Vietnam: Decree 38

Freshfields'' partners Milton Lawson and Bui Thanh Tien discuss the implications of Decree 38 for foreign companies operating in Vietnam.

1. Introduction

Background

On 15 April 2003, the Government issued a long-awaited decree on the conversion of foreign-invested companies into shareholding companies.1 By way of background, foreign-invested companies in Vietnam, be they 100% wholly foreign-owned or joint ventures, are not companies divided by shares. Instead, the equity in a foreign-invested company is held by way of legal capital, the holders of which are identified in the Investment Licence of the company. This has various implications, among other things

  • Since any change to the Investment Licence requires approval from the relevant licensing authority, any change in the investors in the company will require an application to be made...

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