Vetting a Vietnamese partner before a joint venture — key points

Choosing the wrong partner turns even a good joint venture into a dispute. What should foreign investors verify before contributing capital to a joint venture with a Vietnamese enterprise? This article provides an 8-area vetting checklist under the Law on Enterprises 2020, the Law on Investment 2025 (No. 143/2025/QH15) and the Land Law 2024.

1. Why vetting the partner matters more than vetting the project

Projects can be adjusted, but a wrong partner makes even the finest contractual terms hard to enforce. Vietnamese JV dispute practice reveals three recurring causes: partners failing to contribute committed capital; legally encumbered contributed assets (disputed land, expired licences); and loose governance leading to deadlock. All three are preventable with thorough pre-signing diligence.

2. The 8-area partner-vetting checklist

Area 1 — Legal standing

• Enterprise registration certificate still valid; check operating status on the National Business Registration Portal.
• Registered business lines cover the JV project’s sector.
• Legal representative: who, with what authority under the charter; validity of authorisation documents.
• Ownership structure and ultimate beneficial owner (UBO): avoid “front” partners.

Area 2 — Financial health

• Financial statements (preferably audited) for the last 2-3 years: revenue, profit, cash flow, liabilities.
• Tax and social-insurance arrears — hidden liabilities that can “migrate” into the JV.
• Ability to contribute capital on schedule; legitimacy and transparency of contribution sources.

Area 3 — Land and contributed assets

• Where the partner contributes land-use rights: verify the certificate (proper purpose, remaining term, no mortgage/dispute/distraint).
• Independent valuation of non-cash contributions — avoid inflated contribution values.
• Note: foreign investors receiving land-use-right contributions on islands, in border/coastal areas or defence-security-sensitive zones must meet land-law conditions (Article 21.2 of the Law on Investment 2025).

Area 4 — Licences

• Sub-licences for the target sector remain valid; whether they may be shared with or transferred to the JV.
• Any maintenance conditions the JV must continue to satisfy.

Area 5 — Compliance history and disputes

• History of administrative penalties (tax, environment, construction, labour).
• Ongoing litigation/disputes or unenforced judgments — assess hidden financial exposure.
• Market reputation: check with banks, former partners, industry associations.

Area 6 — Labour

• Labour contracts, social insurance, trade unions — potential retroactive liabilities.
• Existing labour disputes; whether key personnel will stay post-JV.

Area 7 — Intellectual property

• Trademarks, patents, copyrights claimed by the partner: registered in whose name, still valid, under dispute or not.
• Whether licensing agreements (if any) may be assigned to the JV.

Area 8 — The JV agreement (negotiate BEFORE contributing)

• Governance: voting ratios, management seats, veto rights over material decisions, deadlock mechanisms.
• Capital transfer: right of first refusal, restrictions on transfers to competitors.
• Withdrawal: conditions, valuation on exit, non-compete obligations.
• Dispute resolution: arbitration or courts, governing law.

3. Recommended vetting process

1. Sign an NDA before exchanging sensitive documents.
2. Send a document request list covering the 8 areas above.
3. Partner self-review plus independent counsel and auditors engaged by the investor for verification.
4. Produce a diligence report with a red-amber-green risk table and remediation measures.
5. Make diligence findings conditions precedent in the JV agreement.

4. Red flags — walk away

• Partner refuses to provide financial statements, land documents or ownership structure.
• Contributed assets are mortgaged to banks with no release plan.
• Signatory lacks authority under the charter (contract-invalidity risk).
• Major disputes involving the very assets to be contributed.
• Promises to “arrange licences” with no documentary proof.

For assistance vetting partners and drafting joint-venture agreements, investors may contact us. See more in our Foreign Investment section.

Prepared and reviewed by the FLAW AI Legal Council — now submitted to the owner for approval prior to publication. This content is for reference only and does not constitute legal advice for any specific case.