Bylaws are a required component of the application for the Certificate of Registration of Operation. Because it is easiest to establish a branch of an International NGOs (INGOs) in Vietnam rather than to found a foreign-owned NGO in Vietnam, you should already have bylaws from the country of founding.
Bylaws allow business owners to have a written document proving that all relevant parties have agreed upon the rules and regulations set in place. This document will prove useful when future disputes between members arise. Within this agreement there are a number of important provisions defined that were previously left undocumented. It is recommended that founders work with a lawyer to draft corporate bylaws. Bylaws usually include sections with information about:
Are shareholders’ agreements frequent in Vietnam? The use of a shareholders agreement depends on the nature of the shareholders and the type of the company.
For a domestic joint stock company (“JSC”) with no foreign owners, there is no mandatory requirement for a shareholders agreement. In fact, a shareholders agreement is rarely used by a domestic JSC.
In the case of an incorporated joint venture in which there are Vietnamese and foreign owners, the joint venture parties must execute a joint venture contract (“JVC”) in order to obtain a joint venture license. A license for an incorporated entity is an investment certificate (“IC”). In such case, the term “shareholders agreement” is not used. Amendments, which relate to objectives, scale, location, form of company, capital and investment duration, must be filed with the licensing authority and such amendments are reflected in the amended IC. Thus, an incorporated joint venture between Vietnamese and foreign owners needs to submit a copy of an amended JVC to the licensing authority in order to obtain an amended IC3. A shareholders agreement need not be filed or approved by the licensing authority.
In the case of a merger and acquisition involving foreign parties, it is common for shareholders (including both buyers and continuing shareholders) in a JSC with few shareholders to enter into a shareholders agreement in order to reflect their commercial arrangements.
What formalities must shareholders’ agreements comply with in Vietnam? It is legally possible to enter into a shareholders agreement (but not a JVC) in English only. A Vietnamese version is required if the shareholders agreement becomes the subject of litigation. A shareholders agreement can be made in both Vietnamese and a foreign language. In such case, it is customary to state which version will prevail. However, the reality is that state authorities or courts in Vietnam often look only at the Vietnamese version, no matter which version is said to be controlling. This means that extra care must be taken in the translation. There is no requirement to obtain the licensing authorities’ approval for a shareholders agreement.
Unlike the shareholders agreement, the Investment Law provides that a JVC must be made in the Vietnamese language. A JVC may be made in both Vietnamese and in a foreign language (eg, English). In such case, the Vietnamese version is controlling in the case of a discrepancy. A JVC becomes effective only after the licensing authorities have approved it.
Formalities for execution of both a shareholders agreement and a JVC are similar to formalities to execute other documents in Vietnam. That is, only the legal representative of a Vietnamese company or an authorized representative appointed by the legal representative of a Vietnamese company is authorized to execute a contract on behalf of the Vietnamese company. The company’s seal is also required to be affixed along with the authorized signatories. The initials on each page of a JVC are mandatory. Although such mandatory requirement does not apply to a shareholders agreement, in practice the parties often initial every page of a shareholders agreement. The Vietnamese parties to a shareholders agreement may affix their seals on every two or three overlapping consecutive pages.
There are no stamp duties, nor fees for either a JVC or a shareholders agreement.
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