Joint Venture Company in Vietnam

By Lawyer Le Phuong Thanh – UniLaw LLC

Before the advantages list, read how a joint venture company in Vietnam actually fails. It is almost never the commercial logic. Instead, it is capital that never arrives and a board that never meets. The joint venture company itself — charter, capital and governance — is the work of our corporate lawyers in Vietnam.

A decided case on how a joint venture company in Vietnam ends

Judgment No. 15/2021/KDTM-PT of 9 March 2021 — Superior People’s Court in Ho Chi Minh City, joint venture contract dispute.

On 20 June 2009 two Vietnamese companies and two German companies signed a joint venture contract to form a rice processing and export company in Can Tho. Legal capital was USD 700,000 and charter capital USD 12,000,000: the Vietnamese lead partner was to contribute USD 4,953,000 (39%) as a 6,300 m² milling and polishing plant plus cash, and the German partners USD 1,905,000 (15%) as a husk-fired paddy dryer and USD 4,572,000 (36%) as a 2 MW husk-fired power plant, plus cash. The investment certificate issued on 7 August 2009.

What each side actually paid in

What actually happened: the Vietnamese side contributed VND 11,111,679,000 in cash — 4.9% — plus assets worth 23.6%; the German side VND 6,128,964,117 in cash, 2.6%, plus assets worth 3.3%. Neither side had contributed what it promised. The dryer equipment arrived incomplete and the power plant never arrived at all. Meanwhile, from incorporation onwards no chairman of the Members’ Council was ever elected, because the German partner’s representative — regularly present in Vietnam — never attended a meeting despite repeated summons.

The Court of Appeal cancelled the joint venture contract and terminated the investment project, applying Article 507, Article 688(1) and Articles 584 and 585 of the Civil Code 2015 and Article 48 of the Investment Law 2014. Whatever remained — VND 120,000,000 and accrued interest — went into the payment queue at enforcement.

The two clauses that were missing

Two clauses would have changed the outcome. First, a contribution schedule with a consequence: dilution or forced transfer if a partner is late, not merely a promise. Second, a deadlock mechanism — quorum that falls on a second call, a casting vote, or a buy-out trigger, so that one absent partner cannot freeze a company for a decade.

A second case: when a joint venture company in Vietnam outlives its own capital

Judgment No. 34/2020/KDTM-PT of 14 July 2020 — Superior People’s Court in Ho Chi Minh City, joint venture contract and member dispute.

Here the venture began on 22 July 1994, when a Vietnamese tourism company and a state-owned tourism corporation agreed to upgrade a hotel in Can Tho. Together they formed a limited liability company. Legal capital stood at VND 10 billion. One side paid VND 5 billion in cash. The other contributed land use rights over 565 m² and the six-storey building standing on it.

Then came the question nobody had answered in writing: who pays the annual land rent? For years the contributing member paid it, sent the receipts to the company, and asked to be reimbursed. Eventually it sued for the rent covering 2006 to 2017.

Why the claim was not time-barred

The defence argued the claim was time-barred. However, the court applied Article 154(2) of the Civil Code 2015, because the right to demand payment arose each year as each tax notice landed. So the claim survived.

On the merits the court looked at how the State had valued the contribution. A provincial decision of 14 September 2010 permitted the member to lease the land in order to contribute its value. Later, official letter 281 of 19 January 2015 fixed the state capital at VND 5 billion, and letter 3771 of 9 December 2015 confirmed the land was leased from the State with rent payable annually. The valuation of the contribution therefore never included the rent. That obligation belonged to the joint venture company itself.

What the court awarded

Judgment followed: the company had to pay VND 3,854,748,000 in principal and VND 1,891,893,000 in interest, about VND 5.75 billion. The court also cancelled the 1994 joint venture contract, which had expired in November 2019 anyway, and split the remaining capital value equally — VND 741,599,000 each.

Read those two figures together. The whole remaining capital came to VND 1,483,198,000. After twenty-five years, therefore, a venture capitalised at VND 10 billion was worth about a quarter of the single rent bill it had never paid.

What a joint venture company in Vietnam is, in law

Vietnamese law no longer treats a joint venture company in Vietnam as a separate company type. Rather, a joint venture company in Vietnam is an ordinary company that happens to have both foreign and Vietnamese owners. In practice it takes one of two forms: a limited liability company with two or more members, or a joint stock company.

Article 18 of the Investment Law 2025 lists the routes in. Two of them matter here. Under Article 19 an investor forms a new company. Under Article 21 an investor instead buys into a company that already exists, by acquiring shares or a capital portion.

That choice drives everything that follows, including the paperwork a joint venture company in Vietnam must file. Forming a new company with foreign capital triggers an investment registration certificate. Buying into an existing one usually does not, as Article 26(2)(c) makes clear.

Alternatively, a third route avoids a company altogether. Under Article 22 the parties sign a business cooperation contract, share revenue, and appoint a coordination board instead of a Members’ Council. Foreign parties to such a contract still need an investment registration certificate.

When a joint venture company in Vietnam actually needs a Vietnamese partner

Many investors assume that a joint venture company in Vietnam must have a local partner. Usually it need not. Article 8(1) of the Investment Law 2025 gives foreign investors the same market access conditions as domestic investors, save where a restriction applies.

In practice, those restrictions live in a list the Government publishes under Article 8(2). The list has two halves: sectors closed to foreign investors, and sectors open on conditions. Where a condition applies, Article 8(3) says it may bite on the ownership percentage, the form of investment, the scope of activity, or the qualifications of the investor and its partner.

So the sequence is simple. Check the sector against the list first. If a cap applies, a Vietnamese partner becomes structurally necessary and the shareholding must be built around that cap. If no cap applies, a partner is a commercial choice rather than a legal one — and a wholly foreign-owned company may serve better.

Similarly, treaty commitments matter too. Article 8(2) counts international agreements to which Vietnam is a party, so a WTO or free trade agreement schedule can open a sector that domestic law would otherwise restrict.

How a joint venture company in Vietnam gets licensed

Two certificates sit at the start of the project, and investors regularly confuse them. A joint venture company in Vietnam needs both, in order.

The investment registration certificate

Article 26(1) requires this certificate for any project of a foreign investor. It also applies to companies already caught by Article 20(1) — broadly, those more than 50% foreign-owned. Since 1 March 2026, Article 27 has moved the issuing authority: the Department of Finance handles projects outside industrial and economic zones, while the zone management board handles projects inside them. Nevertheless, older guides still name the Department of Planning and Investment. Ignore them.

The enterprise registration certificate

Only after the investment certificate issues does the company itself come into existence, through enterprise registration under the Enterprise Law. Article 19(2) lets a foreign investor form the company before adjusting the investment certificate, provided the market access conditions in Article 8 are met.

The fast track worth knowing about

Article 28 offers a special procedure for projects inside industrial zones, export processing zones, hi-tech parks, free trade zones and the international financial centre. Choose it and the project skips in-principle approval, technology appraisal, the environmental impact report, detailed planning and the construction permit. In exchange the investor gives a written commitment to meet the construction, environmental and fire safety standards, and files a start-of-works notice with a technical report before building.

Capital contribution decides whether a joint venture company in Vietnam survives

Both cases above turned on contributions. For a joint venture company in Vietnam that is no coincidence.

Cash is straightforward. However, contributions in kind are not. When a partner contributes land use rights, machinery or a building, three questions need answers in the contract itself. What is the asset worth, and who valued it? What happens if the asset arrives late, arrives incomplete, or never arrives? And which ongoing costs attach to it after transfer?

The 2020 case failed on the third question. Everyone knew the land was worth VND 5 billion. Nobody had written down who would pay the rent that kept the lease alive. Consequently a dispute ran for more than a decade over a bill that a single sentence could have allocated.

The 2021 case failed on the second. Both partners under-contributed, yet neither contract nor charter attached any consequence to lateness. Because no consequence existed, no party could force the other to perform, and the company simply drifted.

Accordingly, draft the remedy. A schedule with dates. A valuation method and a named valuer. An automatic adjustment of shareholding if a partner misses a milestone. Above all, an allocation of every recurring cost that travels with a contributed asset.

Governance: quorum, deadlock and the casting vote

A joint venture company in Vietnam lives or dies by its Members’ Council. The Enterprise Law sets default quorum and voting thresholds. Those defaults assume that members turn up.

When one member stops turning up, the defaults become a weapon. Recall the 2021 case: no chairman was elected at any point in the company’s life, because one representative never attended. The company could not decide anything, and it could not be fixed from inside.

Fortunately, three clauses prevent that. A reduced quorum on a second or third convening, so absence stops blocking business. A casting vote, or an independent chair, for defined categories of decision. And a buy-out trigger — often a shotgun clause — which lets either side end the paralysis by naming a price.

Furthermore, reserved matters deserve their own list. Changes to charter capital, new borrowing, related-party contracts and the appointment of the legal representative usually belong to the members, not to the general director. Write that list rather than inherit it.

Exit, and where a dispute will be heard

Article 13 of the Investment Law 2025 sets the forum for any dispute inside a joint venture company in Vietnam. Negotiation and mediation come first. Failing that, a dispute between domestic parties goes to a Vietnamese arbitration centre or a Vietnamese court.

By comparison, foreign investors have wider options. Where at least one party is a foreign investor, Article 13(3) permits a Vietnamese court, Vietnamese arbitration, foreign arbitration, international arbitration, or an ad hoc tribunal the parties establish. Disputes with a State authority, by contrast, stay with Vietnamese arbitration or the Vietnamese courts under Article 13(4), unless a contract or a treaty says otherwise.

Above all, choose deliberately, because the choice is hard to revisit later. An award from a foreign seat needs recognition in Vietnam before it can be enforced here. A Vietnamese seat avoids that step entirely. Where the assets sit in Vietnam, that difference is usually decisive.

Leaving a joint venture company in Vietnam also needs a route that does not require agreement. Tag-along and drag-along rights, a pre-emption procedure with a deadline, and a valuation formula all belong in the charter as well as the shareholders’ agreement. Otherwise a departing partner needs the consent of the partner it is leaving.

Legal basis

• Investment Law, Law No. 143/2025/QH15, in force 1 March 2026 — Article 8 market access, Article 13 disputes, Articles 18 to 22 forms of investment, Articles 26 to 28 the investment registration certificate and the special procedure.
• Enterprise Law, Law No. 59/2020/QH14 — the Members’ Council, quorum and voting, capital contribution and the consequences of failing to contribute.
• Civil Code, Law No. 91/2015/QH13 — the joint venture contract itself, limitation under Article 154(2), and the consequences of cancellation.

Decided cases are published on case.unilaw.vn. Deal structuring sits with our Vietnam M&A lawyers, licensing with our Vietnam investment lawyers, and company formation with our guide to establishing a Vietnam limited liability company.