Sub-leasing of spare office or factory space in Vietnam
It is not clear under Vietnamese law if a company may sublease its spare office or factory space without having to register for “real estate trading” and to have a minimum capital of VND 6 billion.
- Article 4.2 of the Enterprise Law provides that “doing business” (kinh doanh) means the continuous conduct of one, several or all of the stages of the investment process, from production to sale of products or provision of services in the market for profits. There is no further interpretation of the term “continuous conduct”. Therefore, it is not clear if a company which enters into only one subleasing contract for its spare office or factory space could be considered as having a continuous conduct of leasing or not.
- In an official letter dated August 2011, the Ministry of Planning and Investment took the view that a company subleasing its spare office or factory space is considered as providing real estate trading service and is required to register for “real estate trading” and to have a minimum capital of VND 6 billion.
- On the opposite end, in November 2013, in an official letter to Long An Department of Planning and Investment, the Ministry of Construction takes the view that a company subleasing its spare office or factory space is not considered as providing real estate trading service and is not required to register for “real estate trading” and to have a minimum capital of VND 6 billion.
It appears that the Ministry of Construction considers that entering into one sublease contract does not constitute a continuous conduct. On the other hand, the Ministry of Planning and Investment took the opposite view. The issue in question could also extend to other normal corporate activity such as intercompany lending or providing parent guarantee.
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In June 2025, the National Assembly passed a new Law on Management of State Capital (Law on State Capital 2025) replacing the same law issued in 2014 and amended in 2018 (Law on State Capital 2014). The Law on State Capital 2025 have given the individuals managing State-owned (or controlled) enterprises (i.e., the Members’ Council or the Chairman) substantial flexibility to run their businesses. In this post, we discussed some key changes introduced by the Law on State Capital 2025. A comparison between the Law on State Capital 2025 and Law on State Capital 2014 by Deep Research of Gemini 2.5 Pro can be found here.
Clearer scope of application
Law on State Capital 2025 clearly provides that enterprises which more than 50% charter capital or voting shares of which is held by the State are also subject to this law. This point is not clear under the Law on State Capital 2014.
Definition of State Capital
Under Law on State Capital 2025, State capital in a State-owned enterprise only includes the contributed capital portion held by the State out of the total owner's equity of the enterprise. In addition, the Law on State Capital 2025 defines State capital by reference to the holding percentage of the State. This new approach is a significant change from the Law on State Capital 2014 because:
The Law on State Capital 2025 excludes other funding sources such as the state budget, public assets, and development investment funds from the definition of "State capital" within an enterprise. Instead, the Law on State Capital 2025 classifies these as sources of capital and assets to be used for investing state capital in enterprises; and
in many scenarios, the holding percentage is more important than the absolute amount
The 9th working session of the National Assembly of Vietnam, which lasted 35 days and ends on 27 June 2025, is probably the most productive working session of the National Assembly for several decades. In this one working session, the National Assembly has passed a number of laws equal to all laws passed by the National Assembly in 17 previous working sessions.
Immediately after the conclusion of the National Assembly’s working sessions in late June 2025, newspapers and social media in Vietnam were flooded with information about these new laws and regulations. Information about these new laws was important since many of those laws would take effect on 1 July 2025 – only one week after the National Assembly concluded its working session.
As part of our marketing efforts, we also set out to review those laws and resolutions for our legal updates. However, when we first started, our lawyers struggled to locate the final text of many of these laws. For us, a “final text” of a law would be a scanned PDF of these laws bearing the seal of the National Assembly and signatures of the Chairman of the National Assembly or an official publication on official websites such as the Official Gazette or the National Database of Legal Documents.
Introduction
From 1 July 2025, Vietnam’s local Government system formally operates according to a new “two-tier” system in 34 provinces as opposed to the old “three-tier” system in 63 provinces. In the new system, there are only two levels of local Government including provinces (tỉnh) and wards (xã, phường). Government agencies at district level no longer exist. Vietnam also combines several existing wards to form a larger ward. As a result, we estimate that Vietnam now has about 3,300 local people’s committees down from 10,000 local people’s committees.
To achieve this, by 1 July 2025, the National Assembly and the Government have, among other things, amended the Constitution, amended the Law on Organisation of Local Government, issued 34 resolutions and 28 Decrees to restructure the local government system. Unfortunately, despite such herculean efforts, it appears that the new regulations have not addressed adequately various legal issues arising from the restructuring. In this post we will discuss some of these issues. More information can be found from the attached research generated by the latest AI LLM from Google (Gemini Pro 2.5).
No clear geographical boundaries between various local authorities at wards levels.
It appears that on 1 July 2025, the Government did not establish clear geographical boundaries between the newly established wards. This is because the Standing Committee of the National Assembly sets a deadline of 30 September 2025 for the Government to do so for each province. Until a source of truth of the geographical boundaries at wards level is set up, many companies and individuals may not know for sure the correct addresses that they may use in their operations including application submitted to the authorities, invoices issued to clients, or contracts.
In 2024, the National Assembly of Vietnam enacted the new Law on Organization of the People’s Court (Law on Courts), which implemented significant reforms to the structure of the People’s Court system in comparison to the 2014 Law on Courts. Shortly after the promulgation of the 2024 Law on Courts, Vietnam initiated a substantial reorganisation of its administrative divisions, transitioning from a three-tier (province, district, commune) model to a two-tier (province, commune) model. Consequently, in 2025, the National Assembly approved an amendment to the 2024 Law on Courts to align the court system with the updated two-tier administrative division model (2024-2025 Law on Courts). Below are our discussions on the key changes under the 2024-2025 Law on Courts when compared to the 2014 Law on Courts.
1) Complete Restructuring of the Court Hierarchy
The court system is majorly reformed with the removal of the High People's Courts (Tòa án nhân dân cấp cao) and replacement of District Courts with Regional Court (Tòa án nhân dân khu vực).
In this post, we continue to discuss certain aspects of the new provisions on beneficial owners (BOs or commonly called as “UBOs”) under the new amendments to the Enterprise Law 2020 passed in June 2025 (2025 Enterprise Law Amendment) and the new Decree 168/2025 on enterprise registration. We have discussed some of the issues in our earlier post.
UBOs with joint controls
Under the 2025 Enterprise Law Amendment and Decree 168/2025, the criteria to determine whether an individual is an UBO seem to apply to a single individual only. As such, it is not clear if the information about related persons of such individual (e.g., his/her relatives) should be taken into account when determining an UBO. For example, it is not clear if an individual together with his/her spouse hold more than 25% voting rights of an enterprise should be declared as an UBO. A literal reading of Decree 168/2025 suggests that declaration of UBOs is not required in case of joint control. However, such an approach is likely not consistent with the purpose of the provisions on UBOs.
The law amending the Enterprise Law 2020 (Amended Enterprise Law 2020), effective 1 July 2025, introduces the following key changes:
1. The New Beneficial Owner Regime
1.1. The Amended Enterprise Law 2020's most significant change is the introduction of a Beneficial Owner (BO) regime, designed to enhance transparency and align Vietnam with international anti-money laundering standards.
Who are BOs?
1.2. The Amended Enterprise Law 2020 defines a BO as the individual who ultimately owns or controls an enterprise. The recently issued Decree 168/2025 on enterprise registration (Decree 168/2025) further clarifies the specific criteria for identifying a BO. In particular, an individual is considered a BO if they meet one of the following conditions:
In Vietnam, industrial parks are usually developed by private investors (IP Developer), rather than the State. The IP Developer will directly lease a large land parcel from the State, build necessary infrastructure, and then sublease land with ready-built infrastructure to the ultimate tenants (IP Tenant) for their investment projects.
From a legal standpoint, the nature of these land sublease agreements (sublease contract) between the IP Developer and the IP Tenant is an interesting issue. Should the sublease contract be treated as a property sale or a traditional lease? The answer has significant implications for the rights and obligations of both parties.
As discussed in our previous post, we believe the pilot mechanism introduced under Resolution 171 will bring a significant improvement to the legal framework for commercial housing development in Vietnam. With the enactment of implementing Decree 75/2025, this pilot mechanism is now fully set up. In this post, we will highlight key takeaways from Decree 75/2025 and discuss potential implications for housing developers.
On 29 April 2025, the State Bank of Vietnam (SBV) has issued Circular 3 on the opening and using of VND account for conducting indirect investment in Vietnam (Circular 3/2025). From 16 June 2025, Circular 3/2025 will replace Circular 5 dated 12 March 2014 of the SBV (Circular 5/2014) guiding the opening and using of indirect investment capital account (IICA) for conducting indirect investment in Vietnam.
n a landmark reform for 2025, the Government of Vietnam has commenced a significant restructuring of its ministries. This major overhaul, approved by Resolution No 176 of the National Assembly dated 18 February 2025, aims to create a leaner, more efficient, and effective state apparatus to better support the nation's development.
The restructuring involves a series of complex mergers and transfers of functions between ministries. Based on the guiding decrees, the key changes include: