Related-Party Transactions Vietnam 2026: 10 Steps

Conflict-of-Interest Checklist for Related-Party Transactions

A director signs an office lease with his wife's company. A Board chairman sells company assets to a business run by his son. These deals are not absolutely prohibited — but signed without the statutory approval procedure and voting exclusion, they can be declared void, with signatories liable for damages. This 10-step checklist keeps every related-party transaction compliant.

First, test against Clause 1, Article 167 of the Law on Enterprises (for JSCs):

(a) Shareholders or authorized representatives of institutional shareholders holding over 10% of ordinary shares, and their related persons;
(b) Board members, the Director/General Director, and their related persons;
(c) Enterprises that Board members, Controllers, the Director/General Director and other managers must declare under Clause 2, Article 164.

"Related persons" (Clause 23, Article 4) is a wide net: parents, subsidiaries, managers, spouses, parents, children, siblings, and enterprises they control. The most commonly missed: deals with businesses owned by a Board member's siblings or spouse — still related persons.

Step 2: Value the deal against the 35% threshold

Determine the transaction value against total asset value in the latest financial statements:

Below 35% (or a smaller ratio/value set by the charter) → Board of Directors approves;
35% or above → GMS approves;
Special case: loans, lending or asset sales exceeding 10% of total assets between the company and a shareholder holding 51% or more of voting shares (or their related persons) → always the GMS, even below 35%.

Note: the charter may only set a lower threshold for the Board, never higher. Check the charter first — many companies set 10–20% internal thresholds for tighter control.

Step 3: Check interest-declaration duties (Article 164)

Board members, Controllers, the Director/General Director and other managers must declare their related interests and those of their related persons. Cross-check declarations before presenting the deal — honest declaration is the first line of defense; concealing a related interest aggravates any later dispute.

Step 4: Prepare the approval dossier

The company's representative signing the contract/transaction must notify Board members and Controllers of the related parties, attaching the draft contract or key terms. The dossier should include:

A submission memo identifying the related party and relationship;
The draft contract with key commercial terms;
A pricing basis (independent quotes; valuation for large values);
A fairness assessment against market terms.

Step 5: Exclude the conflicted person from voting

An interested Board member may not vote (Clause 2, Article 167). Good practice:

The conflicted person leaves the room during discussion and voting;
Record in the minutes: who withdrew, why, and the remaining vote count;
Verify the remaining members still form a valid quorum under the charter.

Minutes recording "100% of attending members voted in favor" while one member was the counterparty — that is documentary evidence of a procedural breach.

Step 6: The Board decides within 15 days

The Board must decide on approval within 15 days of receiving the notice, unless the charter sets another deadline. Letting the dossier sit past the deadline and signing anyway to meet business timelines breaches procedure.

Step 7: Escalate to the GMS when beyond authority

Deals at 35% or above, or in the special case (>10% with a ≥51% shareholder), go to the GMS. A shareholder that is the related party (or their related persons) should not vote on that transaction — the conflict-exclusion principle applies at every level.

Step 8: Keep complete records

Retain everything: the submission, notices, draft contract, meeting minutes (recording voting exclusion), the approval resolution, and the pricing basis. This file is the only proof of compliance when minority shareholders, auditors or courts question the deal later.

Step 9: Apply to LLCs

Single-member LLC owned by an organization (Article 86): transactions with the owner, managers and their related persons require approval by the Members' Council/Company President, the Director/GD and Controllers; decisions within 10 days by majority (one vote each), related persons excluded; approval only where parties are independent and pricing is at market price.
Multi-member LLCs: the law has no equivalent of Article 167. Handle via the charter and managers' duties of loyalty and care — embed a similar identification, threshold and voting-exclusion mechanism in internal regulations from the start.

Step 10: Know the consequences of skipping procedure

Contracts/transactions signed without proper approval may be declared void by the Court; signatories and related persons are jointly liable for damages and must return benefits gained to the company. Board members/Directors breaching conflict-avoidance duties may also be dismissed under the charter.

Summary checklist

[ ] Correct identification (Clause 1, Article 167 / Article 86)
[ ] Valuation against the 35% threshold (note the special >10% case with ≥51% shareholders)
[ ] Charter check on internal thresholds and deadlines
[ ] Interest declarations cross-checked (Article 164)
[ ] Submission memo + draft contract + pricing basis prepared
[ ] Conflicted persons excluded from voting, recorded in minutes
[ ] Board decision within 15 days (single-member LLC: 10 days)
[ ] GMS escalation when beyond authority
[ ] Complete records retained
[ ] Multi-member LLCs: mechanism embedded in internal regulations

When to work with a lawyer

Related-party transactions are a flashpoint for shareholder disputes, especially in family companies and foreign-invested firms. Counsel helps identify the right subjects, design charter-compliant approval procedures, draft voting-exclusion records, and assess term fairness — so the deal withstands any challenge.

FLAT LAW FIRM advises on corporate governance and conflicts of interest for many foreign-invested companies. Call our hotline 0988424851 for advice on your specific case.

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References

Law on Enterprises 2020; Law 76/2025/QH15 (passed 17/6/2025) — Article 4 (related-person definition), Article 86 (single-member LLC), Article 164 (interest declaration), Article 167 (approval of related-party transactions).