Disputes arising during investment process in Vietnam

Tuesday - 11/02/2020 21:57
During investment process in Vietnam, investors may face some troubles slowing down investment schedule or affecting their business.
Disputes arising during investment process in Vietnam
These disputes may appear in different aspects. In order to give investors a general view on those disputes arising during investment process in Vietnam.

Disputes with target companies:

Among foreign investment methods in Vietnam, capital contribution, shares/capital purchase are the most common ones as they save time and are simpler than others. However, to purchase a company in Vietnam, foreign investors may face some legal issues like conditional business sectors. When purchasing one, investors should thoroughly conduct due diligence, especially, satisfaction of business conditions. Assuming that a company which has not applied for sublicenses of a conditional business sector or has not satisfied required conditions, there is a potential risk that they would hide those facts.

Dispute with employees:

Employers shall comply with labor law, especially employment contracts and social insurance for employees. In reality, employment disputes regularly arise not only in domestic companies but also in foreign-owned companies.

Internal disputes between investors:

During investment process, there may be some disputes arise among investors such as capital contribution proportion, appointment of legal representative and managers… In order to avoid this, investors should prepare and negotiate carefully before making decisions or sign internal agreement to create a peaceful basis for investment process.

Disputes with business partners:

When operating in Vietnam, foreign-owned companies also need to maintain good business relationships with their partners such as: suppliers, distributor, service providers… Likes other relationships, there is always a potential risk between parties as they are looking for their own benefits. In order to avoid conflicts, agreements or contracts signed by parties should be drafted carefully and balance benefits to maintain trust and business relationships.

Disputes during transferring investment projects:

Many investors investing in Vietnam as they want to take over projects from previous investors. Investment project transfer contain many potential disputes such as labor, finance, debts, ownership… Therefore, investor should research and thoroughly conduct due diligence for the intended-to-be-transferred projects as well as negotiate with the transferor.

Dispute with competent agencies:

Although this is a sensitive but still may occur such as dispute on corporate income tax incentives between tax agencies and investors as each has their own explanation. In order to avoid this, investors should prepare carefully and research related regulations to ensure their projects are legitimate.

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