Official Letter 13629 of Ministry of Finance: Notable Clarifications and Gaps in Corporate Regulations
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. To be specific:
The Civil Code rules that only legal/natural persons may authorise other legal/natural persons to act as their representatives. As neither the GMS nor the Board qualifies as such, they fall outside this provision;
The Enterprise Law is silent on the GMS's delegation/authorisation; and
Conversely, Decree 155/2020 of the government stipulates that the GMS may delegate the Board to, for example, amend the plan for the use of proceeds from the public offering of securities.
The MOF's response:
The purpose of the relevant provision under Decree 155/2020 is to ensure flexibility, facilitation, and smooth operation of business activities, whereby the Board is authorized to amend the plan for the use of proceeds in accordance with actual circumstances in between the GMS's meetings;
The term "uỷ quyền" under Decree 155/2020 is not an authorisation governed by the Civil Code, but rather falls under the authority of the General Meeting of Shareholders - the supreme decision-making body of a joint-stock company; and
This provision is inherited from preceding regulations (Article 9.5 of Decree 58/2012) and has been consistently applied without encountering any obstacles.
Our comments:
The MOF appears to take the view that the GMS is allowed to delegate its authority to the Board, and such delegation is not an authorisation under the Civil Code. This, in our view, is a welcome clarification from the MOF as it provides flexibility in corporate governance. Provided that appropriate governance structures are in place, the GMS should be permitted to delegate its authority to their trusted members of the Board.
As discussed previously, we also support the position that the GMS should be permitted to delegate its authority to the Board pursuant to Decree 155/2020. To avoid confusion altogether, however, the Government should consider substituting the Vietnamese term “uỷ quyền” under Decree 155/2020 to clearly distinguish between authorisation under the Civil Code and delegation under the Enterprise Law.
Material gaps in the unidirectional determination of related persons (Query no. 12)
Query/Issue raised:
The Enterprise Law only provide the definition of a related person of an enterprise but not the definition of a related person of an individual (the latter is only available in the Securities Law, which is generally applicable to public companies rather than private companies). Thus, it is unclear how to determine the related person of the relevant managers and directors with regard to related parties transaction approval process under Articles 86 and 167 of the Enterprise Law.
The MOF's response:
The concept of "related person" as stipulated in Article 4.23 of the Enterprise Law is distinct from "related member" as defined in Article 67.2 of the Enterprise Law. Specific subjects are further regulated under Article 67.1 of this Law.
Article 86 of the Enterprise Law stipulates "Contracts and transactions between a company and related persons." Consequently, the term "parties" in this Article 86.3 refers to the related party to the company's transaction or contract, or the related party of the parties involved in such transactions/contracts, as specified in Article 86.1 of this Law.
Accordingly, the Enterprise Law already has provision about individuals having interests related to the company's transaction partners whose shall have their voting rights restricted.
Our comments:
The MOF appears to take the position that the related persons of the relevant managers can already be identified by applying the Enterprise Law’s definition of a related person of a company. This implies that, in the MOF’s view, the related persons of such managers are limited to companies, and do not extend to other legal entities or natural persons.
We are not certain whether this reflects the MOF’s actual intention. In case our interpretation is correct, it would be a serious oversight for the MOF to exclude, for example, family members of company managers from the related‑party transaction approval requirements in private companies.
Branch representation issue unresolved (Query no. 13)
Query/Issue raised:
Article 44 of the Enterprise Law stipulates that: "A branch has the function of representation by authorization," which is inconsistent with the Civil Code. Specifically, Article 138.1 of the Civil Code 2015 governing representation by authorization states: "Individuals and legal entities may authorize other individuals or legal entities to establish and perform civil transactions." A branch is not an independent legal entity; therefore, it does not possess the function of representation by authorization for a corporate legal entity under the provisions of the Civil Code.
According to Article 84.5 of the Civil Code 2015: "The head of a branch or representative office performs duties under the authorization of the legal entity within the scope and term of such authorization." Thus, the subject of representation by authorization is identified as an individual—specifically, the head of the branch or representative office.
Consequently, this leads to two interpretations:
According to the Civil Code: The enterprise must authorize the individual who is the head of the branch or representative office.
According to the Enterprise Law: The enterprise may authorize the branch or representative office itself, as if it were an inherent function or duty of that unit.
Furthermore, the Enterprise Law lacks clarity regarding the legal status of the head of the branch, the organizational model and operational mechanisms of branches, and the authorization/decentralization from the enterprise to the branch in establishing and performing civil transactions.
The MOF's response:
The functions, duties, and legal status of the head of a branch, as well as the organizational model and operational mechanisms of the branch, are internal corporate matters. These are conducted in accordance with the provisions of the Civil Code and may be further regulated by the company within its Charter on organization and operation.
Article 138.1 of the Civil Code stipulates representation by authorization specifically for the establishment and performance of civil transactions.
Article 44.1 of the Enterprise Law provides for a branch representing the enterprise to conduct part or all of its business and production operations. Consequently, the substances of these two provisions are distinct.
Our comments:
The MOF appear to suggest that a branch may represent its company, yet they fail to explain the legal nature of such representation nor to resolve the apparent inconsistency between the Enterprise Law and the Civil Code (i.e., a branch is neither a legal entity nor a natural person, so it lacks the legal capacity to represent another subject).
We have discussed this issue in the past and proposed an interpretation aimed at harmonizing the relevant legal provisions.
Unfortunately, given the MOF’s unsatisfactory response, this issue, which has been persisting for more than a decade, remains unresolved.
Share buyback time limit is still debatable (Query no. 16)
Query/Issue raised:
Article 133.1 of the Enterprise Law governing the repurchase of shares by company decision states:
“A company has the right to repurchase no more than 30% of the total sold ordinary shares, and part or all of the sold dividend preference shares, in accordance with the following regulations:
1. The Board of Directors has the authority to decide on the repurchase of no more than 10% of the total sold shares of each class within a 12-month period. In other cases, the repurchase of shares shall be decided by the General Meeting of Shareholders.”
The aforementioned regulation may lead to different interpretations of the "12-month" period:
First Interpretation: Within a period of 12 months starting from the date of sale [of the relevant shares], for each class of shares sold, the Board has the authority to decide on the repurchase of no more than 10% of those sold shares.
Second Interpretation: The Board has the authority to decide on the repurchase of no more than 10% of the total sold shares of each class, and these shares would be eligible for sale within a 12-month period prior to the date of the repurchase decision.
The MOF's response:
According to Article 133.1 of the Enterprise Law, the phrase "within a 12-month period" is "linked" to the word "sold". Therefore, this provision of the Enterprise Law is sufficiently clear and requires no further guidance.
Our comments:
The MOF’s response remains highly ambiguous. Given that the purpose of the Official Letter is to clarify uncertainties in the law, the MOF should have articulated its position more directly and clearly. Lacking a comprehensive clarification from the authority, the meaning of this time limit remains debatable.
Nevertheless, based on the wording of the response, it appears that the MOF may be endorsing the first interpretation. Under this reading, for example, if 500 ordinary shares and 400 preference shares are sold in January 2026, the Board would be entitled to repurchase no more than 50 ordinary shares and 40 preference shares during the period ending in January 2027.
Ambiguities in the related party transaction approval regulations (Queries no. 6, 14, 20, and 32)
Query/Issue raised:
In a limited liability company, the members/directors/controllers "related" to the "parties" in a related party transaction (RPT) is not allowed to vote on the company's entering into said RPT. The concern is that the "parties" in a RPT might include the company itself, which would lead to none of the Company's members, directors, or controllers has the right to vote.
The MOF's response:
The concept of "related person" as stipulated in Article 4.23 of the Enterprise Law is distinct from "related member" as stipulated in Article 67.2 of the Enterprise Law. Specific subjects have been regulated under Article 67.1 of this Law; and
The term "parties" in Article 86.3 refers to the parties involved in the company's transactions or contracts, or the related parties of the participants in said transactions or contracts, as prescribed in Article 86.1 of this Law.
Our comments:
The MOF's response is grossly ambiguous and does not exactly address the question raised:
In the first sentence, the MOF seems to say that the "related members" under Article 67.2 of the Enterprise Law are specifically referring to those listed under Article 67.1 of the Enterprise Law - which are the counterparties in an RPT that requires prior approval of the Company's top management bodies (RPT Counterparties). This means that only those who are RPT Counterparties would not be allowed to vote; and
However, in the next sentence, the MOF seems to take the view that the "parties" in the Article 86.3 of the Enterprise Law are the RPT Counterparties mentioned in Article 86.1 of the Enterprise Law. This means that those who are related to the RPT Counterparties would not be allowed to vote. However, given that the MOF ruled that the concept of related [member] in this regulation is different from the concept of "related person" under Article 4.23 of the Enterprise Law, the scope of subjects covered under this is, once again, unclear.
Indirect ownership remains unclear (Queries no. 11 and 18)
Query/Issue raised:
Article 155.2 of the Enterprise Law does not clarify how would the criteria of "not owning […] indirectly 1% or more of the voting shares of a joint stock company" means.
The MOF's response:
There are regulations regarding indirect ownership already, and the term "indirect ownership" under Article 155.2 of the Enterprise Law should be interpreted in accordance with such regulations, namely:
the definition of "indirect ownership" under Article 4.33 of the Law on Financial Institution:
"Indirect ownership means an organization's or individual's ownership of the charter capital of a credit institution through investment trust or an enterprise in which such organization or individual owns more than 50% of charter capital."
the definition of "indirect ownership" Article 17.2 of Decree 168/2025:
"Article 17. Beneficial owners of an enterprise
1. Criteria for identification of an enterprise’s beneficial owner
A beneficial owner of an enterprise having juridical person status (hereinafter referred to as “beneficial owner”) means an individual who:
a) either directly or indirectly owns at least 25% of the charter capital of that enterprise or at least 25% of its total voting shares; or
[…]
2. An individual who has indirect ownership as prescribed in point a clause 1 of this Article means an individual who holds at least 25% of the charter capital or at least 25% of total voting shares of the enterprise through another organization."
Our comments:
The MOF relies on analogous provisions from other laws to try to address the missing definition of “indirect ownership”. However, they failed to fully address the issue at hand because the legal provisions referenced by the MOF apply to different situations, with largely different implications, and not without ambiguity-the specifics of which are discussed in the table below:
|
|
Article 4.33 of the |
Article 17.2 of |
|
Scope |
Indirect ownership with regards to shareholding in a credit institution. |
Indirect ownership regarding identifying the beneficial owner of an enterprise. |
|
Implication |
A person is considered to have indirect ownership over a credit institution if said person owns 50% or more of the charter capital of an intermediary trust/enterprise that own a part of the charter capital of said credit institution. |
A person is considered to have indirect ownership over an enterprise if said person holds 25% or more of the charter capital or total voting shares of said enterprise through its intermediary. |
|
Ambiguity |
The law is still silent about how to determine the amount of indirect ownership of said person (e.g., any amount owned by the intermediary is counted as the indirect shareholding of said person, or the indirect shareholding would be the product of said person's shareholding in the intermediary multiply by the intermediary's shareholding in the relevant credit institution…) |
The law is still silent about how to determine the amount of indirect ownership of said person (e.g., any amount owned by the intermediary is counted as the indirect shareholding of said person, or the indirect shareholding would be the product of said person's shareholding in the intermediary multiply by the intermediary's shareholding in the relevant enterprise…) |
Crucial distinction of liabilities between the registrant and registrar regarding enterprise registration applications (Queries no. 5, 30, and 33)
Query/Issue raised:
When registering the source of charter capital of a company (i.e., capital from state fund, private capital, foreign capital or others), the registrant is usually met with challenges from the registrant due to their different opinions regarding the determination of source of charter capital.
The MOF's response:
The MOF:
highlighted the different scope of liabilities between the applicants and the enterprise registrar under the law (i.e., the applicant is liable for the legality, truthfulness and correctness of the information submitted, while the registrar is only liable for the "validity" of the applications - which refers to the completeness of the application files and information submitted); and
confirmed that (a) the registrant should determine the source of charter capital and (b) the registrar should accept the registrant's determination without needing to verify the source of charter capital by themselves.
Our comments:
This is a welcome clarification from the MOF. This view, if applied widely by the state authorities, should benefit both the applicants and the state authorities. This is because its adoption would not only reduce friction in the enterprise registration process (and any procedures with similar distribution of liabilities regarding the applications, including the investment registration procedure) that save time for the applicants, but also give the state authorities the peace of mind knowing that they will not be held accountable for any incorrect, untruthful information filed by the applicants.
Autonomy in unregulated matters under the Enterprise Law (Queries no. 7, 15, 9, 10)
Query/Issue raised:
Among others, the Enterprise Law failed to:
1. define the term "commercial secret" (bí mật thương mại in Vietnamese) used under Article 115.2(a);
2. clarify which of the two voting procedures for the Board of Members in a State-owned enterprise prescribed under Article 98.7(b) would apply, and in which case; or
3. specify the person or body with the power to approve the resignation letter of board directors and controllers of an JSC.
The MOF's response:
The Enterprise Law has set out the general regulations for all forms of enterprises. For specific matters, companies should regulate them in their charters.
Our comments:
This is a welcomed clarification from the MOF as it affords companies greater flexibility and autonomy to establish their own rules for corporate matters not expressly regulated by law. Although not explicitly stated by the MOF, we argue that this view should also be applicable to unregulated matters other than those raised in the queries.
That said, the boundary between unregulated matters and those that are regulated yet ambiguous is not always clear.
This post is written by Le Thanh Nhat.