On 9 September 2025, the Government of Vietnam adopted Resolution No. 05/2025/NQ-CP, approving a five-year pilot program for a regulated crypto trading market. The move marks a significant shift in Vietnam’s approach to digital assets: from a grey regulatory status to a structured framework under state supervision. This legal article outlines the key provisions of the pilot program, highlights implications for foreign investors, and provides recommendations for compliance and market entry strategies.

Background

Prior to Resolution 05/2025/NQ-CP, Vietnam maintained a restrictive stance on cryptocurrency:

• Cryptocurrencies were not recognized as legal tender, and their use for payments was prohibited.

• Crypto-related activities existed in a regulatory vacuum, exposing participants to compliance and enforcement risks.

With the adoption of the pilot program, Vietnam is signaling a more balanced approach: recognizing digital assets under a supervised framework, while ensuring systemic safeguards against money laundering, financial instability, and investor abuse.

Key Legal Provisions

1. Licensing and Scope of Operation of Crypto Trading

• Only enterprises licensed by the Ministry of Finance (MoF) are permitted to operate crypto exchanges, issuance platforms, or conduct associated marketing.

• All activities must be conducted in Vietnamese Dong (VND), preserving monetary sovereignty.

2. Issuance Criteria

• Only Vietnamese enterprises are authorized to issue crypto assets.

• Issued tokens must be backed by tangible underlying assets (excluding fiat currency and securities).

• Issuers are required to publish a prospectus at least 15 days prior to offering.

3. Foreign Investor Participation

• Foreign investors may only participate through licensed domestic service providers.

• Foreign ownership is capped at 49% in licensed crypto enterprises, ensuring Vietnamese control.

4. Capital Requirements

• Crypto Asset Service Providers (CASPs) must maintain a minimum charter capital of VND 10 trillion (~USD 379 million).

• At least 65% of such capital must come from institutional investors (banks, insurers, securities firms, technology enterprises).

5. Compliance and Governance Standards

Licensed CASPs must comply with:

• Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) regulations.

• Cybersecurity and data protection laws.

• Corporate governance and risk management obligations, including qualified personnel with relevant certifications and executive experience.

6. Pilot Duration and Enforcement

• The pilot program for crypto trading will run from 9 September 2025 to 9 September 2030.

• Within six months of the first CASP being licensed, trading on unlicensed platforms will become subject to administrative and legal penalties.

• 

Implications for Foreign Investors

Regulatory Certainty and Market Legitimacy

For the first time, crypto assets will be regulated under a government-sanctioned pilot, reducing legal uncertainty for foreign investors.

High Entry Barriers

The VND 10 trillion capital requirement and institutional funding threshold restrict market entry to large, well-capitalized players, while excluding smaller speculative actors.

Structuring Constraints

The 49% ownership cap necessitates joint ventures or minority positions for foreign investors. Strategic alignment with Vietnamese partners is therefore essential.

Compliance Burden

The pilot imposes onerous compliance standards, which align with international norms but demand significant investment in infrastructure, risk management, and human resources.

Currency and Repatriation Risks

The requirement to transact exclusively in VND introduces currency exposure and necessitates careful planning for the repatriation of profits.

Strategic Considerations

• Engage Early with Domestic CASPs: Establish partnerships with Vietnamese enterprises preparing for licensing under the pilot program.

• Structure Investments Prudently: Design ownership models that comply with the 49% cap while protecting investor rights.

• Enhance Compliance Infrastructure: Implement global-standard AML, cybersecurity, and data governance frameworks.

• Monitor Regulatory Developments: Anticipate refinements as the pilot progresses toward a permanent legal framework.

Conclusion

Resolution 05/2025/NQ-CP represents a landmark development in Vietnam’s digital asset regulation. While the framework imposes high entry barriers and stringent compliance obligations for crypto trading in Vietnam, it also provides legal certainty and structured opportunities for foreign investors. Those who position themselves early—through compliant structures, strategic local partnerships, and robust governance—stand to benefit from Vietnam’s gradual integration of crypto into its broader digital economy strategy.

IVLF Advisors LLC stands ready to assist foreign investors in navigating Vietnam’s emerging crypto regulatory landscape, from structuring compliant market entry strategies to ongoing legal and financial advisory.

📧 Contact: info@ivlf-advisors.com
☎ Hotline: (+84) 936 726 065

In the world of corporate governance, few challenges are as disruptive as a deadlock among shareholders or directors. When disagreements escalate to the point where critical business decisions cannot be made, the company may face serious consequences: stalled growth, missed investment opportunities, declining stakeholder confidence, and even the risk of dissolution.

Deadlock in business often arises in companies where ownership is equally divided or when decision-making structures do not provide a clear path for resolution. What begins as a simple disagreement can quickly evolve into a major obstacle, preventing the company from moving forward at pivotal moments such as raising capital, expanding into new markets, or pursuing an IPO.

The good news is that deadlock is not an inevitable end. With the right preventive strategies—such as drafting a robust shareholders’ agreement, designing a balanced ownership structure, or appointing independent decision-makers—companies can minimize the risk of deadlock before it occurs. And if disputes do arise, a wide range of legal, financial, and negotiation tools are available to break the stalemate and restore operational stability.

This article provides a comprehensive overview of what shareholder deadlock is, why it happens, the risks it creates, and the most effective solutions to prevent and resolve it. Whether you are an entrepreneur, investor, or legal advisor, understanding how to handle deadlock is essential to ensuring the long-term success and resilience of your business.

What is Deadlock?

In corporate governance, Deadlock occurs when shareholders or board members fail to reach consensus on critical business decisions, causing the company to stall.

Deadlock typically arises in companies where:

• There are two main shareholders, each holding an equal stake (50:50).
• The board of directors has an even number of members, creating split votes.
• No individual or group holds a controlling interest.

Example:
Two co-founders own 50% each. Founder A supports raising capital; Founder B objects. No majority is reached → the company falls into a deadlock.

Common Causes of Deadlock 

1. Unbalanced ownership structure
   • Equal 50:50 shareholding easily leads to stalemates.
   • No tie-breaking mechanism in place.
2. Lack of a Shareholders’ Agreement
   • No dispute resolution mechanism.
   • No provisions for buy-out or share transfer.
3. Conflicts of interest and strategy
   • Different visions for expansion, investment, or risk appetite.
   • Short-term vs. long-term profit focus.
4. Lack of trust and communication
   • Poor transparency in financial reporting.
   • Personal conflicts spilling into corporate matters.

Serious Consequences of Deadlock

Deadlock not only slows down management but also:

• Blocks key decisions: fundraising, acquisitions, IPOs.
• Damages reputation with investors and partners.
• Affects cash flow and profit due to stalled operations.
• Leads to litigation: costly, lengthy shareholder disputes.
• Potential dissolution if unresolved.

Preventing Deadlock from the Start

1. Drafting a Shareholders’ Agreement

This is the most effective preventive tool. It should include:

• Decision-making procedures.
• Buy-sell options (Call/Put).
• Dispute resolution mechanisms (arbitration, mediation, court).
• Appointment of independent directors.

2. Smart equity structuring

• Avoid 50:50 ownership.
• Favor majority structures (e.g., 51%–49%).

3. Incorporating Deadlock Clauses into the Company Charter

• Define a clear process for resolving deadlock.
• Identify a tie-breaking mechanism.

Solutions to Resolve Deadlock

1. a) Negotiation & Share Transfer

• One shareholder exits by selling shares to the company or a third party.
• Helps restore balance and decision-making control.

1. b) Buy-Sell Agreements (Shotgun Clauses)

• One shareholder names a price for buying the other’s shares.
• The other shareholder must either sell or buy at that price.
• Ensures fairness and prevents drawn-out disputes.

1. c) Bringing in a New Shareholder

• Adding a third shareholder breaks the 50:50 deadlock.
• A strategic investor can also bring funding and expertise.

1. d) Appointing an Independent Director

• If deadlock arises at board level → the independent director casts the deciding vote.

1. e) Arbitration, Mediation, or Litigation

• Arbitration: faster, more confidential than court.
• Mediation: helps achieve a win-win settlement.
• Court litigation: last resort, but costly and time-consuming.

Real Case Studies on Deadlock

Case 1 – Tech Startup Deadlock:

Two co-founders split 50–50. They disagreed on IPO strategy. The company missed Series B funding.
➡️ Solution: One founder exited, and a strategic investor joined.

Case 2 – Family Business Deadlock:

Two brothers equally split shares. Conflict arose over bank loan decisions.
➡️ Solution: Appointment of an independent director to mediate and finalize key financial decisions.

How IVLF Advisors LLC Can Help

With 10+ years of experience in legal, financial, and FDI advisory, IVLF Advisors LLC offers:

• Drafting & reviewing Shareholders’ Agreements.
• Advisory on equity restructuring to prevent deadlock.
• Acting as a neutral mediator in shareholder disputes.
• Strategic guidance for IPO & M&A to ensure transparency and minimize risks.

👉 Our commitment: Fast – Effective – Confidential solutions.

📧Email:info@ivlf-advisors.com
☎️ Hotline: (+84) 936 726 065

FAQ – Frequently Asked Questions 

1. Does deadlock mean the company must dissolve?

❌ No. Multiple solutions exist before dissolution is considered.

2. Is a Shareholders’ Agreement legally required?

⚖️ Not mandatory, but highly recommended for governance and dispute prevention.

3. What is the fastest way to break a deadlock?

✅ Usually, a share transfer or bringing in a new shareholder.

4. Is going to court the best option?

⏳ Not always. Litigation is lengthy and expensive. Mediation or arbitration is often more efficient.

Conclusion

Deadlock is a potential risk in every company, especially those with poorly structured shareholding. However, with proper preparation and the right solutions, businesses can overcome deadlock and ensure sustainable growth.

📌 If your company is facing shareholder deadlock or you wish to prevent it, contact IVLF Advisors LLC for tailored legal and financial advisory

OUR FOUNDING PARTNER PARTICIPATING IN THE QSI ANNUAL CAREER FAIR.

On 13 March 2024, QSI International School of Hai Phong (“QSI” or the “School”) hosted the QSI Annual Career Fair. Mr. Nguyen Trung Nghia, our firm’s founding Partner, has been invited to participate in engaging with international and overseas Vietnamese students at the School. During this interactive session, Mr. Nghia provided useful insights into the legal profession, elucidating its inherent responsibilities, requisite education/training, essential skills, encountered challenges and rewards, as well as the crucial aspect of maintaining work-life balance alongside discussing the average remuneration associated with the profession.

As a result of this informative exchange, the students acquired a comprehensive understanding of the legal profession and the role of an attorney and legal advisor therein. The session also facilitated an opportunity for the students to express their appreciation and to share their reflections with Mr. Nguyen Trung Nghia and IVLF.

SOME THOUGHTS FROM THE STUDENT AFTER THE SESSION

“Thank you for today’s informative session. I really appreciated learning about the time it takes to study to become a lawyer. My favorite part of your presentation was the clear explanation of the salary, what I would need to do to become a good lawyer, and what I would have to experience.” (Nhi)

“Thank you for talking about how being a lawyer works. I really appreciated learning about how much an average lawyer makes. My favorite part of your presentation was when you talked about the challenges and joys of being a lawyer.” (Griffin)

“Thank you for presenting to us today and for answering our questions. My favorite part of the presentation was the salary, it helped me understand.” (Maria Luiza)

“Thank you for coming to talk to us about your career. I really appreciated learning about the lawyer career. My favorite part of your presentation was when you told us the hardest case you had to deal with.” (Maria L.)

“Thank you for taking your time and teaching us about your career. I really appreciated learning about new careers, especially when it comes to careers related to laws. My favorite part of your presentation was when you answered the questions; it was helpful.” (Marta Llana Miguel)

 “Thank you for giving the Lawyer presentation. I really appreciated learning about the lawyer field in Vietnam, and the possibilities available.” (Viktor)

 “Thank you for coming to our school to explain and share your experiences of the career which was a lawyer. My favorite part of your presentation was the specific salary information in several cities in Vietnam and the comparison of them.” (Jieun)

 “Thank you for sharing your expertise on law. I really appreciated learning about the skills necessary to practice law, I also found it interesting how your schedule looks. My favorite part of your presentation was the part about responsibilities.” (Jaspaert, Oskar)

“Thank you for giving me information about lawyers. I really appreciated learning more about lawyers. My favorite part of your presentation was when you said lawyers should study a lot to be a lawyer.” (Charles Moon)

“Thank you for your speech of how lawyer career is like. I really appreciate learning about the challenges and requirements of becoming a lawyer. I am impressed with the number of years spent learning to actually become a lawyer. Being a lawyer is hard and I do understand that you also have a lot of struggles, right? Anyways, your presentation was amazing, I learned a lot of new things about lawyers and even outstanding my knowledge from what I know about lawyer from my grandpa’s. It was an amazing presentation overall.” (Ha Nguyen)

“Thank you for teaching us about all the information about lawyers. It really helped me to visualize what it is like to be a lawyer. I really appreciated learning about laws and lawyers. I could see you were really trying your best even though English was challenging to you. My favorite part of your presentation was when you answered all the student’s questions nicely.” (Rumi Lee)

 “Thank you for coming to give the presentation; it was nice to learn about all the different varieties of laws you can practice.” (Arthur)

 “Thank you for coming to QSI and telling us about your job and how it works. I really appreciate learning about how being a lawyer works and all the challenging work that is put into becoming one. My favorite part was learning about the things needed to become a lawyer, and the process in becoming one. Thank you for coming to QSI today!” ( Leah)

The career-sharing session stands as a cherished memory for IVLF. IVLF expresses profound satisfaction in imparting valuable information to the students. Such endeavors exemplify IVLF’s commitment to fostering meaningful interactions aimed at shaping the future generations. IVLF earnestly anticipates that these insights will ignite students’ determination to excel academically and evolve into exemplary members of society.

Furthermore, IVLF extends its best wishes for the continued success of your esteemed institution in the realm of education. IVLF eagerly anticipates future opportunities to engage with students at QSI, as well as other educational institutions, to inspire and cultivate their passion for the legal profession, thereby contributing to the nurturing of future generations.

For more information, please check out QSI Haiphong: https://haiphong.qsi.org/

IVLF LLC has been awarded and recognized by APAC Insider 2023

IVLF LLC is pleased to announce that our firm and respected partner have been recognized and awarded by APAC Insider 2023, a longstanding publication operated by AI-Global Media, a UK-based publishing group. This recognition has demonstrated our exceptional expertise and practical experience to our esteemed clients, as well as marked a remarkable milestone in consolidating the client’s trust in our high-profile and landmark advisory services.

Following that, we are honored to congratulate Mr. Nguyen Trung Nghia, a distinguished legal expert of our firm in Foreign Investment, M&A, Finance, and Restructuring, for being awarded the “Most Innovative Legal Advisor 2023 (Vietnam)”. Together with that, our firm was awarded “Best International Tax & Legal Advisory 2023” and “Best Foreign Investment Advisors 2023 – South East Asia” as well.

IVLF LLC and Mr. Nguyen Trung Nghia have achieved the prestigious “Most Innovative Legal Advisor 2023 (Vietnam) and “Best Foreign Investment Advisors 2023 – South East Asia in the APAC Legal Awards 2023!

The triple-award win in APAC Insider 2023 is the recognition of IVLF LLC and Mr. Nguyen Trung Nghia’s devotion to delivering the most innovative legal guidance, solutions, and support to our esteemed clients. IVLF LLC could not have done it without our team of innovative and dedicated experts and our esteemed client’s trust. These awards are the motivation for IVLF LLC and continue to be clients’ trustworthy companions. We would like to express our sincere gratitude to our clients and partners for their continued trust and support. It is through their collaboration that we are able to achieve such remarkable milestones.

Once again, congratulations to Mr. Nguyen Trung Nghia, and our firm’s tirelessly attempting professionals and lawyers at IVLF LLC for their well-deserved recognition.

For a complete list of winning firms and individuals, please visit the Apac Insider website.

Did you know how to open a company in USA from Vietnam?

Currently, there is a growing interest among individuals and companies based in Vietnam to invest in the United States of America. This includes setting up a subsidiary company in the USA, acquiring shares or equity in a US-based company, and even establishing a branch or representative office in the country. If you are interested in opening a company in the USA, this article will provide you with some useful guidance on how to open a company in USA from Vietnam.

Selecting a State in the USA

The United States of America has a diverse legal landscape, with each state having its own legal system that governs various regulations. It is essential to keep in mind the state in which you plan to open a company in USA before considering opening a business in the USA.

To register your company’s business in the United States, you shall first file to register your company in that state. For instance, like in California, you shall file either an Application to Register a Foreign Limited Liability Company (LLC) or a Statement and Designation – Out-Of-State Stock Corporation with the California Secretary of State (SOS).

Documents and information required to register

To complete the application to open a company in USA, you typically need to provide:

• the name of your company as registered in the state where it was organized
• if necessary, an alternate name that your company will use in California (necessary if your company’s original name or something very similar is already being used by a California registered business, or the original name does not include words such as “Limited Liability Company” or an abbreviation such as “LLC“)
• the state where your company was formed
• the date on which your company was formed
• a statement that your company currently is allowed to conduct business in the state where it was formed
• the name and street address of your company’s registered agent
• the street address of your company’s principal office
• the street address of your company’s principal office in the chosen U.S. state, if any
• the mailing address of your company’s principal office, if different from its street address, and
• a signature from the authorized person (e.g. general manager or Chief Executive Officer).

You must include a certificate of good standing with your application. The certificate must have been issued within the last six (6) months by the governmental agency where your company was formed (usually a secretary of state in the state where your company is incorporated).

Registration fees

Most states in the United States, especially California, allow you to file by online application (most common) or mail. The basic filing fees vary among the U.S. states, e.g., in California, the filing fee is $70 for an LLC and $100 for a stock corporation.

Post-Incorporation Proceedings

Once you have qualified your foreign entity to do business in a U.S. state, technically you are free to transact business in that state. However, practically speaking, in order to do any real business in that state (or anywhere in the US), you will need to obtain a Federal Employer Identification Number (a “FEIN”) from the United States Internal Revenue Service (the “IRS”).

A FEIN is your company’s taxpayer identification number; essentially your company’s identity number in the United States (the company equivalent of a Social Security Number issued to individual US taxpayers).

In addition to being used to file US and state tax reports, the FEIN is required by all American banks in order to open a bank account and is also necessary to obtain employer identification numbers and accounts required by most states. As such, without a FEIN, you are pretty much stalled.

Proceedings To Be Conducted in Vietnam.

Apart from the necessary steps to open a company in the USA, there are also some essential procedures that you need to go through in Vietnam. These include obtaining an offshore investment registration certificate from the Ministry of Planning and Investment of Vietnam and fulfilling the registration for foreign exchange transactions in relation to offshore investment activities, which must be approved by the State Bank of Vietnam.

The above advice is preliminary, and we encourage you to contact us for more information at finnnguyen@ivlf-lawyer.com. At IVLF LLC, we have extensive experience and expertise and can tailor our services to meet your specific needs. In Vietnamese legislation, we have Mr. Nguyen Trung Nghia, who is currently the managing partner of the firm, and in the US legislation, we have a US-practicing Counsel, Nguyen Duc Nguyen Vy, who is well-versed in US legislation and well-trained in US-based reputable law schools and can assist you with the initial establishment proceedings as required.

How legally a no-legal-provision business model works in Vietnam?

Vietnam’s economy has been rapidly growing in recent years, positioning itself as one of the fastest-growing economies in Southeast Asia. The country’s business environment is highly dynamic, making it an attractive destination for entrepreneurs and investors worldwide. In the other words, Vietnam’s market is highly competitive, and many businesses are introducing new and attractive business models to stay ahead of their competitors. These companies often task their personnel with creating innovative business models that will generate higher profits.

However, the constant development of new business models often means that they operate in a legal gray area, which can be a concern for foreign investors. Foreign investors often have concerns about the risks associated with conducting business in Vietnam. They may wonder about the legal framework surrounding their business model and which Vietnamese laws will apply to their company. If there is no specific provision in Vietnamese legislation that applies to their business model, they may be uncertain about how it will be affected and if it will be in compliance with Vietnamese laws.

Therefore, when developing these new business models, they also prioritize compliance with Vietnamese laws to avoid any legal risks. They strive to ensure that their business models are legally sound and adhere to Vietnamese regulations. In this article, we will discuss the above in the following:

Some Practically Recommendations in Vietnam

Choosing a suitable business line and comprehending the legal framework of Vietnamese laws for that specific business line is the initial and crucial step. This helps to determine the legality of the business model, which options can be implemented, and whether the foreign ownership ratio needs to be adjusted.

Furthermore, consultation with legislators and relevant ministries can be helpful to gain insight into whether there is a clear foundation for implementing the business model. These consultations can be conducted on a no-name and unofficial basis to avoid any potential legal complications.

If the chosen business line has no restrictions on foreign ownership ratio, the registration process involves adding the new business line at the provincial Department of Planning and Investment.

If restricted by the foreign ownership ratio, investors have two options. They can either partner with a local individual or a Vietnam-owned entity to operate the business line and then convert their current company form. Alternatively, they can partner with a local entity to establish a new company, in which both parties will own shares/capital contributions in proportion to their agreement. The new company can be established as either a multi-member limited liability company or a joint-stock company, depending on their mutual decision and objectives. This will enable them to operate the business model in compliance with Vietnamese laws.

In order to proceed with the above proposal, investors may need to follow certain procedures, including but not limited to:

(i) Preparing corporate internal approvals for doing the company’s new business;
(ii) Preparing sets of relevant documents and application dossiers to implement the new business model;
(iii) Registering to add the new business line at the provincial Department of Planning and Investment;
(iv) Transforming the corporate form of the company or incorporating a newly established company;
(v) Obtaining the necessary approvals, permits, and licenses from the competent licensing authorities before its commencement of operation.

Depending on the corporate form chosen, the highest-level administrative body will make decisions and assign a legal representative to prepare the application dossiers for submission to the competent licensing authorities. This administrative body can be the owner of a single-member company limited, the members’ committee of a multi-member company limited, or the general shareholders of a joint-stock company. The application dossiers will be submitted to the provincial Department of Planning and Investment or other competent licensing authorities as required.

In Conclusion

Understanding the legal framework for new business models in Vietnam is essential for entrepreneurs and investors who want to maximize the potential benefits of their ventures. By complying with registration and licensing requirements, and guiding and governing legislations, businesses can minimize legal risks and ensure long-term success.

In addition, it is important to stay informed about legal developments and changes in the regulatory environment. Vietnam is a rapidly changing market, and new laws and regulations are being introduced on a regular basis. By staying up-to-date on these changes, businesses can adapt to new legal requirements and take advantage of new opportunities as they arise.

Overall, the legal framework for new business models in Vietnam is complex but manageable. By working closely with legal professionals, regulators, and other stakeholders, businesses can navigate the regulatory environment and successfully launch and operate their ventures. With the right legal strategy and compliance plan in place, entrepreneurs and investors can take advantage of the tremendous growth potential of the Vietnamese market.

Did you know How to open a representative office in Vietnam?

Opening a representative office in Vietnam can be a great opportunity for foreign companies looking to expand their business into the Vietnamese market to have a first-market approach to how the business environment in Vietnam is running. A representative office of a foreign company established in Vietnam is considered an extending hand of a foreign company established in their home country to conduct marketing and research activities without aiming for profitable commercial purposes. In this article, we will discuss the legal requirements, conditions, and procedures for opening a representative office in Vietnam.

Eligibility Requirements

To open a representative office in Vietnam, foreign companies must meet, among others, the following requirements:
(i) The foreign company must have been operating for at least one year from the date of incorporation or registration;
(ii) The foreign company must be legally established and operating in accordance with the laws of its home country; and
(iii) Activity content(s) of the representative office must be in conformity with commitments contained in the treaties to which Vietnam is a party.

Licensing Procedures

The licensing procedure to open a representative office in Vietnam involves the following steps:

Step 1: Preparing the de-forma application documents

The foreign company must prepare the following documents:
(i) A written request for opening a representative office in Vietnam;
(ii) A copy of the business registration certificate or equivalent document of the foreign company;
(iii) A power of attorney issued by the foreign company’s legal representative;
(iv) A decision on the appointment of the representative office’s proposed chief representative;
(v) Passport/ identity card of the chief representative;
(vi) A copy of the foreign company’s latest audited financial statement or written confirmation of tax obligations status; and
(vii) A document evidencing the representative office’s proposed registered location.

Step 2: Submitting the application

The foreign company must file the application documents to the Provincial Department of Industry and Trade (“DOIT”) if the representative office is located outside the industrial area and must file to the provincial Management Board of Industrial Zones (the “MBIZ”) if the representative office is located in the industrial area. The application can be submitted in person, online, or by post.

Step 3: Obtaining the license

The provincial DOIT or MBIZ will review the application and issue a license for the establishment of a representative office of a foreign company (the “License“) within seven (7) working days from the receiving date of the complete and proper application dossier by the provincial MOIT / MBIZ.

Term of the License

The term of the License is five (5) years from the date of issuance by the DOIT or MBIZ and shall be extended upon the expiry of the term of the License.

Post-licensing Procedures

After obtaining the License, the foreign company must complete the following post-licensing procedures, among others:
(i) a seal from the seal production company.
(ii) Register with the local tax office and obtain a tax code.
(iii) Opening a bank account.
(iv) Registering for recruiting Vietnamese employees.

The representative office of the foreign company established in Vietnam must submit annual reports to the DOIT / MBIZ in which the representative office is located. The annual report must include information on the activities and financial status of the representative office.

In conclusion, opening a representative office in Vietnam can be a great opportunity for foreign companies looking to expand their business in Vietnam before making a decision to set up a subsidiary company in Vietnam or find valued investment opportunities. However, it is important to comply with all legal requirements and procedures and to be aware of and to determine whether it is eligible to open a representative office in Vietnam. Foreign companies can be in consultation with our practically experienced lawyers and professionals before making the right decision for opening their representative office in Vietnam.

For further information and should have any questions, please reach out to us at finnnguyen@ivlf-lawyer.com

How to Fundraise for Startup Companies in Vietnam: A Legal Guide

If you are a startup company in Vietnam looking to raise funds from venture capital, private equity, or other funds, it’s important to understand the legal framework of Vietnam governing how to fundraise for startup companies in Vietnam. This guide will provide an overview of the relevant laws and regulations of Vietnam, as well as some tips for optimizing your fundraising efforts.

Legal Framework

In Vietnam, fundraising activities to fundraise for startup companies are typically governed by the Law on Investment, the Law on Enterprises, the Law on Securities, and specific guiding legislations. These legislations shall provide the legal framework of Vietnam for fundraising activities and set out the rules, conditions, and requirements with which startup companies must comply.

Under the Law on Investment, foreign investors are allowed to invest in Vietnamese companies through various forms, such as capital contribution, share acquisition or merger and acquisition, and business cooperation contracts. However, there are certain restrictions and conditions that must be met, such as obtaining necessary licenses and approvals from the relevant authorities (for example obtaining an M&A Approval to be granted by the provincial Department of Planning and Investment, removal of certain business lines limiting foreign investors’ whole ownership ratio.

The Law on Enterprises, in the other words, governs the establishment, management and operation, and internal approvals of companies in Vietnam. It provides the legal ground for companies to either issue additional shares by a means of private placement applicable to the form of a joint stock company, or issue additional capital contribution applicable to the form of a multi-member company limited, to transfer shares from existing shareholders of the company or to convert the company’s form for the purpose of deal structuring and to raise capital through various means, such as private placement, public offering or bond issuance, debt-to-equity conversion, convertible loans.

Transactional documentation for the closing of a fundraising transaction

When it comes to the fundraising transaction, legally speaking, it is typically referred to as a form of M&A and a startup company shall in its capacity produce themselves or engage a trusted and experienced legal advisor to produce certain must-have transaction documents and review them in compliance with the laws of Vietnam as well as protect the legitimate rights and interests of a contractual party specified in transactional documents, such as Term Sheet, Memorandum of Understanding, Shares Purchase Agreement, Shares Subscription Agreement, Shareholders Agreement from time to time.

Aside from the above contractual documents, the company can be subject to each specific deal structure proposed by foreign investors and target company/ selling shareholders, produce some of the necessary applications for closing proceedings of the fundraising transaction, such as registering of foreign loans, modifying foreign loans to convert to equity/ shares in the startup company, obtaining an M&A approval for the acquisition of shares/ equity by foreign investors, charter capital increase…

In addition, the process of conducting corporate due diligence to fundraise for startup companies is considered an optional process by the investors and startup companies, their involved legal, finance, and tax advisors shall together find out key findings as much as possible in relation to the target company in many various aspects to be aware of whether the implications of key findings on how fundraising transactions will effects and how the key issues will be tackled in the transactional documents and in the process of negotiation of terms and conditions contained in the transactional agreement to which it is a party.

Conclusion

To fundraise for startup companies in Vietnam can be a challenging but multiple-step process. By understanding the legal framework and optimizing your fundraising efforts, you can increase your chances of success and take your company to the next level.

I hope this article helps you with your fundraising efforts. Let me know if you have any further questions and reach out to us at finnnguyen@ivlf-lawyer.com

How to Fundraise for Startup Companies in Vietnam: A Legal Guide

If you are a startup company in Vietnam looking to raise funds from venture capital, private equity, or other funds, it’s important to understand the legal framework of Vietnam governing how to fundraise for startup companies in Vietnam. This guide will provide an overview of the relevant laws and regulations of Vietnam, as well as some tips for optimizing your fundraising efforts.

Legal Framework

In Vietnam, fundraising activities to fundraise for startup companies are typically governed by the Law on Investment, the Law on Enterprises, the Law on Securities, and specific guiding legislations. These legislations shall provide the legal framework of Vietnam for fundraising activities and set out the rules, conditions, and requirements with which startup companies must comply.

Under the Law on Investment, foreign investors are allowed to invest in Vietnamese companies through various forms, such as capital contribution, share acquisition or merger and acquisition, and business cooperation contracts. However, there are certain restrictions and conditions that must be met, such as obtaining necessary licenses and approvals from the relevant authorities (for example obtaining an M&A Approval to be granted by the provincial Department of Planning and Investment, removal of certain business lines limiting foreign investors’ whole ownership ratio.

The Law on Enterprises, in the other words, governs the establishment, management and operation, and internal approvals of companies in Vietnam. It provides the legal ground for companies to either issue additional shares by a means of private placement applicable to the form of a joint stock company, or issue additional capital contribution applicable to the form of a multi-member company limited, to transfer shares from existing shareholders of the company or to convert the company’s form for the purpose of deal structuring and to raise capital through various means, such as private placement, public offering or bond issuance, debt-to-equity conversion, convertible loans.

Transactional documentation for the closing of a fundraising transaction

When it comes to the fundraising transaction, legally speaking, it is typically referred to as a form of M&A and a startup company shall in its capacity produce themselves or engage a trusted and experienced legal advisor to produce certain must-have transaction documents and review them in compliance with the laws of Vietnam as well as protect the legitimate rights and interests of a contractual party specified in transactional documents, such as Term Sheet, Memorandum of Understanding, Shares Purchase Agreement, Shares Subscription Agreement, Shareholders Agreement from time to time.

Aside from the above contractual documents, the company can be subject to each specific deal structure proposed by foreign investors and target company/ selling shareholders, produce some of the necessary applications for closing proceedings of the fundraising transaction, such as registering of foreign loans, modifying foreign loans to convert to equity/ shares in the startup company, obtaining an M&A approval for the acquisition of shares/ equity by foreign investors, charter capital increase…

In addition, the process of conducting corporate due diligence to fundraise for startup companies is considered an optional process by the investors and startup companies, their involved legal, finance, and tax advisors shall together find out key findings as much as possible in relation to the target company in many various aspects to be aware of whether the implications of key findings on how fundraising transactions will effects and how the key issues will be tackled in the transactional documents and in the process of negotiation of terms and conditions contained in the transactional agreement to which it is a party.

Conclusion

To fundraise for startup companies in Vietnam can be a challenging but multiple-step process. By understanding the legal framework and optimizing your fundraising efforts, you can increase your chances of success and take your company to the next level.

I hope this article helps you with your fundraising efforts. Let me know if you have any further questions and reach out to us at finnnguyen@ivlf-lawyer.com

Awarding ESOPs from Foreign Companies to Vietnamese Employees in Vietnam: A Legal Guide

Awarding ESOPs to Vietnamese employees is becoming an increasingly popular way for companies to attract and retain talent. One common form of equity compensation is the Employee Stock Ownership Plan (ESOP). ESOPs allow employees to own a portion of the company they work for, which can provide a powerful incentive to work hard and contribute to the company’s success.

However, awarding ESOPs from foreign companies to Vietnamese employees in Vietnam can be a complex legal process and time-consuming. In this article, we will outline the key steps both local and foreign companies must take to award ESOPs to their Vietnamese employees.

Step 1: Understand Vietnamese Law Governing ESOPs to be issued by a foreign entity to their Vietnamese employees

The first step in issuing ESOPs to Vietnamese employees is to understand the relevant governing laws in Vietnam. The Labor Code of Vietnam governs all employment relationships in the country, including those between foreign companies and Vietnamese employees. In other words, the banking legislation of Vietnam shall guide how to issue and register the ESOP issued by the foreign entity to their Vietnamese employee working in Vietnam.

ESOPs issued by the foreign entity in Vietnam are solely for Vietnamese employees and shall be issued in the form of either (i) awarding actual shares, or (ii) awarding share options with special rights to the eligible employees.
This includes providing appropriate compensation and benefits and complying with any local regulations related to equity compensation.

Step 2: Eligible to award ESOPs

A foreign company wishing to issue the ESOPs to its Vietnam-based Vietnamese employee must have its legitimate registered commercial presence in Vietnam, subject to certain conditions as required by the legislation of Vietnam. That commercial presence in Vietnam can be their foreign-invested company, branch or representative office in Vietnam, or executive office of a foreign party in a business cooperation contract to which it is a part.

To satisfy certain conditions and requirements and be implemented legally, it is advised that the ESOP issued by the foreign entity must be registered with the State Bank of Vietnam through his/her commercial presence registered in accordance with the laws of Vietnam.

Step 3: Preparation of a Plan for Implementation of the ESOPs

Prior to submitting the application for registration of the ESOPs to the State Bank of Vietnam, the foreign entity must prepare an approved plan for implementation of the ESOPs which is in compliance with the laws of Vietnam and their applicable jurisdictional laws and approved by the competent management authority of them.

This plan should outline the terms and conditions of the ESOP, including the number of shares awarded to each employee, the vesting schedule, any restrictions on the transfer of shares, and other requisition terms and conditions. The foreign entity and its Vietnam-based commercial presence entity should explain the clearest way of terms and conditions thereof, as well as any risks or restrictions associated with owning shares in a foreign company to its Vietnamese employees before approval of the Plan of ESOPs and registering it at the State Bank of Vietnam.

Step 4: Awarded ESOP Registration Process

To register the ESOP awarded in Vietnam for Vietnamese employees, the foreign company must first have a commercial presence in Vietnam and obtain the must-have license and approval when doing business in Vietnam (such as an Investment Registration Certificate, Enterprise Registration Certificate, M&A Approval, License for establishment of a branch/ representative office of a foreign entity in Vietnam). Subject to each commercial presence said above, the ESOPs issued by a foreign entity must be conducted through an entity with a Vietnam-based commercial presence (the “Vietnam Presence Entity”) to submit an application for ESOP registration to the State Bank of Vietnam.

The State Bank of Vietnam shall within fifteen (15) working days from the receipt date of a complete and valid application grant written approval for implementing the offshore ESOP to Vietnamese employees.

Step 5 ESOP Banking Account Opening

Upon receipt of the written approval from the State Bank of Vietnam, the Vietnam Presence Entity shall come to a licensed commercial bank located in Vietnam to open a banking account for the implementation of ESOPs and all transactions in relation to the legitimate approved ESOPs must be carried out via the said banking account for overseas fund remittance or transfer of proceeds back to Vietnam.

Awarding Esops from foreign companies to Vietnamese employees in Vietnam

Conclusion

Awarding ESOPs from foreign companies to Vietnamese employees in Vietnam can be a complex legal process and time-consuming, given the statutory timing being 15 working days, yet the timing to be granted written approval by the State Bank of Vietnam is relatively long due to having to be explanatory to the officials of the State Bank of Vietnam. However, by possessing governing laws of Vietnam and guiding legislation of Vietnam, implementing the ESOPs in a compliant manner, companies can successfully award ESOPs to their Vietnamese employees and provide a powerful incentive for them to contribute to the company’s success.

For more information, please reach out to us at finnnguyen@ivlf-lawyer.com or find us at www.ivlf-lawyer.com