Summary: FDI companies in Vietnam often run into difficulty not because of licensing gaps, but because of unclear signing authority, poor internal documentation, or governance decisions that were never properly recorded. This article outlines the practical governance controls that boards, members’ councils and legal representatives should consider maintaining to reduce operational and dispute risk.
By ECOVIS Vietnam Law | Last reviewed: 13 July 2026
“The governance disputes we get called into almost never start with a bad clause — they start with a resolution nobody wrote down or a signature that went beyond what the charter allowed.” — Attorney Vu Manh Quynh, Founder & Managing Partner, ECOVIS Vietnam Law
Why This Matters for FDI Companies
Foreign investors frequently focus governance attention on the initial licensing and charter drafting stage, then treat day-to-day governance as an administrative afterthought. In practice, disputes and regulatory issues more often arise later — when a legal representative signs a contract beyond their authorized scope, when a members’ council resolution is never properly documented, or when a related-party transaction is challenged because it lacked the required approval. These issues can affect contract enforceability, banking relationships and, in some cases, personal liability exposure for management.
For FDI companies operating in East Ho Chi Minh City, where many entities are structured with a mix of foreign parent-company oversight and locally appointed management, the gap between formal charter provisions and actual day-to-day practice can be significant. A periodic governance review can help identify where documentation and practice have diverged.
Key Legal and Compliance Issues
- Legal representative authority and scope. Vietnamese law allows a company to have one or more legal representatives, each with authority defined in the charter and any internal delegation documents. Contracts signed outside this authorized scope may face enforceability challenges, so companies should maintain a current, accurate record of who holds signing authority for which categories of transaction.
- Members’ council or board decision-making. Certain decisions — capital increases, charter amendments, major asset transactions, or changes to business lines — generally require formal members’ council or board approval under the charter and applicable law. Decisions made informally without proper resolutions may be difficult to defend if later challenged.
- Internal approval matrix. Many FDI companies operate without a clearly documented approval matrix defining which transactions require which level of internal sign-off (e.g., value thresholds, related-party status, cross-border payments). Without this, day-to-day decisions may be made inconsistently across departments.
- Related-party transactions. Transactions between the company and its parent, affiliates, or management should generally be conducted on arm’s-length terms and, where required, subject to specific disclosure or approval procedures. Unauthorized related-party transactions are a common source of shareholder disputes and regulatory scrutiny.
- Corporate records and compliance calendar. Charter amendments, resolutions, share or capital transfer records, and statutory filings should be kept current and consistent with the actual state of the company. A compliance calendar tracking license renewals, reporting deadlines and periodic filings can help avoid inadvertent lapses.
- Shareholder and management disputes. Where governance documentation is weak, disagreements between shareholders or between shareholders and management may escalate more quickly, as there is less objective record to rely on in resolving the dispute.
- Delegation and power of attorney practices. Where the legal representative is based outside Vietnam or is otherwise unavailable, powers of attorney should be properly scoped, time-limited where appropriate, and consistently tracked to avoid confusion over who currently holds authority.
Practical Risks for Management
- Legal representative: may inadvertently exceed authorized scope, exposing signed contracts to enforceability challenges.
- CFO: may process related-party or cross-border payments without confirming proper internal approval was obtained.
- Members’ council/Board: may lack a clear record of past resolutions, making it difficult to demonstrate proper governance in a dispute or audit.
- Shareholders: may face difficulty enforcing rights if capital contribution and share transfer records are incomplete or inconsistent.
What Companies Should Review
- Confirm current legal representative(s) and the precise scope of their signing authority.
- Review the charter for decisions requiring members’ council or board approval.
- Establish or update an internal approval matrix with clear value and category thresholds.
- Review related-party transaction history for proper authorization and arm’s-length terms.
- Reconcile corporate records (resolutions, capital contributions, share transfers) against actual company history.
- Set up or update a compliance calendar for filings, renewals and reporting deadlines.
- Review outstanding powers of attorney for scope, validity and expiry.
- Confirm meeting minutes and resolutions are properly documented and retained.
How Ecovis Vietnam Law Can Support
Ecovis Vietnam Law supports FDI companies in reviewing and strengthening governance structures, including legal representative authority, internal approval matrices, and related-party transaction controls. Serving clients in Thao Dien, An Phu, Thu Thiem, Thu Duc and across East Ho Chi Minh City, our team can conduct a governance health check, help reconcile corporate records, and assist boards and members’ councils in formalizing decision-making processes going forward.
FAQ
Can a Vietnamese company have more than one legal representative?
Yes, under current law a company may appoint multiple legal representatives, provided their respective authority is clearly defined in the charter.
What happens if a contract is signed by someone without proper authority?
Depending on the specific facts, the contract may be challenged as unenforceable or require ratification by the properly authorized body, which can create delay and uncertainty.
Do related-party transactions always require special approval?
Not always — the requirement depends on the transaction value, the company’s charter provisions and applicable regulations, and should be assessed case by case.
How often should corporate records be reviewed?
Many companies benefit from an annual governance review, though more frequent checks may be appropriate after significant transactions or management changes.
Is a compliance calendar legally required?
It is not a formal legal requirement, but maintaining one may help reduce the risk of missed filings or renewal deadlines.
Can weak governance documentation affect a future M&A transaction?
Yes — buyers conducting legal due diligence often flag unclear authority or missing resolutions as a risk area, which may affect deal timing or valuation.