In the intricate and risky world of business, the role of an investment lawyer, especially those offering legal services for investment in Vietnam, becomes crucial. They not only act as a guardian of investors’ rights but also aid in adhering to legal standards and optimizing risk management. In this article, Unilaw, serving as an adept provider of legal services for investment in Vietnam, will dissect the case of Mr. Kieu and Trung Thanh Company to extract lessons pertaining to agreements on converting salary into shares and reclaiming assets deposited in investment activities in Vietnam.
The Case of Mr. Kieu and Trung Thanh Company: A Practical Lesson
The court decision No. 05/2014/KDTM-ST, dated 18/7/2014, resolved a dispute concerning profit sharing of the company and reclaiming assets between Mr. Hoang Kieu, a Taiwanese national, and Trung Thanh Limited Liability Company. Mr. Kieu, who had worked for 33 months without salary for the representative office of Fraval International Cord in Vietnam, later agreed with the General Director of Trung Thanh Company to convert his salary into shares in Trung Thanh Company. However, after the establishment of Trung Thanh Company, Mr. Kieu neither received profits nor was the deposit for factory rental, intended for the establishment of the Company, returned to him.
Trung Thanh Company denied Mr. Kieu’s shareholder status and disagreed with his request for profit sharing. They also asserted that the deposit for factory rental was not Mr. Kieu’s money.
Regarding the dispute’s content, Mr. Hoang Kieu demanded profit sharing from Trung Thanh Company based on his supposed 10% share ownership. The court acknowledged the existence of the share agreement between Mr. Kieu and the Company, but as Mr. Kieu withdrew this request at the trial, the dispute over profit sharing was discontinued.
For the claim to reclaim the deposit for factory rental from Hong Hanh Private Enterprise, Mr. Kieu proved that the deposit amount of 23,122.87 USD was his personal fund. Trung Thanh Company did not pay this amount back after taking over the relationship with Hong Hanh Private Enterprise. Therefore, the court ordered Trung Thanh Company to pay Mr. Kieu 489,742,386 VND.
Advice from an Investment Lawyer’s Perspective: The Role of Legal Services for Investment in Vietnam
Based on the details in the court decision No. 05/2014/KDTM-ST and relevant legal regulations, here are specific advices for foreign investors like Mr. Kieu and foreign-invested companies like Trung Thanh.
For foreign employees in Vietnam like Mr. Kieu:
Clarity and Written Agreements: When converting salary or any financial benefits into company shares, such agreements must be clearly and comprehensively documented in writing. This not only ensures legality but also helps avoid misunderstandings and disputes later on.
Adherence to Company’s Charter: Any agreement related to shares must comply with the company’s charter and be approved by the company’s governing body such as the Members’ Council or the Board of Directors.
Registration with State Agencies: Once the agreement is approved, information about new shareholders or members needs to be registered with competent state agencies. This formalizes the rights and obligations of shareholders/members in the company.
For foreign-invested companies like Trung Thanh:
Transparency in Money Transfers: When transferring money for investment purposes or sending funds to employees for expenses related to establishing a company in Vietnam, investors need to clearly state the purpose of the transfer. This helps avoid confusion and can be used as evidence in case of disputes.
Clear Purpose of Money Transfer: The content of the money transfer must be specific, such as “deposit for factory rental for establishing a company in Vietnam” or “investment capital in company ABC”. This helps clearly determine the purpose of the funds and the relationship between the parties involved.
Compliance with Foreign Investment Legal Regulations: Investors should comply with Vietnam’s legal regulations related to foreign investment, including registering investment projects and adhering to procedures related to transferring money from abroad to Vietnam. Transfers should be made through investment accounts opened at state banks.
By following these guidelines, Mr. Kieu and foreign investors can minimize legal risks and facilitate investment and business operations in Vietnam.
Conclusion:
The dispute between Mr. Kieu and Trung Thanh Company not only represents a legal case but also vividly illustrates the cost of adhering to legal principles in Vietnam’s business environment. In every transaction, every investment decision, the investment lawyer plays the role of a guide, ensuring that all business activities not only comply with the law but also step ahead in identifying and managing risks.
If you feel the need for an investment lawyer, Unilaw is always ready to assist you. Contact Unilaw today at 0912266811 or via email at legal@unilaw.vn for professional, detailed, and insightful insightful legal services for investment in Vietnam.
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