Under the corporate governance mechanism in Vietnam, significant transactions are not solely decided by the legal representative but often require approval from the highest governing bodies, such as the General Meeting of Shareholders (“GMS”) or the Board of Directors (“BOD”). This process is regarded as an important internal control measure to ensure transparency and protect the interests of the owners (“Owners”).
While the Law on Enterprises 2020 applies generally to ordinary companies with a common approval threshold of 35% of total assets, as of August 1, 2025, the Law on State Management and Investment of Capital in Enterprises 2025 (“Law on State Management 2025”) will officially take effect, introducing a specific approval mechanism for enterprises with state capital. The article below provides a detailed analysis of the approval authority for each relevant group.
1. Approval authority for transactions
| STT | Type of Enterprise | Type of Transaction | Approval threshold | Competent Authority | Legal basis |
| 1. | Ordinary joint-stock companies (without state capital) | – Investment or sale of assets.
– Contracts of purchase, sale, loan, lending, and other transactions
|
≥ 35% of total asset value (latest financial statement) | GMS or BOD (depending on the transaction) | Point d, Clause 2, Article 138 and Point h, Clause 2, Article 153 of the Law on Enterprises 2020 |
| 2. | Enterprise wholly owned by the State (100% charter capital) | – Investment projects, capital investments.
– Transfer of investment projects, capital investments. |
≤ 50% of Owner’s equity or capital contribution of the Owner
|
Members’ Council (“MC”) or Company President | Point a, Clause 3, Article 20 and Clause 2, Article 21 of the Law on Vietnam Management 2025 |
| > 50% of Owners’ equity or State capital contribution | MC or Company President decides after obtaining approval from the Owner’s Representative Agency | Point b, Clause 3, Article 20 and Clause 2, Article 21 of the Law on Vietnam Management 2025 | |||
| 3. | Enterprise with State ownership of more than 50% but less than 100% of charter capital | – Investment projects, capital investments.
– Transfer of investment projects, capital investments |
≤ 50% of Owners’ equity or State capital contribution | GMS, BOD, or MC decide;
The State capital representative participates in voting
|
Point dd Clause 2 Article 27 of the Law on Vietnam Management 2025 |
| > 50% of Owners’ equity or State capital contribution | The State capital representative must report to and seek opinions from the Owner’s Representative Agency before voting;
|
Clause 2 and Clause 7, Article 27 of the Law on Vietnam Management 2025 | |||
| 4. | Enterprise with State ownership of 50% or less of charter capital | – Investment projects, capital investments.
– Transfer of investment projects, capital investments. – Other transactions under the Charter and the Law on Enterprises.
|
No specific threshold prescribed | The Owner’s Representative Agency manages the State capital through the State capital representative;
the representative votes in accordance with law and the Charter |
Article 28 of the Law on Land Management 2025 |
2. Key notes for enterprises
- Review and amend the Charter and internal regulations to update approval thresholds and the two-tier approval mechanism under the Law on State Management 2025.
- Comply with reporting obligations and seek approval from the Owner’s Representative Agency in cases required by law before voting.
- Ensure that meeting procedures (notice of meeting, distribution of documents, adoption of resolutions) comply with statutory requirements to secure the validity of decisions.
Law on State Management and Investment of Capital in Enterprises 2025 introduces a new approval mechanism for significant transactions, highlighting the role of the Owner’s Representative Agency. Enterprises with State capital should proactively review and adjust internal governance to ensure transparency, compliance, and minimize legal risks.
Date written: 20/09/2025
Disclaimers:
This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.
For issues related to the content or intellectual property rights of the article, please email cs@apolatlegal.vn.
Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Business and Investment and contact our team of lawyers in Vietnam via email info@apolatlegal.com.
