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.

Mr. H sued to be recognised as a member of the company. The lower courts initially sided with Mr. H and accepted his request as a member of the company. However, the higher court overturned the decision, ruling that his investment was for "business cooperation" rather than "charter capital".

Full case law can be read here (full text in Vietnamese). Extracted contents of the case law and English translation by AI for reference only can be found here.

Key takeaways from the case law

The case law has two critical factors that investors should consider:

· Purpose of capital contribution: Under this case law, contributing funds to a company does not automatically create or increase the charter capital of such company unless there is a specific agreement to do so. If parties focus solely on sharing profits from a specific project or "business purposes" without mentioning an increase in charter capital, the court may view the contributor as a business partner rather than a shareholder/member. Another indicator used by the court is whether the agreement defines the contributor's liability for the company's debts and other financial obligations. Without clearly documented obligations corresponding to the capital, the court is likely to view the arrangement as business cooperation.

· Evidence to prove company member/shareholder status: In this case, the court has examined several criteria and documents to determine if the plaintiff has satisfied the requirements to be recognised as a company member, such as:

+ whether the plaintiff’s information is recorded on the ERC;

+ whether the plaintiff is exercising management rights or performing duties within the company;

+ whether the company has registered the capital increase with the relevant licensing authorities;

+ whether the plaintiff is named in the company’s charter and/or the register of members; or

+ whether the plaintiff holds a capital contribution certificate issued by the company.

Since the plaintiff was unable to provide the documents or prove he managed the company or acted with the rights and liabilities of an owner, the court declined to recognise his membership status, maintaining that he was solely a business contributor.

Notes for investors

Based on the case law, if you are investing or contributing capital to a Vietnamese company, you must be clear on your role from the outset:

· Verify your purpose in writing: Your agreement with the company or existing owners must explicitly state whether your funds are intended to create or increase the charter capital of the company for ownership purposes or are for business cooperation to receive profit distributions.

Register your name in company records: An agreement to contribute capital or the consistent receipt of profits is insufficient to prove ownership. If your goal is to become a company member/shareholder, you must ensure the company completes the statutory procedures to update your name on the ERC, which is vital for limited liability companies, and within the internal register of members/shareholders. Formal registration is the shield that guarantees your status and rights as a member/shareholder of the company.

· Secure ownership certificates: You should demand the issuance of a capital contribution certificate or share certificate confirming your ownership of the company's capital.

This blog is written by Le Minh Thuy.

Vietnam Business Law