By Lawyer Luu Thi Hue – UniLaw LLC

Investment Fund Attorney in Vietnam – Unilaw

Navigating the complex legal landscape of investment funds in Vietnam requires specialized expertise and deep understanding of both domestic regulations and international best practices. As Vietnam continues to attract substantial foreign capital and develop its financial markets, the role of an experienced investment fund attorney has become increasingly critical for investors seeking to establish, structure, and operate funds in compliance with Vietnamese law.

Unilaw has established itself as a premier legal partner for investment fund matters in Vietnam, offering comprehensive services that span regulatory compliance, fund structuring, dispute resolution, and transactional support. Our team’s practical experience extends beyond theoretical legal knowledge to include hands-on representation in complex investment disputes and fund establishment processes that reflect the evolving regulatory environment.

Real-World Investment Dispute Resolution: A Case Study

The complexity of investment fund agreements in Vietnam is illustrated by a recent appellate decision from the Hanoi High People’s Court (Decision No. 64/2024/QĐ-PT, dated June 7, 2024) involving a dispute between two investors over an investment agreement for a Vietnamese joint-stock company. In this case, one investor sought to invalidate an investment agreement valued at 6 million Chinese Yuan (approximately 21 billion VND) on grounds of mutual mistake regarding the nature of the transaction.

The plaintiff claimed that he had mistakenly believed the agreement constituted a share purchase transaction, when in fact it was structured as a capital investment into the company. This fundamental misunderstanding regarding the legal characterization of the investment led to significant complications when only partial payment (11,116,980,000 VND) was made, with the remaining amount unpaid. The defendant investor subsequently sought to apply the statute of limitations to bar the claim, requesting dismissal of the case.

At the trial court level, the Provincial People’s Court of Yen Bai initially issued a decision to suspend proceedings. However, the appellate court reversed this decision, finding that the plaintiff’s amended pleading—which shifted from seeking to declare the agreement void to requesting cancellation of the agreement—did not exceed the scope of the original claim and should be considered on its merits. The High Court emphasized that regardless of whether the remedy was characterized as “declaring the investment agreement void” or “canceling the investment agreement,” the ultimate objective remained the same: resolving the consequences of discontinuing a civil relationship.

This case demonstrates several critical points that an investment fund lawyer must address when structuring investment transactions in Vietnam. First, precise drafting of investment agreements is essential to ensure all parties share a common understanding of the transaction’s legal nature—whether it constitutes equity investment, share transfer, or another structure. Second, the characterization of an investment vehicle has significant implications for remedies, taxation, and regulatory compliance. Third, procedural knowledge of Vietnamese civil procedure, including amendment of pleadings and statute of limitations defenses, can be decisive in investment disputes.

Why Choose an Investment Fund Attorney?

An investment fund attorney plays a critical role in guiding investors through the regulatory and legal frameworks governing investment funds. In Vietnam, where laws and regulations evolve rapidly, professional legal advice is indispensable for safeguarding your investments. The recent introduction of Decree 115/2024/NĐ-CP (dated September 16, 2024), which details the implementation of the Bidding Law regarding selection of investors for land-use investment projects, exemplifies the constantly changing regulatory environment that fund managers and investors must navigate.

Investment funds operating in Vietnam face multiple layers of regulation, including the Law on Investment, the Law on Enterprises, sector-specific regulations, and land use requirements when projects involve real estate or development components. An experienced investment fund attorney ensures compliance across all these regulatory domains while structuring transactions to achieve commercial objectives efficiently.

Unilaw’s Expertise in Investment Fund Legal Services

Comprehensive Legal Services for Investment Funds

Unilaw provides a broad range of legal services tailored specifically to the unique requirements of investment funds. These services are designed to support clients in navigating the complexities of the financial market while achieving their investment objectives effectively. Our approach combines technical legal expertise with practical business understanding, ensuring that legal solutions support rather than hinder commercial goals.

Regulatory Compliance

One of the primary challenges faced by investment funds is ensuring compliance with the ever-evolving legal and regulatory landscape. Unilaw’s team of legal experts is well-versed in Vietnam’s regulatory framework, offering invaluable guidance to help clients meet all legal requirements. From filing necessary documentation to liaising with regulatory authorities, Unilaw ensures that your investment fund operates smoothly and within the confines of the law.

• Monitoring Regulatory Changes: Keeping abreast of updates and amendments to laws and regulations to ensure ongoing compliance. Recent regulatory developments, such as Decree 115/2024/NĐ-CP on investor selection for land-use projects, require continuous monitoring and adaptation of fund structures and investment strategies.
• Licensing and Registration: Assisting with obtaining the required licenses and completing registration processes efficiently, including investment certificates and sector-specific approvals.
• Risk Mitigation: Identifying potential compliance risks and implementing strategies to mitigate them, including structuring investments to avoid conflicts with foreign ownership restrictions and conditional business sectors.

Fund Structuring

Designing the optimal structure for an investment fund is critical for maximizing returns and minimizing associated risks. Unilaw offers strategic advice to establish a structure that aligns with the fund’s goals, target market, and investor preferences. Our structuring services address both the legal form of the fund vehicle and the contractual relationships among investors, managers, and portfolio companies.

• Tax Efficiency: Structuring funds to minimize tax burdens while adhering to legal standards, including analysis of double taxation treaties and optimal holding structures.
• Asset Segregation: Ensuring proper allocation and segregation of assets to protect investor interests and comply with Vietnamese corporate law requirements.
• Custom Solutions: Providing tailored structuring options to meet the specific requirements of each investment fund, whether venture capital, private equity, real estate, or sector-specific funds.
• Investment Agreement Drafting: Preparing precise investment agreements that clearly define the nature of the transaction, rights and obligations of parties, and remedies in case of disputes—addressing the type of ambiguity that led to the litigation in Decision No. 64/2024/QĐ-PT.

Dispute Resolution

Conflicts and disputes can arise in the course of investment activities, as demonstrated by the investment agreement dispute resolved by the Hanoi High People’s Court. Unilaw specializes in dispute resolution, offering both preventative strategies and effective representation in legal conflicts. Our expertise covers a wide range of disputes, ensuring that clients receive the best possible outcomes.

• Mediation and Negotiation: Utilizing alternative dispute resolution methods to resolve conflicts amicably, often preserving business relationships while achieving favorable outcomes.
• Litigation Support: Representing clients in court proceedings with a focus on protecting their rights and interests, including appellate representation before High People’s Courts.
• Contractual Disputes: Resolving issues related to breaches of investment contracts, mutual mistake claims, and disputes over the interpretation of investment agreements.
• Procedural Expertise: Navigating Vietnamese civil procedure, including strategic use of amendments to pleadings, statute of limitations defenses, and appellate review processes.

Share Transfer and Equity Compliance in Investment Structures

Beyond the initial establishment and registration of investment funds, ongoing compliance with Vietnamese corporate and securities law is essential throughout the fund’s operational lifecycle. One critical area where legal missteps can invalidate transactions and expose investors to significant losses involves share transfers and equity compliance—particularly restrictions on founding shareholders transferring shares during the initial three-year lock-up period following company registration.

Legal Framework for Share Transfers by Founding Shareholders

Article 119 of the Enterprise Law 2014 (applicable to companies established under that regime) imposed strict limitations on the ability of founding shareholders to transfer their shares during the first three years after a company receives its Enterprise Registration Certificate. Specifically, founding shareholders were permitted to freely transfer shares among themselves, but any transfer to a non-founding shareholder required approval from the General Meeting of Shareholders. This restriction aimed to ensure stability in newly established companies and protect the interests of co-founders and creditors during the formative period.

The current Enterprise Law 2020 maintains similar principles under Article 120, which continues to regulate transfers by founding shareholders within the three-year period, though with certain modifications to the approval process and exceptions for shares acquired after initial establishment. These provisions represent mandatory law—transactions conducted in violation of these requirements are not merely voidable at the option of affected parties, but rather void ab initio under Article 123 of the Civil Code 2015, which renders void any civil transaction that violates a prohibition of law.

Judicial Application: The Share Transfer Dispute Case

The practical significance of these statutory restrictions was demonstrated in Decision No. 63/2023/KDTM-PT issued by the Ho Chi Minh City High People’s Court on June 26, 2023, which addressed a share transfer dispute between Ms. Nguyen Ngoc T (the defendant and transferor) and Ms. Nguyen Thi Truc D (the plaintiff and transferee) involving GL Fertilizer Joint Stock Company.

The facts established by the court were straightforward: GL Fertilizer Company was initially registered on August 17, 2015, with Ms. Nguyen Ngoc T as one of three founding shareholders holding VND 1,750,000,000 in contributed capital. On November 27, 2017—less than three years after the company’s initial registration—Ms. Nguyen Ngoc T entered into a share transfer agreement with Ms. Nguyen Thi Truc D, transferring 51,000 shares representing 8.5% of the company’s charter capital for VND 510,000,000. Ms. Nguyen Thi Truc D paid the full purchase price, but the company never issued share certificates to her, never updated the shareholder register, and she was never permitted to participate in shareholder meetings or receive dividends.

When Ms. Nguyen Thi Truc D demanded proper registration of the transfer, Ms. Nguyen Ngoc T claimed to have transferred the company to another party. Ms. Nguyen Thi Truc D then filed suit seeking a declaration that the November 27, 2017 share transfer agreement was void and demanding return of the VND 510,000,000 purchase price.

Comparative Analysis: Statutory Requirements vs. Actual Transaction Structure

The court’s analysis reveals the precise intersection between statutory prohibition and transactional reality. The defendant argued that the transfer was valid because the shares were not subject to any dispute or enforcement lien at the time of transfer, and that the Enterprise Law merely imposed conditions on certain transfers without categorically prohibiting them. This argument fundamentally misunderstood the mandatory nature of Article 119 of the Enterprise Law 2014.

The court systematically rejected this defense by establishing four critical facts: (1) Ms. Nguyen Ngoc T was definitively a founding shareholder based on the August 17, 2015 Enterprise Registration Certificate; (2) the November 27, 2017 transfer occurred within the three-year restricted period; (3) Ms. Nguyen Thi Truc D was not a founding shareholder; and (4) no written resolution from the General Meeting of Shareholders approving the transfer was presented. Furthermore, Ms. Nguyen Ngoc T failed to prove that the transferred shares constituted shares she had acquired after the company’s establishment—the only category of shares exempt from the founding shareholder restrictions.

The court held that the transaction violated Article 119 of the Enterprise Law 2014 and was therefore void under Article 123 of the Civil Code 2015. Applying Article 131 of the Civil Code 2015, which requires parties to restore the status quo ante when a transaction is declared void, the court ordered Ms. Nguyen Ngoc T to return the full VND 510,000,000 purchase price to Ms. Nguyen Thi Truc D. Notably, the court rejected the defendant’s statute of limitations defense, correctly holding that claims to declare transactions void for violating legal prohibitions under Article 123 are not subject to time limitations, unlike claims under Articles 125-127 and 129 which carry a two-year limitations period.

Regulatory Compliance and Administrative Sanctions

Beyond civil invalidity, violations of investment and corporate governance regulations can trigger administrative sanctions under Decree 122/2021/ND-CP on sanctioning administrative violations in the fields of planning and investment. Article 15 of this decree specifically addresses failures to comply with reporting and information disclosure requirements for investment activities in Vietnam, with fines ranging from VND 20,000,000 to VND 50,000,000 for organizations (half that amount for individuals).

Particularly relevant to share transfer compliance, Article 15(2)(a) imposes fines of VND 30,000,000 to VND 50,000,000 for failure to implement the reporting regime for investment activities or failure to report within prescribed deadlines. Article 15(2)(b) addresses submission of untruthful or inaccurate reports regarding investment activities with the same penalty range. These administrative sanctions operate independently of any civil consequences—a company and its responsible officers can face both the voiding of an improper share transfer and separate administrative fines for related reporting failures.

Unilaw’s Advisory Role in Cross-Border Share Acquisitions

The complexity of Vietnamese share transfer regulations and the severe consequences of non-compliance underscore the necessity of experienced legal counsel in structuring equity investments. Unilaw represented a Thai investor in connection with the proposed acquisition of shares in a Vietnamese company. The engagement required detailed legal analysis of two alternative transaction structures: acquisition of 100% of the target company’s shares versus acquisition of 80%.

Unilaw’s advisory work encompassed several critical dimensions. First, the firm analyzed the comparative advantages and disadvantages of each ownership structure from regulatory, tax efficiency, and operational control perspectives. Second, Unilaw prepared a comprehensive procedural roadmap detailing the registration requirements for capital contribution transfers, including preparation and submission of all required documentation to the business registration authority. Third, the firm provided specific guidance on timeline expectations for each stage of the registration and approval process. This proactive structuring advice—delivered before the transaction was executed—enabled the client to make informed decisions and avoid the type of post-closing disputes that plagued the parties in the GL Fertilizer case.

The contrast between the GL Fertilizer dispute and Unilaw’s Thai client advisory illustrates a fundamental principle: investment fund attorneys add maximum value through front-end transaction structuring rather than back-end dispute resolution. While Unilaw maintains robust litigation capabilities, the firm’s strategic focus remains on designing compliant structures that prevent disputes from arising in the first instance.

Frequently Asked Questions: Investment Fund Attorneys and FDI in Vietnam

What is the role of an investment fund attorney in foreign direct investment in Vietnam?

An investment fund attorney specializing in foreign direct investment in Vietnam provides comprehensive legal guidance across the entire investment lifecycle—from initial structuring through post-closing compliance. As demonstrated in Unilaw’s representation of the Thai investor, the attorney’s role encompasses comparative analysis of alternative ownership structures (such as 100% versus 80% equity acquisition), detailed procedural roadmapping for registration requirements, preparation and submission of documentation to business registration authorities, and timeline management for approval processes. The attorney ensures compliance with Vietnam’s foreign ownership restrictions, conditional business line requirements, and share transfer registration obligations under the Enterprise Law and Investment Law. Critically, the investment fund attorney identifies regulatory pitfalls before transaction execution, preventing the type of post-closing disputes illustrated by the GL Fertilizer case where failure to properly register share transfers led to judicial invalidation of the transaction.

What are the key legal requirements for FDI to Vietnam through equity investment?

Foreign direct investment in Vietnam through equity acquisition is governed primarily by the 2020 Enterprise Law and the 2020 Investment Law. Article 46(1) of the Enterprise Law establishes the fundamental requirement that all capital contribution transfers must be registered with the business registration authority within ten days of the transfer. For investments in conditional business lines—sectors where foreign participation is restricted or requires special licensing—investors must satisfy additional requirements specified in Appendix IV of the Investment Law before the share transfer can be validly registered. The business registration authority verifies compliance with these conditions as part of the registration process. Failure to complete proper registration renders the share transfer legally invalid and unenforceable against the company and third parties, as confirmed by the Supreme People’s Court in Decision 02/2022/DS-GDT. Administrative penalties under Decree 122/2021/ND-CP for registration failures range from VND 30,000,000 to VND 50,000,000, operating independently of civil consequences such as transaction voidance.

How does investing in Vietnam differ from other Southeast Asian jurisdictions?

While this analysis focuses specifically on Vietnam’s legal framework, Vietnam’s approach to foreign investment in Vietnam is characterized by its detailed registration requirements and the severe consequences of non-compliance. Unlike jurisdictions where share transfers may be effective between parties even without government registration, Vietnamese law—as articulated in Supreme People’s Court Decision 02/2022/DS-GDT—treats unregistered share transfers as void and unenforceable not only against the company but also against third parties. This distinguishes Vietnam’s regime as particularly formalistic, requiring investment fund attorneys to prioritize compliance with registration procedures and timelines. The Investment Law’s conditional business line framework, which requires sector-specific approvals before equity transfers can proceed, adds an additional layer of complexity. Foreign investors accustomed to more permissive regimes must adapt to Vietnam’s requirement that regulatory compliance precede rather than follow transaction closing.

What penalties apply for non-compliance with FDI Vietnam regulations?

Non-compliance with foreign investment regulations in Vietnam triggers both civil and administrative consequences. Civilly, Article 46(4) of the Enterprise Law provides that unregistered capital contribution transfers are invalid and unenforceable against the company and third parties—meaning the transferee acquires no legally recognized ownership rights despite payment of consideration. This was the outcome in the GL Fertilizer case, where the Supreme People’s Court voided a share transfer despite the parties’ contractual agreement and partial payment. Administratively, Decree 122/2021/ND-CP imposes fines ranging from VND 5,000,000 to VND 10,000,000 for violations of registration requirements under Article 13(1), with higher penalties of VND 30,000,000 to VND 50,000,000 under Article 15(2)(a) for failure to implement reporting regimes for investment activities or failure to report within prescribed deadlines. Article 15(2)(b) addresses submission of untruthful or inaccurate investment reports with the same penalty range. These administrative sanctions apply independently—a company can face both transaction voidance and separate fines for related reporting failures.

Why should I engage an investment fund attorney before executing an investment in Vietnam?

The GL Fertilizer case provides a cautionary illustration of the risks of inadequate legal planning. In that dispute, the parties executed a share transfer agreement and made partial payment before discovering that registration requirements could not be satisfied due to the target company’s involvement in conditional business lines. The result was years of litigation, judicial invalidation of the transaction, and significant financial and reputational costs for both parties. By contrast, Unilaw’s representation of the Thai investor demonstrates the value of front-end legal structuring: comprehensive analysis of alternative transaction structures, proactive identification of regulatory requirements, preparation of compliant documentation, and realistic timeline planning before any binding commitments are made. An experienced investment fund attorney enables informed decision-making at the structuring stage, when flexibility remains to adjust transaction terms or ownership percentages to satisfy Vietnamese legal requirements. This proactive approach prevents disputes rather than resolving them after the fact, protecting both the investor’s capital and the transaction’s commercial objectives.

Conclusion: Strategic Legal Counsel for Vietnam Investment Transactions

Successful foreign direct investment in Vietnam requires more than commercial acumen—it demands precise navigation of a complex and formalistic regulatory framework where procedural non-compliance carries severe consequences. The share transfer registration requirements under the Enterprise Law, the conditional business line restrictions under the Investment Law, and the administrative penalties under Decree 122/2021/ND-CP create a legal landscape where even sophisticated investors face significant risk without experienced local counsel.

Unilaw’s investment fund attorneys combine deep knowledge of Vietnamese foreign investment regulations with practical transaction experience to structure compliant equity investments from the outset. Whether you are considering a majority acquisition, minority investment, or joint venture arrangement, our team provides the strategic guidance necessary to achieve your commercial objectives while satisfying all applicable legal requirements. Contact Unilaw today to discuss your Vietnam investment plans with an attorney who understands both the law and the business realities of foreign direct investment in Vietnam.