The team at Venture North Law has prepared a sample draft charter of a private joint stock company in Vietnam under the new Enterprise Law 2020. There are a few points to note:

• The draft is prepared with the interest of the controlling shareholder and company’s managers in mind;

• The draft is prepared for a private joint stock company which has been set up and which has paid up its initial charter capital;

• The draft needs to be read in parallel with the Enterprise Law 2020 since we do not simply cut and paste various articles of the Enterprise Law 2020 in the sample charter;

Under Article 125.2(b) of the Enterprise Law 2020, except for the cases of merger and consolidation of companies, when a non-public joint stock company (a target company) plans to conduct a private placement of shares, the existing shareholders must be offered to purchase such shares first. Only after the existing shareholders do not subscribe for new shares, the target company could conduct a private placement of shares. While the new regulations clarify an unclear point before the Enterprise Law 2020, they could increase the risks that a target company may not be able to successfully issue shares to a desirable investor via a private placement. Below are some potential mechanism to mitigate such risks.