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Legal Framework For Business Transfer In Vietnam

Part 1: Transfer of Commercial Contracts In the context where enterprises are increasingly undertaking restructuring to optimize their operational models and management efficiency, the business transfer model is gradually becoming a commonly used approach alongside traditional M&A transactions. As a matter of principle, business transfer refers to the transfer by an enterprise of certain rights, obligations, and assets from one legal entity to another through a series of independent transactions. In practice, particularly within corporate groups and holding company structures, business transfer is often utilized as a mechanism to streamline organizational structures, reallocate functions among affiliated entities, and enhance both governance efficiency and tax optimization. It should be clarified that this does not constitute a form of corporate reorganization as prescribed under Clause 31 Article 4 of the Law on Enterprises 2020 (including division, separation, consolidation,...
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Risks for enterprises to note when converting loans into contributed capital

The conversion of loans into equity – commonly referred to as a Debt/Equity Swap (“ DES ”) – is increasingly prevalent in the internal financial structuring of companies, particularly where shareholders or capital contributors seek to legitimize funds previously injected into the company. However, this mechanism also represents a financial arrangement that entails significant legal risks, especially where it is implemented in an ad hoc manner without a clear legal basis. This article highlights the key legal risks that companies should carefully consider prior to undertaking such a transaction.   1. Legal nature of DES   In essence, a loan and an equity contribution represent two entirely distinct legal relationships. A loan arises from a loan agreement, under which the borrower is obliged to repay both principal and interest in accordance with the agreed terms . 1 In contrast, an equity contribution refers to an asset contributed by a member or shareholder to the company...
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Options for handling inactive companies: Dissolution, Bankruptcy or Transfer?

In the structure of many Vietnamese conglomerates today, it is not difficult to identify the existence of subsidiary companies that have ceased operations long ago  –  perhaps remnants of failed investment projects, business lines that have been phased out, or simply the result of incomplete restructuring processes. These legal entities continue to exist on paper, consuming annual maintenance costs, and in many cases, accumulating tax or social insurance debts that go unnoticed until the problem becomes serious.   The question arises: how should these legal ‘zombies’ be handled? Vietnamese law provides three main pathways  –  voluntary dissolution, recovery/bankruptcy proceedings, and transfer of capital contributions or shares. Each option has different conditions for application, implementation procedures, and legal consequences. Choosing the wrong option not only wastes resources but may also lead to legal liability for the legal representative. This article ...
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Declaration of temporary residence for foreigners entering and residing in Vietnam

In the context of international economic integration and the increase in cross-border labor and trade exchange, the number of foreigners entering and residing in Vietnam is steadily rising. To ensure immigration management, social order and safety and statutory compliance, Vietnamese law mandates the obligation to declare temporary residence for foreigners during their stay in Vietnam. Proper adherence to these regulations not only assists state management agencies in monitoring the residential status of foreigners but also helps enterprises, organizations, and individuals mitigate legal risks arising from the hosting and residence of foreign nationals.  1. The obligation to declare temporary residence upon entering and residing in Vietnam Pursuant to Article 33.1 of the Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam 2014 (amended and supplemented in 2019, 2023 and 2025), foreigners entering and residing in Vietnam must, through the person directly managing or op...
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Conditions for foreign investors to operate Homestay businesses in Vietnam

The provision of homestay services is no longer a new business sector. However, in order for foreign investors to conduct such business activities in Vietnam, they must satisfy all applicable conditions as prescribed by law.   In this article, the author provides legal analysis and opinions based on the prevailing laws and regulations for reference purposes. Please note that this article does not constitute legally binding advice and should not be relied upon as a basis for obtaining approval from competent authorities. Accordingly, readers are advised to consult with the relevant authorities prior to implementing any project to ensure full compliance with applicable laws.   I. CONTENTS UNDER VIETNAM’S WTO COMMITMENTS   According to Vietnam’s WTO Schedule of Commitments, Vietnam has only committed to market access for foreign investors in the following sectors:   9. TOURISM AND TRAVEL RELATED SERVICES    A. Hotel and restaurant including   Lodging services (CPC 6411...
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Procedures for Establishing a Preparatory Committee for the Establishment of an Association under Decree No. 126/2024/ND-CP

In the process of establishing an association under Vietnamese law, many organizations tend to focus primarily on preparing the application dossier for establishment while overlooking a fundamental preliminary step: the establishment of a Preparatory Committee for the establishment of an association. However, pursuant to Decree No. 126/2024/ND-CP, this is not merely a procedural step but a prerequisite condition for the association to be considered for establishment approval.   In accordance with Decree No. 126/2024/ND-CP, the establishment of a Preparatory Committee must be reviewed, commented on, and formally recognized by a competent state authority. The Preparatory Committee acts as the representative body of the founding members, responsible for preparing the application dossier and organizing the founding congress of the association.   Accordingly, a proper understanding and compliance with the procedures for establishing the Preparatory Committee are essential to ensuring both...
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