Internal Governance Rules for FDI Enterprises in Vietnam

For foreign-invested enterprises (FDI) in Vietnam, internal disputes — between capital contributors, shareholders, or with the legal representative — often inflict heavier damage than disputes with outside partners. The most effective shield is not litigation but a complete system of internal governance documents built from day one.

This article outlines the “seven-document package” every FDI enterprise should have, four FDI-specific points to address, five typical internal disputes with preventive clauses, and a build-out roadmap in priority order.

The seven internal governance documents for an FDI enterprise

1. The company charter — the foundational document

The charter is the company’s “constitution”, with mandatory contents under Article 24 of the Enterprise Law 59/2020/QH14 (as amended by Law 76/2025/QH15, effective 1 July 2025): name, address, business lines, charter capital, management structure, legal representative, decision-making procedures, and more. All other internal rulebooks must not contradict the charter; in case of conflict, the charter and the law prevail.

2. Corporate governance rules (Members’ Council / Board of Directors — executives)

These delineate authority between the Members’ Council/Board of Directors and the General Director: who may decide up to which threshold, meeting convening and voting procedures, and reporting lines. For FDI companies, the role of members appointed by the foreign investor needs explicit definition.

3. Financial rules

Budgeting and approval workflows, spending authority limits by approval level, cash-flow management, profit distribution policy and overseas profit repatriation — a critical FDI-specific point (see below).

4. Human resources rules

Recruitment, appointment and dismissal of managers, performance appraisal, labour discipline, compensation policy, and crucially the procedure for replacing a foreign legal representative when a term expires or the incumbent can no longer manage.

5. Contract approval and transaction rules

An approval matrix: which contract values the General Director may sign alone, which require Members’ Council/Board approval — and, critically, related-party transactions, which must comply with Article 167 of the Enterprise Law (approval by the Members’ Council/General Meeting of Shareholders, disclosure of related interests).

6. Internal control and compliance rules

Internal audit, legal-risk management, reporting compliance (investment project implementation reports, audited financial statements), anti-corruption and conflict-of-interest controls. FDI companies must add dual compliance: Vietnamese law plus the parent company’s home-country requirements.

7. Information confidentiality rules

Classification of confidential information, access rights, confidentiality duties of employees and managers, and handling of breaches. Especially important for FDI companies in technology and manufacturing with proprietary know-how.

Four FDI-specific points for governance documents

A foreign legal representative: define delegation mechanisms during absence from Vietnam, emergency replacement procedures, and delegation limits (who may sign on behalf, and within what scope).
Overseas profit repatriation: internal procedures must mirror statutory conditions (fulfilled financial obligations, audited financial statements) to avoid cash-flow blockages to the parent.
Parent-company reporting: standardise management report templates, cycles and language (bilingual) to avoid “a different format every quarter” complicating consolidated audits.
Multi-jurisdiction compliance: an FDI enterprise answers to Vietnamese law and to parent requirements (e.g., the US FCPA, EU anti-corruption rules). Compliance rules should reconcile both, applying the higher standard.

Five typical internal disputes and preventive clauses

1. 50/50 deadlock

Two equal contributors disagree on strategy; neither can push a decision through. Prevention: the charter/shareholders’ agreement should include a deadlock-breaking mechanism — e.g., a buy-sell (shoot-out) clause with a pre-agreed valuation formula, or arbitration.

2. Fights over the company seal and the legal representative

A removed representative refuses to hand over the seal, paralysing operations. Prevention: seal-management rules naming the custodian, the retrieval procedure on personnel changes, and interim signing authority during transition.

3. Opaque related-party transactions

A council member signs contracts with their own “backyard” company on terms disadvantageous to the company. Prevention: contract-approval rules mandating disclosure of related interests and compliance with Article 167 of the Enterprise Law; violating transactions may be declared void and the signatory liable for damages.

4. Disputes over profit distribution

The foreign side wants to repatriate profits; the local side wants reinvestment. Prevention: the charter should pre-set dividend policy (minimum/maximum ratios, fund allocation conditions) instead of re-litigating every year.

5. Language priority in interpretation

Bilingual Vietnamese–English documents read differently, each side citing the version favouring it. Prevention: a “prevailing language” clause in the charter and every rulebook: in case of conflict, the Vietnamese (or English) version prevails.

Build-out roadmap: what first, what later

Before operations begin: a proper charter + governance rules (Members’ Council/Board) + contract-approval rules + a prevailing-language clause. This is the indispensable skeleton.

Within the first 6 months: financial rules + HR rules + a deadlock mechanism in the shareholders’ agreement.

As the business scales: internal control and compliance rules + information confidentiality rules.

Frequently asked questions

Are internal rulebooks mandatory under the law?
No — the law does not require standard internal rulebooks for ordinary enterprises (except in regulated sectors like banking and securities). They are voluntary but powerfully binding internally when disputes arise.

If an internal rulebook conflicts with the charter, which applies?
The charter and the law prevail. Every rulebook should therefore be cross-checked article by article against the current charter.

Can rulebooks be amended without amending the charter?
Yes, if the amendment does not contradict the charter. Amending rulebooks is usually simpler than amending the charter (no enterprise-registration filing required).

Legal basis

Enterprise Law 59/2020/QH14 (as amended by Law 76/2025/QH15, effective 1 July 2025): Article 24 (charter contents), Article 167 (related-party transactions).

Note: internal rulebooks do not replace the charter; where they conflict, the charter and the law take precedence.

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Does your FDI enterprise need its governance system reviewed or built? Contact FLAT Law Firm via our contact page.

The information in this article is general in nature and does not constitute legal advice. The status of cited instruments was verified as of 14 October 2026.

Transparency: this article was prepared by the FLAW AI Legal Council using AI systems. This article is awaiting review by the QA Council and has not been reviewed by a practising lawyer.