Vietnam Governance, Contracts, and IP: The Questions Foreign Investors Ask Once They Are Operational
The most common governance, contract, and IP questions from foreign investors in Vietnam arise not during market entry — but twelve to eighteen months after operations begin. That is when the gaps between global corporate standards and Vietnamese legal requirements become visible: the legal representative who has authority to bind the company beyond what the parent intended; the supplier contract that cannot be enforced because it was not localised; the brand that a competitor has registered in Vietnam; the production process that a former employee has taken to a competitor. The following FAQ addresses the most consistently raised governance, contract, and IP questions from G20 investors operating in Vietnam.
Corporate Governance and the Legal Representative
What authority does a Vietnam legal representative have under Vietnamese law?
Under Vietnam’s Law on Enterprises (as amended by Law No. 76/2025/QH15, effective 1 July 2025), the legal representative (Người đại diện theo pháp luật) of a limited liability company has broad authority to represent the company in all legal, administrative, and commercial dealings — including signing contracts, filing with authorities, and initiating and defending litigation. Unless the company’s charter explicitly restricts the legal representative’s authority for specific categories of transaction (and even then, the restriction binds only internally — third parties dealing with the legal representative in good faith may not be affected), the legal representative can bind the company to significant obligations without any other approval.
This is fundamentally different from the authority structure in most OECD jurisdictions, where board approval requirements and delegation matrices are more strictly enforced against third parties. Foreign parent companies that appoint a Vietnam legal representative without clearly defining authority limits in the charter — and without understanding that the legal representative’s acts bind the company regardless of internal approval matrices — are exposed to governance risk. The charter should specify: categories of transaction requiring member approval before the legal representative can act; signing value thresholds; and for particularly sensitive categories (property, litigation, related-party transactions), a counter-signature requirement from a member or the parent company representative.
How should a foreign parent company maintain control over a Vietnamese subsidiary?
Effective parent control over a Vietnam subsidiary requires four interlocking mechanisms: (1) a well-drafted charter that defines reserved matters (decisions requiring parent/member approval), the legal representative’s authority limits, the compliance calendar, and the financial reporting standard; (2) an approval matrix that is embedded in the charter’s reserved matters — not just in a separate internal policy document (internal policy alone does not bind the legal representative against third parties); (3) a legal representative who is either a parent company appointee (with clear loyalty and authority understanding) or a trusted Vietnam-side manager with contractual obligations to refer reserved matters for parent approval; and (4) a routine compliance calendar that ensures the parent is aware of statutory obligations (annual member meetings, tax finalisation, social insurance reconciliation, IRC amendments) before deadlines are missed.
What are the most common Vietnam subsidiary governance failures?
The four most consistent governance failures in foreign-owned Vietnam subsidiaries are: (1) missing or out-of-date company charter — using the standard charter issued at ERC registration without customisation for the parent’s governance requirements; (2) legal representative acting outside delegated authority — often in payroll, procurement, or leasing decisions — because authority limits were not defined in the charter; (3) annual member meeting not held — Vietnam law requires an annual member meeting, and failure to hold it creates a governance record gap that affects authority confirmation and future regulatory dealings; and (4) IRC and ERC not updated after material changes — companies that change directors, increase capital, add product lines, or change the legal representative without filing the corresponding IRC/ERC amendment operate outside their registered status.
Contract Localisation
Why do global contract templates fail in Vietnam?
Global contract templates are drafted for the legal system in which they were first used — typically English law, New York law, or another major commercial legal system. When applied in Vietnam without localisation, they contain provisions that: reference legal concepts that do not exist in Vietnamese law (for example, equitable remedies and injunctions work differently in Vietnamese courts than in common-law systems); use termination procedures that do not comply with mandatory Vietnamese requirements (particularly in employment and real estate); include dispute resolution clauses that specify forum and procedures incompatible with how Vietnamese courts recognise foreign judgments; and omit provisions required by Vietnamese mandatory law (such as VAT invoice requirements in commercial contracts, specific currency and payment provisions for foreign-denominated contracts, and compulsory content for labour contracts under the Labour Code).
What are the critical localisation points for Vietnam supplier contracts?
The critical localisation points for Vietnam supplier contracts are: governing law (where Vietnamese law applies or is chosen, the contract must comply with mandatory Vietnamese commercial and contract law provisions — some of which cannot be contracted out); language (contracts with Vietnamese entities should be available in Vietnamese for administrative, regulatory, and enforcement purposes); VAT invoice requirements (the supplier must issue compliant e-VAT invoices or the buyer cannot deduct input VAT); payment terms and currency (foreign currency payment to Vietnamese domestic suppliers requires State Bank of Vietnam permission; USD-denominated domestic contracts are generally not permitted unless one party is a foreign-invested enterprise); force majeure (Vietnamese commercial law and court interpretation of force majeure in certain sectors may differ from international commercial standards); and dispute resolution (specify Vietnamese arbitration or Vietnamese court — or international arbitration for international contracts where enforcement of a foreign award in Vietnam is anticipated and planned for).
What is the risk of using unsigned or informally agreed contracts with Vietnam suppliers?
Informal supply arrangements — verbal agreements, WeChat or email confirmations without signed contracts, purchase orders without general terms — are common in Vietnamese SME business practice but create significant enforcement risk for foreign-invested buyers. Under Vietnamese civil and commercial law, an oral contract can be enforceable in principle, but proving the terms of an oral agreement in court or arbitration requires other documentary evidence (correspondence, payment records, delivery documentation). In practice, disputes about price, quality, quantity, and liability that arise from undocumented arrangements are extremely difficult to resolve in the foreign investor’s favour. The contractual overhead that seems excessive for a small supplier relationship frequently becomes the decisive factor in a dispute recovery — formalising supply relationships with signed contracts, even simple ones, is standard practice for foreign-invested manufacturers with Vietnam supply chains.
Intellectual Property
How should foreign investors register trademarks in Vietnam?
Vietnam operates a first-to-file trademark system: the first party to register a trademark in Vietnam has priority over the trademark, regardless of prior use elsewhere in the world. Foreign investors who rely on prior registration in their home country without registering in Vietnam are exposed to the risk that a local party registers their trademark first — either opportunistically or inadvertently. Trademark registration in Vietnam should be filed before market entry or production startup, not after. The registration process before the National Office of Intellectual Property (NOIP) takes approximately twelve to eighteen months for an uncontested application. Filing a well-prepared application — with the correct class scope for the intended goods and services — is more important than speed: an incorrectly filed application that must be refiled loses its priority date.
How can foreign manufacturers protect production know-how and trade secrets in Vietnam?
Trade secret protection for production know-how in Vietnam requires a legal framework built around confidentiality obligations: employment agreements that include clear and enforceable confidentiality clauses (specifying the exact categories of information covered, the duration of the obligation, and the consequences of breach); subcontractor and supply agreements that include matching confidentiality obligations for any production know-how shared with the supply chain; internal procedures that classify sensitive information and limit access on a need-to-know basis; and physical and digital security controls that demonstrate the company treats the information as confidential (courts applying Vietnam’s IP law on trade secrets expect evidence that the company actively maintained confidentiality — casual treatment of supposedly secret information undermines claims).
Non-compete clauses in Vietnamese employment contracts are enforceable with limitations: the restriction period, geographic scope, and scope of restricted activity must be reasonable, and the clause must be supported by adequate compensation during the restriction period. Post-employment non-competes without compensation are generally unenforceable in Vietnamese courts. Companies that rely on uncompensated non-compete clauses to protect know-how should redirect their protection strategy to confidentiality and trade secret law rather than post-employment restraint.
Frequently Asked Questions
Can a foreign parent company terminate a Vietnam legal representative without using a Vietnamese court?
The member (parent company) of a Vietnam LLC can replace the legal representative by passing a member resolution under the procedures specified in the charter and the Law on Enterprises (as amended by Law No. 76/2025/QH15). This is an internal corporate decision — it does not require court action. The new legal representative must be registered with the ERC authority and their information updated in the business register. Until the ERC amendment is filed and accepted, the old legal representative remains the registered representative for third-party purposes. Companies that urgently need to change a legal representative (for example, following a management dispute) should take immediate steps to file the ERC amendment — but should also review and revoke any outstanding powers of attorney or signing authorities granted to the departing representative.
Should Vietnam contracts be in English or Vietnamese?
Both. For contracts between a foreign-invested entity and a Vietnamese counterparty, maintaining both a Vietnamese and an English version is standard practice — and for contracts that may be submitted to Vietnamese courts or administrative authorities, having an accurate Vietnamese version avoids translation disputes. Where the two versions conflict, the agreement should specify which language version controls (or that the Vietnamese version controls for Vietnamese law purposes). Contracts submitted to authorities, labour courts, or commercial courts in Vietnamese without a verified Vietnamese translation will be delayed or returned.
How long does patent registration take in Vietnam?
Vietnam patent applications filed with NOIP typically take three to five years from filing to grant for utility patents, and one to two years for utility solutions (a lower-threshold protection category available for certain innovations). PCT international applications designating Vietnam can convert to national phase and benefit from international search reports. Given the long examination timelines, foreign manufacturers with valuable process or product innovations should file Vietnamese patent applications as early as possible — ideally at the same time as their home-country applications, or using PCT designation to establish priority. Pending patent applications in Vietnam provide some protection (publication puts competitors on notice) even before the patent is granted.
Reviewing your Vietnam subsidiary governance, localising your contracts, or protecting your IP in Vietnam? Contact Attorney Vu Manh Quynh at ECOVIS Vietnam Law for a corporate governance and IP advisory. Email: [email protected] | Website: www.ecovislaw.vn
This material is for general informational purposes only and does not constitute legal, tax or professional advice. Investors should seek specific advice based on their business sector, ownership structure and investment location in Vietnam. Legal and regulatory references reflect the position as of September 2026.
Attorney Vu Manh Quynh is the Managing Partner of ECOVIS Vietnam Law, advising international investors on Foreign Direct Investment (FDI), corporate governance, and regulatory compliance in Vietnam. Email: [email protected] | Website: www.ecovislaw.vn
