Short answer: A company’s bank accounts may be frozen during a criminal investigation, but under Article 129 of the Criminal Procedure Code (CPC, consolidated text 104/VBHN-VPQH), freezing is limited to the corresponding sum matching the possible fine, confiscation or compensation — not the entire account. Contracts are not automatically void under the law when a company is investigated; the impact is indirect and practical (loss of ability to pay or deliver).
1. Account freezing — a coercive measure under Article 129 of the CPC
Freezing accounts is a coercive measure in criminal proceedings, applicable only when all of the following conditions are met:
- Against a person charged with an offence for which the Penal Code prescribes a fine, confiscation of property or compensation for damage; and
- There are grounds to determine that the person holds accounts at a credit institution or the State Treasury (Article 129(1) CPC).
Critically for businesses: the freeze order may extend to another person’s accounts — including a company’s accounts — if there are grounds to determine that the money in those accounts is connected to the criminal act of the charged person (Article 129(1), second paragraph; similarly for legal entities under Article 438(2)). In other words, a company may have its accounts frozen even though it is not the accused, if the money flow is connected to the case. FDI companies and parent–subsidiary groups should pay special attention to this point.
1.1. The limit: only the corresponding sum
The most common misunderstanding: “freezing an account” is not the same as “freezing all money in the account.” Article 129(3) CPC is explicit: only the corresponding sum matching the possible fine, confiscation or compensation may be frozen. Anyone who unlawfully unfreezes a frozen account bears criminal responsibility.
1.2. Authority and procedure
- Freezing orders fall under the authority specified in Article 113(1) CPC and the presiding trial judge;
- An order from the Investigation Agency must be notified immediately to the Procuracy at the same level before execution (Article 129(2));
- Banks (credit institutions, the State Treasury) must execute immediately upon receiving the freeze order and draw up minutes in 05 copies (Article 129(4)).
Alongside account freezing, seizure of property under Article 128 CPC applies only to assets of suspects/defendants in offences carrying fines, confiscation or compensation — and only to the corresponding portion.
1.3. When must freezing be lifted? (Article 130)
The freeze must be cancelled when: the investigation or the case is suspended; the suspect is suspended; the defendant is acquitted; the defendant is not fined, has no property confiscated and pays no compensation; or when the measure is deemed no longer necessary.
2. Specific to legal entities under prosecution (Articles 436–438 CPC)
When a legal entity is prosecuted, the Investigation Agency, the Procuracy and the Court may apply coercive measures: seizure of property, freezing of accounts, temporary suspension of operations for a fixed term, and requiring a monetary deposit to secure judgment enforcement. These measures may not exceed the time limits for investigation, prosecution and trial (Article 436(2) CPC). Under Article 438(2), accounts of other individuals or organisations may be frozen if there are grounds that the money is connected to the legal entity’s criminal act.
Example (illustrative scenario): Company X (an FDI enterprise) has its director prosecuted. The Investigation Agency orders a freeze of the company’s accounts on grounds that proceeds of the offence flowed through them. Under Article 129(3), only the corresponding sum is frozen; the remainder stays available for lawful operations unrelated to the case.
3. Do the company’s contracts automatically become void?
No. The CPC contains no provision rendering a company’s contracts automatically void or cancelled upon investigation. The impact on contracts is indirect and practical:
- Frozen accounts, seized assets, and temporary suspension of operations (Article 439 CPC — applicable when the criminal act caused or is capable of causing harm to life, health, the environment or public order and safety) may leave the company practically unable to pay, deliver or perform contracts;
- This creates a risk of contractual breach under civil and commercial law — counterparties may claim damages for late or non-performance.
Distinguish clearly: what the law provides (no rule voiding contracts) versus practical consequences (the company may still be sued by counterparties for breach).
4. The company’s leaders are prosecuted — what must the company do?
Two provisions to know:
- Article 181 CPC: the Investigation Agency and the Procuracy may recommend the competent agency/organisation to temporarily suspend the suspect from office; the managing agency must reply in writing within 07 days.
- Article 434(1) CPC: if the legal entity’s legal representative is prosecuted, investigated, charged, tried or otherwise unable to participate in proceedings, the legal entity must appoint another person as its representative in the proceedings.
5. Practical recommendations (not statutory rules)
- Proactively review cash flows and separate operating accounts from funds at risk of connection to the case;
- Prepare a backup-representative plan as soon as litigation risk appears (Article 434);
- Work with counsel immediately upon receiving a freeze or seizure order to assess its correctness and promptly request cancellation when no longer necessary (Article 130).
Need legal assistance? If your company faces an account-freezing order, asset seizure, or prosecution of its leaders, contact FLAT Law Firm for timely advice.
Note: This article is under internal review.
For reference only, not legal advice. Content quality-checked by the AI Legal Council; not yet reviewed by a human lawyer.