De-facto Director
In other jurisdictions, a de-facto director is a person who performs the function of a director but who has not been formally appointed as a director. Under Article 11.3 of Circular 121/2012, if a Board Member ceases to be Board Member then the Board may appoint another person to temporarily replaces the former Board Member. The temporary Board Member will need to be formally elected at the next meeting of the Shareholders Meeting. A temporary Board Member may be viewed as a de-facto Director as he/she is not formally appointed by the Shareholders Meeting.
However, under the Enterprise Law, only the Shareholders Meeting has the power to appoint a Board Member. Accordingly, it is not clear if Article 11.3 of Circular 121/2012 can be considered as (1) a special law which prevails the Enterprise Law and is valid or (2) a sub-ordinate law which is different from a higher law (i.e. the Enterprise Law) and is invalid. If Article 11.3 of Circular 121/2012 is valid then it is likely that a temporary Board Member appointed under Article 11.3 of Circular 121/2012 will have the liabilities and obligations of a normal Board Member.
Other than the context of Article 11.3 of Circular 121/2012, Vietnamese law does not have any general provision about a person acting as a de-facto Director of a Joint stock company (JSC). Therefore, it would be difficult to make a de-facto Director subject to the obligations and liabilities of a Director of a JSC.
Under Article 8 of the Enterprise Law, a JSC is entitled to operate and run its business in its own discretion. Article 11.7 of the Enterprise Law prohibits any action which interferes or prevents shareholders and owners of a JSC to exercise their rights under the Enterprise Law or the charter of the company. Accordingly, a de-factor Director who exercises the functions of a Director of a JSC without being formally appointed may be considered as violating the rights of the JSC to conduct its business under Article 8 of the Enterprise Law or as interfering or preventing shareholders and owners of the JSC to exercise their rights under Article 11.7 of the Enterprise Law. As a result, a de-factor Director may potentially be subject to non-contractual liabilities in case his/her action causes damages to the JSC.
The Government officially issued Decree 342/2026/ND-CP dated 3 September 2026, detailing the Commercial Law and the Law on Foreign Trade Management on the sale and purchase of goods and activities directly related to the sale and purchase of goods by foreign investors and foreign-invested enterprises (FIEs) in Vietnam (Decree 342/2026).
Effective from 18 October 2026, Decree 342/2026 replaces Decree 09/2018/ND-CP (Decree 09/2018), which has governed the Business License and Retail Outlet License regime since 2018. However, FIEs holding Business Licenses and Retail Outlet Licenses issued before 18 October 2026 may continue the licensed activities under their existing licences.
Must a business obtain both the child's consent and the consent of the child's legal representative, a parent or guardian (dual consent), whenever it processes the personal data of a child aged 7 or over? Under the Personal Data Protection Law (PDPL), the answer is no. Dual consent is required only for processing that would disclose the child's private life or personal secrets. For other processing, the legal representative consents on the child's behalf, and the child's own consent is not required (Article 24.2 of the PDPL). However, Decree 330/2026 of the Government on administrative penalties for violations in the fields of cybersecurity and personal data protection (Decree 330/2026) seems to apply dual consent to a broader set of circumstances. Article 60.1(c) of Decree 330/2026 fines processing of the data of a child aged 7 or over without dual consent. That rule was taken from Decree 13/2023, which ceased to have effect on 1 January 2026.
The State Bank of Vietnam (SBV) officially issued Circular 38/2026/TT-NHNN dated 31 July 2026 on foreign exchange management for foreign investment activities in Vietnam (Circular 38/2026). Effective from 18 August 2026, Circular 38/2026 replaces Circular 06/2019/TT-NHNN (Circular 06/2019) as amended by Circular 03/2025/TT-NHNN (Circular 03/2025), which has governed the direct investment capital account (DICA) regime since 2019. Circular 38/2026 also terminates Articles 11.3 and 11.4 of Circular 03/2025 on opening and use of VND-denominated accounts for conducting foreign indirect investment in Vietnam and amends Circular 16/2014/TT-NHNN on the use of foreign currency and Vietnamese dong accounts of residents and non-residents.
A typical share sale agreement (SPA) takes effect on signing. Closing, when the buyer and the seller exchange money and title to the shares, usually comes later, once conditions have been met. One might expect tax on the sale to be imposed when the shares are sold, that is, at closing. But where a foreign enterprise with no permanent establishment (Foreign Seller) in Vietnam sells shares in an unlisted Vietnamese company to a resident buyer, Article 5.2(a) of Circular 20/2026 provides that revenue is taxed when the initial capital-transfer contract takes effect. On the face of that Article, the SPA can be that contract, and signing can be when it takes effect. The fact that closing has not yet occurred might not, by itself, defer the tax. Until Circular 20/2026, that was not so.
Similar to the Enterprise Law 2005 and the Enterprise Law 2014, the Enterprise Law 2020 is silent on whether founding shareholders may hold voting preference shares newly issued after the issuance date of the enterprise registration certificate (ERC), and only provides at Article 116.1 that the voting preference of founding shareholders is effective for three years from that date. This blog will examine different views on this issue.
On the one hand, one may support the view that founding shareholders are entitled to hold voting preference shares issued after ERC issuance date because:
Based on Resolution No. 206/2025/QH15 of the National Assembly on special mechanisms to address difficulties and obstacles arising from legal regulations, the Government has issued several Resolutions on administrative procedure reduction (such as Resolution 66.16/2026/NQ-CP, Resolution 66.18/2026/NQ-CP, etc.). Most of these provisions remain effective until 28 February 2027. If new provisions covering the same subject matter are promulgated to replace them during this period, the relevant provisions of these Resolutions will automatically cease to be effective.
On 16 March 2026, the Ministry of Public Security (MPS) issued the draft decree on administrative sanctions in the fields of cybersecurity and personal data protection (the Draft Decree) for public consultation. It is the first step to put concrete penalties behind the PDPL 2025, which took effect on 1 January 2026 but left the enforcement details to the Government. The Draft covers a wide range of sectors, such as cybersecurity, personal data, AI, telecommunications, and digital signatures. This post focuses on the personal data provisions (Articles 57 to 69 of the Draft Decree), which raise potential concerns for businesses.
On 5 June 2026, the Government issued Decree 200 on private placement and trading of corporate bonds on domestic market and offering of corporate bonds on international market (Decree 200/2026). Decree 200/2026 will replace Decree 153/2020 (as amended) on the same subject. We have discussed certain contents of Decree 200/2026 in New Decree on private bonds (Part 1) — Vietnam Business Law.
The Government officially issued Decree 102/2026/NĐ-CP (Decree 102/2026), which introduces critical amendments and supplements to Decree 75/2019/NĐ-CP (Decree 75/2019) regarding administrative penalties for violations in the competition sector. Effective from 20 May 2026, Decree 102/2026 provides clearer enforcement guidelines and adjusts penalty frameworks, particularly for economic concentrations.
Below is a summary of the key changes introduced by Decree 102 that will directly affect M&A transactions subject to merger control (economic concentration notification) requirements in Vietnam.
In March 2026, Vietnam’s Ministry of Finance (MOF) released a draft decree (Draft Decree) implementing the Law on Personal Income Tax 2025 (PIT Law 2025) for public consultation. One proposal drew strong feedback from businesses and investors: a change to how individuals are taxed on the transfer of shares in non-public/unlisted joint-stock companies (JSCs). Following the consultation, the MOF now appears poised to step back from that change – welcome news for investors and companies engaged in M&A and private share transactions.
On 5 June 2026, the Government issued Decree 200 on private placement and trading of corporate bonds on domestic market and offering of corporate bonds on international market (Decree 200/2026). Decree 200/2026 will replace Decree 153/2020 on the same subject. In the past, Decree 153/2020 has been amended by Decree 65/2022 and Decree 8/2023. Decree 200/2026 introduces more conditions for private bond issuance.
5x debt/equity ratio
1.1. Decree 200/2026 reflects the 5x debt/equity requirement established under the 2025 amendment to the Enterprise Law. In particular, the debt of a bond issuer (including the value of the bonds to be issued) must not exceed 5 times of the equity of such issuer as recorded in the audited financial statements of the year preceding the issuance.
On 15 May 2026, the Government issued Resolution No. 66.17/2026/NQ-CP (the Resolution 66.17 or the new), slimming down the list of conditional business sectors currently set out in Appendix IV of Investment Law 2025 (the old).
Resolution 66.17 will take effect on 1 July 2026 and is set to expire on 28 February 2027, by which time the Government expects the National Assembly to formalise these adjustments through an amendment to Appendix IV. Although there would be a question about the effectiveness of the Resolution 66.17 over the Appendix 4 of Investment Law 2025 and how the investment authority will apply in practice, the investor may, in the meantime, treat the Resolution 66.17 as the working text for the next 9–10 months while following up on the law amendments.
Under Article 41 of the Law on Real Estate Business 2023 (Real Estate Business Law), a real estate project (Project) eligible for transfer may follow one of two sets of legal procedures, depending on how it was approved. While the difference may appear procedural at first glance, it has significant implications for when the transfer transaction is legally completed, and for what the parties can (or cannot) do if the transaction ultimately falls through. This post discusses the two procedures and the practical implications arising from the distinction between them.
Vietnam has temporarily raised several general economic concentration notification thresholds under Resolution No. 66.18 of the Government dated 18 May 2026 (Resolution 66/2026), a practical change for M&A transactions as fewer deals should be caught solely by Vietnamese assets, Vietnamese turnover or transaction value.
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,