer under the reorganisation contract; creditors may demand early repayment or additional security. Negotiating with banks on transferring repayment obligations to the new entity is often the longest bottleneck.
• Secured assets: mortgage and pledge contracts tied to the old entity must be re-registered for the new entity; missing this step costs creditors their priority or puts the enterprise in breach with the bank.
• Profit distribution and accumulated loss handling: before division or separation, profit balances, funds and losses must be closed and clearly stated in the division/separation contract to avoid later disputes between entities.

Details: corporate debt restructuring in Vietnam · restructuring a group with multiple companies in Vietnam · spinning a business line into a separate entity.

Labour in restructuring

The Labour Code 2019 provides for two situations:

• Labour transfer (Article 48): on enterprise merger, consolidation, division, separation or transfer of ownership or asset use rights, the succeeding employer must continue performing effective labour contracts and collective labour agreements. Where continuation of all or part is impossible, the employer must build a labour utilisation plan.
• Termination due to structural change (Article 44): where reorganisation changes structure, technology or for economic reasons, the enterprise may terminate employees but must build a labour utilisation plan and consult the grassroots employee representative organisation. Terminated employees in this case receive job-loss allowances: at least 01 month’s salary per year of work, minimum 02 months’ salary for employees regularly working 12 months or more (Article 47).

Accompanying practical work: reviewing all labour contracts of the old entity to determine who moves to the new entity; signing appendices or new contracts; closing and reopening social, health and unemployment insurance; settling outstanding wages and termination allowances. For enterprises with hundreds of employees, the labour utilisation plan should be prepared before the restructuring is announced.

Details: labour transfer in corporate restructuring.

Tax and licence review in restructuring

On tax. The new Law on Tax Administration No. 108/2025/QH15 (passed 10/12/2025, effective 01/7/2026, replacing the 2019 Law on Tax Administration) is the applicable framework. Reorganising an enterprise typically triggers: CIT and VAT finalisation for the terminating entity; handling overpaid tax, tax debts and late-payment interest; e-invoices of the old entity; loss carry-forward under CIT law; tax obligations from asset and capital transfers between entities during division, separation and merger. Enterprises should close tax figures before completing reorganisation registration. Details: tax review in corporate restructuring.

On licences. Many licences attach to the legal entity and do not transfer automatically when the old entity terminates: conditional business line licences, sector-specific operation licences, investment incentives, land use right certificates in the old entity’s name, trademarks and IP. Each licence needs separate review: which are inherited, which must be re-applied for, and how long re-application takes — because licence gaps can interrupt the new entity’s business. Details: handling licences in corporate restructuring.

Process and timeline of a restructuring project

A typical internal restructuring project comprises the following stages, with actual total time usually 2 to 6 months depending on scale, entity count and the complexity of debt, labour and licences:

1. Current-state assessment (2–4 weeks): legal review of the entities — charters, ownership structures, credit contracts, labour contracts, licences, tax status and existing disputes.
2. Plan design (2–4 weeks): choosing the reorganisation form, designing the target entity structure, debt, labour, tax and licence handling plans.
3. Creditor and stakeholder negotiation (4–8 weeks): working with banks and major creditors on transferring repayment obligations; consulting the employee representative organisation on the labour utilisation plan.
4. Document drafting and internal adoption (2–4 weeks): merger/consolidation/division/separation contracts, draft charters of new companies, internal resolutions, labour utilisation plans; sending contracts to creditors and notifying employees within 15 days of adoption.
5. Enterprise registration (1–3 weeks): filing under Decree 168/2025/ND-CP — registering new companies, changes and termination of old entities.
6. Completing tax, licence and contract obligations (4–8 weeks, may run in parallel): tax finalisation for old entities, re-applying for or transferring licences, re-signing contracts with customers and suppliers.

Detailed timelines per project type: legal timeline for a restructuring project.

Why do enterprises need an accompanying lawyer?

Internal restructuring looks like “rearranging paperwork”, but each step creates binding legal consequences: once signed and registered, the reorganisation contract reallocates rights, obligations and assets between entities. The three biggest risks a lawyer helps control:

• Creditor risk: transferring repayment obligations to a new entity without proper creditor consent may breach the credit contract, triggering the bank’s early repayment demand.
• Labour risk: mass terminations without a compliant labour utilisation plan easily spark collective disputes, strikes and administrative penalties.
• Tax and licence risk: the new entity operating while licences are not yet re-issued or the old entity’s tax arrears are unresolved may face suspension or arrears with fines and late-payment interest.

FLAT LAW FIRM runs restructuring projects on a “single point of contact” model: the in-charge lawyer coordinates all workstreams — enterprise registration, labour, tax, licences, contracts — and works directly with business registration authorities, tax authorities and banks on the enterprise’s behalf. The team works in Vietnamese, Chinese and English, fitting restructuring projects of FDI groups with overseas parents.

Frequently asked questions

Useful links

You should talk to a lawyer if:

• Your group has many legal entities in Vietnam and wants to consolidate but does not know whether to merge, consolidate or dissolve each company.
• The enterprise wants to spin a business line into a separate entity to raise capital, sell part or isolate risk, but that line shares assets, personnel and licences with the parent.
• The enterprise plans to convert from LLC to joint stock (or vice versa) and needs to rework ownership structure, charter and contracts tied to the old type.
• The company carries large bank debt and worries that transferring repayment obligations to a new entity will breach the credit contract.
• The restructuring project affects dozens or hundreds of employees and needs a compliant labour utilisation plan under the Labour Code 2019.
• An FDI enterprise needs to reorganise Vietnamese subsidiaries under the overseas parent group’s direction.