Related party transactions in Vietnam are contracts between a company and its own members, major shareholders, directors, parent company, or the relatives and businesses of those people. The Law on Enterprises sets three rules for them. First, the contract needs approval before signing: by the members' council in a multi-member limited liability company (LLC), by the approvers named in Article 86 in a single-member LLC owned by an organisation, and by the board of directors or the General Meeting of Shareholders in a joint-stock company (JSC) (Articles 67, 86 and 167). Second, anyone with an interest in the deal may not vote on it. Third, a contract signed without proper approval can be declared void by a court, and the signatory and the related person must compensate the company and hand back any gain.
For a foreign-invested company the most common case is a contract with the foreign parent: a management services agreement, a licence and royalty, an intercompany loan, a cost-sharing arrangement. Those contracts are related party transactions under company law and, separately, associated party transactions under tax law. This guide covers the first; the tax side is in our guide to transfer pricing in Vietnam. It reflects the law as of 16 October 2026. Law 76/2025/QH15 did not amend the definition of related person (Article 4(23)) or Articles 67, 86 and 164 to 167.
Who is a related person under Vietnamese company law?#
Article 4(23) defines a related person as an individual or organisation with a direct or indirect relationship with the enterprise in one of seven groups:
| Point | Related person of the company | Example |
|---|---|---|
| (a) | The parent company; its managers and legal representative; the person entitled to appoint the parent's managers | The foreign group that owns 100% of the Vietnamese subsidiary |
| (b) | A subsidiary; its managers and legal representative | A 70%-owned subsidiary and its director |
| (c) | A person or group able to control the company through ownership, acquisition of shares or capital, or decision-making | An investor holding 60% |
| (d) | The company's managers, legal representative and inspectors | The general director, a board member |
| (dd) | Spouse, parents (natural, adoptive, in-law), children (natural, adopted, in-law), siblings and siblings' spouses of the managers, legal representative, inspectors, and of members and shareholders holding a controlling stake | The director's wife leasing an office to the company |
| (e) | An individual who is the authorised representative of an organisation in (a), (b) or (c) | The person the parent appoints to hold its stake |
| (g) | An enterprise in which persons in (a) to (e) hold enough to control decisions | A company 80% owned by the director's son |
"Manager" includes any other management title the charter creates (Article 4(24)). If the company charter treats the chief accountant as a manager, the chief accountant's relatives are covered too.
Two gaps in the definition matter in practice, and what follows on both is our reading, not settled law. The list of relatives in point (dd) is shorter than the general definition of "family relationship" in Article 4(22), which also includes the siblings of one's spouse and is used elsewhere in the law, for example in the eligibility rules for inspectors (Article 169(1)(c)). And Articles 67, 86 and 167 speak of the related persons "of" an individual (a member, a director), while Article 4(23) defines related persons "of the enterprise". No official guidance reconciles the two. For a contract of real value with the director's wife's brother, the careful course is to treat him as covered and seek approval. Likewise, the "controlling stake" wording at the end of point (dd) may limit that limb to controlling members and shareholders, but Article 67(1)(b) covers the related persons of every member regardless of stake, so a multi-member LLC should treat the relatives of all members as covered.
Which related party transactions in Vietnam need approval, and from whom?#
| LLC with two or more members | Single-member LLC owned by an organisation | Single-member LLC owned by an individual | JSC | |
|---|---|---|---|---|
| Basis | Article 67 | Article 86(1) to (5) | Article 86(6) | Article 167 |
| Who approves | Members' council | Members' council, or company chairperson, director and inspector (unless the charter provides otherwise) | No approval; record and keep a separate file | Board if under 35% of total assets (or a lower charter threshold); otherwise the General Meeting |
| Time limit | 15 days | 10 days | n/a | 15 days (board) |
Multi-member LLC (Article 67). Covered counterparties are members, members' authorised representatives, the director or general director, the legal representative, managers of the parent company and those who appoint them, and the related persons of all of these. There is no value threshold: a car lease of VND 5 million a month with a 5% member is caught. Unless the charter provides otherwise, the members' council decides within 15 days of the notice, applying Article 59(3): members present holding at least 65% of the capital of all members present must agree, unless the charter sets a different ratio. The denominator is the capital of members present, not "voting capital". Article 67(2) refers to the whole of Article 59(3), not only point (a). On our reading, a sale of assets worth 50% or more of total assets (or a lower charter figure) therefore needs the 75% majority in point (b); the law does not say so expressly. Article 67 has three clauses; the consequences of a breach are in clause 3.
Single-member LLC owned by an organisation (Article 86). This is the usual structure of a wholly foreign-owned subsidiary. Covered counterparties include the owner and its related persons, the members' council members, chairperson, director and inspector and their related persons, and the owner's managers, those who appoint them and their related persons (Article 86(1)). The approvers decide within 10 days by simple majority, one vote each, and anyone related to the parties has no vote (Article 86(3)). Both clause 1 and clause 3 open with "unless the company's charter provides otherwise". Article 86(4) adds substantive conditions that Articles 67 and 167 do not: the parties must be independent legal persons with separate rights, assets and interests; the price must be the market price when the contract is signed or performed; and the owner must comply with contract law in dealing with the company (Article 77(4)).
Single-member LLC owned by an individual. No approval is needed. Contracts between the company and its owner or the owner's related persons must be recorded and kept in a separate file (Article 86(6)). That file also helps show that the owner has kept personal assets apart from the company's, which Article 77(3) requires.
JSC (Article 167). Covered counterparties are shareholders and representatives of institutional shareholders holding more than 10% of ordinary shares, board members, the director or general director, the related persons of all of these, and any enterprise the managers and inspectors must declare under Article 164(2). That last group is wider than many expect: it includes every enterprise in which a manager holds any capital, controlling or not. The board approves deals worth less than 35% of total assets in the latest financial statements, or a lower threshold set by the charter (Article 167(2)). The charter can only lower that threshold, not raise it. A board resolution passes with a majority of members present unless the charter sets a higher ratio (Article 157(12)). The General Meeting approves the rest, plus any loan, borrowing or asset sale worth more than 10% of total assets with a shareholder holding 51% or more of the voting shares or that shareholder's related persons (Article 167(3)), using the ratios in Article 148(1) and (4) unless the charter provides otherwise (Article 167(4)).
Board members who vote for an unlawful resolution that causes loss are jointly liable; those who vote against are exempt (Article 153(4)). The law does not say whether "total assets" means the separate or the consolidated financial statements. For a parent company the cautious course is to use the smaller figure, which makes the 35% threshold easier to reach, or to fix the method in the charter.
Related party transactions in Vietnam with a foreign parent#
A single-member LLC that signs a services, licence, loan or cost-sharing agreement with its foreign parent is dealing with its owner under Article 86(1)(a). The contract needs approval and must meet the three conditions of Article 86(4), including market price.
Here the law runs into a practical gap. The parent appoints the company chairperson or the members of the members' council (Articles 80(1) and 81(1)), and they in turn appoint or hire the director (Article 82(1)). Viewed from the parent, the subsidiary's managers are related persons of the parent (Article 4(23)(b)). Read broadly, Article 86(3) would strip the chairperson (or council members) and the director of their vote, leaving only an inspector, if there is one. Many subsidiaries have no inspector at all, because a supervisory board is mandatory only where the owner is a state enterprise (Article 79(2)). The law does not resolve either point. The tool it does provide is the phrase "unless the charter provides otherwise" in Article 86(1) and (3): the charter of an FDI subsidiary should say expressly who approves contracts with the parent (for example, a written decision of the owner) and how votes are counted. Without that, approval of intercompany contracts rests on a reading nobody has tested in court.
In a joint-venture LLC the foreign parent is a member, so Article 67 applies and the other members decide. In a JSC where the parent holds 51% or more, a parent loan worth more than 10% of total assets goes to the General Meeting, where the parent cannot vote and the minority decides. Plan for that before a funding round, not after.
Medium- and long-term loans from the parent may also need foreign loan registration with the State Bank of Vietnam. That is a separate procedure; registration does not replace internal approval, and approval does not replace registration.
Company law approval is not transfer pricing#
Many guides treat company-law related party rules and transfer pricing as one regime. They are separate systems with different tests and consequences.
| Related person (Law on Enterprises) | Associated party (Decree 255/2026/ND-CP) | |
|---|---|---|
| Purpose | Manage conflicts of interest; decide who approves | Set the taxable price for corporate income tax |
| Ownership link | "Control", no fixed percentage; Article 167 uses more than 10% of ordinary shares | 25% of owner's contributed capital; largest shareholder with at least 10%; certain loans and guarantees (Article 5(2)) |
| Relatives | The list in Article 4(23)(dd) | Wider: also step-parents, stepchildren, grandparents, grandchildren, aunts, uncles, nephews and nieces (Article 5(2)(g)) |
| Consequence | Approval required; unapproved deal may be declared void | Disclosure, transfer pricing documentation, interest cap, tax reassessment |
A contract can fall under one, both or neither. Enterprise Law approval does not prove an arm's length price for tax, and a clean transfer pricing file does not satisfy Article 86. The two tests can share evidence: the benchmarking in the transfer pricing documentation is a reasonable basis for the market-price finding a single-member LLC needs under Article 86(4)(b). The reverse does not hold; a board resolution is not tax documentation.
Two tax points interact with company law. Loans to or from an individual who runs or controls the company, or a relative from the list in point (g), make the parties associated if the amount reaches 10% of owner's contributed capital (Article 5(2)(l) of Decree 255). And once a company has associated party transactions, deductible net interest is capped at 30% of net operating profit plus net interest and depreciation (Article 16(3)), even where the company is exempt from disclosure or documentation (Article 20(3)).
The approval process step by step#
The steps are the same under Articles 67, 86 and 167; time limits and vote counting differ.
- Notice with the draft. The person signing for the company notifies the approving body and the inspector of the related persons and their interest, attaching the draft contract or its main terms (Articles 67(2), 86(2) and 167(2)). Where the General Meeting must approve, the notice goes to the board and the inspector, and the board puts the draft to a meeting or a written vote of shareholders (Article 167(4)). The law speaks of a draft and of a transaction "intended" to be made, so approval comes before signature.
- Decision within the time limit. 15 days for the members' council or the board, 10 days for a single-member LLC owned by an organisation, from receipt of the notice, unless the charter says otherwise. The law does not deem silence to be approval; do not sign without a resolution.
- Exclude the interested votes (Article 67(2); Article 86(3); Article 167(2) and (4)).
- Count the threshold on what remains. The law does not state the denominator after exclusion, and there is no official guidance. Take an LLC with member A at 50%, B at 30% and C at 20%, leasing premises from A, all three present. If A's 50% stayed in the denominator, B and C together would reach only 50%, below 65%, and the deal could never pass. We therefore read the rule as removing A's capital from both sides: 65% of the remaining 50%, or 32.5% of charter capital. Neither B (30%) nor C (20%) alone is enough; both must agree. This is a reading, not a rule, and the charter should fix the method.
- Use "attending and voting" for a JSC. Since 1 March 2022, Article 148(1) counts 65% on "all shareholders attending and voting at the meeting" (as amended by Law 03/2022/QH15). Many older minute templates still say "shareholders present". A written resolution needs more than 50% of the votes of all shareholders entitled to vote (Article 148(4)), unless the charter provides otherwise (Article 167(4)).
On the same reading, take a JSC with total assets of VND 100 billion signing a VND 40 billion contract with a wholly owned subsidiary of institutional shareholder X, which holds 30% of the voting shares. At 40% of total assets the deal goes to the General Meeting. Shareholders at the meeting hold 80% of all votes; without X, 50% remain, so holders of at least 32.5% of all votes (65% of 50%) must approve. The amended "attending and voting" wording can be used to support this reading, since X has no vote on the deal.
For a multi-member LLC, Article 67(2) refers only to the meeting threshold in Article 59(3), not to written resolutions under Article 59(5). With no guidance on the point, hold a meeting, which may be online (Article 59(4)(c)).
What the approval resolution should contain#
This is LexData's own outline, not an official form: the legal basis and the date the notice was received; who attended, their capital or votes, and who was excluded and why; the parties, subject, price, term and payment, with the draft attached; the evidence of market price (a condition of approval under Article 86(4)(b) for a single-member LLC owned by an organisation); for a JSC, the deal value as a share of total assets; the votes cast, the denominator used and the result; the scope of approval and how far the signed text may differ; who signs for the company; and an instruction to update the register of related persons and their contracts (Article 71(4), Article 164(1)). The law does not say whether a single "framework" approval can cover a year of recurring deals. Until guidance appears, approving each contract separately is the lower-risk route.
When related party transactions in Vietnam are signed without approval#
Void by court decision, not automatically. All three articles use the same formula: a contract signed in breach "is void by decision of the court and handled in accordance with law" (Articles 67(3), 86(5), 167(5)). The contract does not lapse on its own; someone must sue. If it is declared void, the parties return what they received and the party at fault compensates the damage (Article 131 of the Civil Code). The Law on Enterprises does not say which Civil Code ground applies, and the limitation periods in Article 132 differ by ground, so the time limit for such a claim remains an open question.
Who pays. The wording differs. In a multi-member LLC, the signatory, the interested member and that member's related person who is party to the deal must compensate the company and return any gain (Article 67(3)); the clause does not say "jointly". In a single-member LLC owned by an organisation, the signatory and the related persons who are parties are jointly liable (Article 86(5)). In a JSC, the signatory and the interested shareholder, board member or director are jointly liable (Article 167(5)).
Who can sue. Members of a multi-member LLC may sue managers in their own name or on behalf of the company for breaching Article 71 or acting against the charter or a council resolution (Article 72). In a JSC, a shareholder or group holding at least 1% of ordinary shares may sue board members and the director (Article 166(1)), and a manager in breach must make good the full loss to the company (Article 165(2)).
Self-dealing under the Civil Code. A representative may not act for the company in a transaction with himself or with another party he also represents, unless the law provides otherwise (Article 141(3)). A director lending to the company, or one person acting as legal representative of both the subsidiary and the parent, should have someone else sign for one side. We have found no guidance on whether Enterprise Law approval counts as the "law providing otherwise", so a separate signatory is the safe course even after approval. Agreed interest on a loan may not exceed 20% a year unless another law provides otherwise, and any excess is void (Article 468(1)).
Disclosure. In a multi-member LLC, managers, the legal representative and inspectors must notify the company in writing within 5 working days of the businesses they own or invest in and those their related persons control (Article 71(3) and (4)). In a JSC the deadline is 7 working days (Article 164(3)). The company keeps the list at its head office.
We found no specific administrative fine for failing to obtain approval; the exposure is civil. Buyers review a target's past related party deals during due diligence and usually ask for a warranty in the share purchase agreement that all of them were properly approved.
Public companies: Decree 245/2025/ND-CP#
Public companies must also follow Article 293 of Decree 155/2020/ND-CP, whose clauses 3 to 5 were rewritten by Decree 245/2025/ND-CP (Article 1(84), in force on signature, 11 September 2025):
- Loans and guarantees to related persons of institutional shareholders are barred, except where the public company is a credit institution, where both are companies in the same group or parent-subsidiary structure (approved as the charter requires, and the borrower is not itself a shareholder), or where another law provides otherwise (clause 3).
- Twelve-month aggregation. A deal worth 35% or more of total assets, or one that takes the total of deals over 12 months from the first deal to 35% or more (or a lower charter threshold), needs General Meeting approval where the counterparty is a board member, supervisory board member, director, other manager, a shareholder holding more than 10% of ordinary shares, a related person of any of them, or an enterprise connected with persons who must declare interests under Article 164(2) of the Law on Enterprises (clause 4(b)). Splitting a contract does not avoid the threshold.
- Loans and guarantees to insiders (board and supervisory board members, the director and other managers who are not shareholders, and their related persons) need General Meeting approval; for related organisations within the same group, the General Meeting or the board approves as the charter provides (clause 4(a)).
- Loans and asset sales above 10% of total assets with a shareholder holding 51% or more of the voting shares, or that shareholder's related persons, also need the General Meeting (clause 4(c)).
Deals under clause 4(b) below those thresholds go to the board (clause 5).
Before signing with the parent or an insider#
- Check the counterparty against Article 4(23) and the declared interests, including relatives outside point (dd).
- Read the charter for a lower JSC threshold, a different time limit, voting rules and, in a single-member LLC, who approves.
- Collect market-price evidence; reuse the transfer pricing benchmark where one exists.
- Send the notice with the draft and hold the meeting before signing.
- Exclude interested votes and record the denominator in the resolution.
- Use a signatory who does not stand on both sides, and register the loan with the State Bank if needed.
For an FDI subsidiary, the conflict of interest built into parent-subsidiary dealings is best handled once, in the charter and the shareholders' agreement, rather than contract by contract. LexData drafts and reviews commercial contracts between companies and their related persons together with the approval resolution, and checks the contracts a target has already signed with insiders in legal due diligence.
