Take-or-pay clause in Vietnamese law contracts
In Vietnam, take-or-pay arrangement is quite common in long term supply or off-take contracts especially those relating large scale infrastructure projects with foreign sponsors which require project financing. A take-or-pay arrangement is essentially an agreement whereby the buyer agrees to either: (1) take, and pay the contract price for, a minimum contract quantity of goods annually (the TOP Quantity); or (2) pay the applicable contract price for such TOP Quantity (TOP Liability) if it is not taken during the applicable year.
It is not clear under Vietnamese law if the payment of TOP Liability by the buyer under in a long term contract could be viewed as a penalty. This is because:
- Article 300 of the Commercial Law defines “penalty for breach” as a remedy whereby the aggrieved party requires the defaulting party to pay a penalty sum for breach of contract if so agreed in the contract; and
- One can argue that the buyer’s failure to take TOP Liabilities is a breach of the long term contract and therefore the TOP Liability is a penalty to be paid by the Buyer.
If the TOP Liability is characterised as a penalty for breach then it is subject to a limit of 8% of the value of obligations which are in breach. To avoid this potential characterisation, the parties to a long term contract with a take-or-pay arrangement may consider characterising TOP Liability payment as adjustment to the sale price or payment for reservation of supplying capacity of the supplier.
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: