Vietnam investment regulations – Direct investment v.s. indirect investment
Under the Investment Law, direct investment means a form of investment whereby the investor invests its invested capital and participates in the management of the investment activity. On the other hand, indirect investment means a form of investment through the purchase of shares, share certificates, other valuable papers or a securities investment fund and through other intermediary financial institutions and whereby the investor does not participate directly in the management of the investment activity.
The confusing point here is what “participating in the management” of investment activity. If having purchased shares of a listed company in Vietnam, a foreign investor attends the shareholders meeting of such company and exercises its voting rights then arguably the investor has “participated in the management” of the company in Vietnam. A more relevant example is a foreign investor purchases a minority stake in a domestic joint stock company and nominates its personnel to hold position in the Board of Directors of such company. In such case, it is not clear if the investor could be deemed to have “participated in the management” of the company in Vietnam.
The consequences of being treated as a direct investment and an indirect investment may be material. If an investment is an indirect investment then the parties may not need to obtain an Investment Certificate and must settle the transaction in Vietnamese Dong through a VND capital contribution account. If an investment is a direct investment then the parties may need to obtain an Investment Certificate and could settle the transaction in foreign currency.
It would have been clearer if the Investment Law replaces the concept of “participating in the management” with “control”. In such case, an investor will be deemed to make a direct investment if it has “control” of the investment activity. In other cases, the investor will be deemed to make an indirect investment.
On 3 September 2025, the Ministry of Finance (MOF) released the Official Letter no. 13629 addressing questions related to difficulties and obstacles arising from legal regulations in the finance and investment sector. This correspondence has several notable issues that are summarized below. While some of the MOF’s guidance offers welcome flexibility and operational reassurance, others fall short of providing clear or comprehensive clarification, leaving important gaps unresolved and inconsistencies with other legislation unaddressed.
Delegation by the General Meeting of Shareholders endorsed in principle (Query no. 29)
Query/Issue raised:
Current regulations regarding delegation/authorisation (both could be translated to/from "uỷ quyền" in Vietnamese) by the General Meeting of Shareholders (GMS) to the Board are unclear and conflicting. […]
A recurring issue in Vietnam corporate governance is whether a former member of the Board of Directors can be appointed as an “independent” Board member in the subsequent term, provided that all other statutory criteria are satisfied. This typically arises where companies want to retain a former board member while still complying with independence requirements under Article 155.2 of the Enterprises Law 2020 as amended in 2025 (Enterprises Law 2020).
Under Article 155.2(dd) of Enterprises Law 2020, an independent Board member must “not hold the position of member of the Board of the company within the last 05 years or longer unless he/she was designated in 02 consecutive terms.”
Vietnamese law currently lacks a formal definition of “latent defect” (khiếm khuyết ẩn) and a clear mechanism for allocating liability once such defects arise. This regulatory vacuum often leads to prolonged disputes between the Employer and the Contractor, particularly when the construction contracts do not include explicit risk allocation.
For the purpose of our discussion below, a “latent defect” is defined as a fault or flaw in construction works/item that is not discoverable through a reasonably thorough inspection at the time of handover.
When companies think about data protection, they usually focus on “visible” data like names, email addresses, or bank details. However, there is a hidden layer called metadata - essentially “data about data” - that often gets ignored.
Under Vietnam’s new personal data protection rules, overlooking metadata is a major risk. If metadata can be used to identify a specific person, it falls under the same strict rules as regular personal data.
What is Metadata? The “Digital Footprint”
Metadata is information that describes the context of a file or a message rather than the content itself. Even if you remove a person’s name from a file, the metadata can still point directly to them.
Vietnam is currently at a pivotal stage of infrastructure modernization. To meet the immense demand for capital, the State has moved to revitalize private sector participation, most notably through the “Build – Transfer” (BT) model.
In a typical BT arrangement, a private investor finances and constructs an infrastructure project, then transfers it to the State upon completion. In return, the State “pays” the investor with land funds, allowing them to develop a “reciprocal project” (dự án đối ứng) to recover their capital and generate profit. While this mechanism is essential to stimulate private sector participation, the recent new legal framework for BT projects may raise significant concern regarding the land access privileges granted to BT investors compared to their counterparts in the general real estate market. In particular,
The recently issued Case Law No. 81/2024/AL (CL 81) introduces a precedent that allows creditors to bypass the standard statute of limitations by re-characterizing an unpaid contractual debt as a property reclamation claim upon the mutual termination of the contract and an agreement on the payable amount. Below are a few of our observations regarding CL 81.
Summary of the Case
The dispute originated from a service contract between Company M (the Service Provider) and Company A (the Client). After the Service Provider performed its services, the parties mutually agreed to terminate the contract. Subsequently, the Client explicitly confirmed in writing the specific amount of the service fee it owed to the Service Provider and the late payment interest but ultimately failed to make the payment. When the Service Provider filed a lawsuit to recover the unpaid amount, the Client requested the court to dismiss the case, arguing that the 3-year statute of limitations for a contractual dispute had already expired.
For investors in Vietnam, "contributing capital" to a company can mean two very different things: becoming a legal owner (member/shareholder of a company) or simply being a business partner. A recent case law no. 78/2025/AL clarifies this distinction and indicates that several pieces of evidence may be considered to prove company member/shareholder status.
Case Summary
In this dispute, Mr. H, the plaintiff, provided significant funds to D Limited Liability Company, which was managed by his relatives. Although Mr. H received the profit distribution for over a decade and signed minutes acknowledging his contribution, Mr. H was never officially recorded as a member of the company in the enterprise registration certificates (ERC) or the company’s charter.