Joint ventures remain one of the most popular structures for foreign investors entering the Vietnamese market. Under the Law on Enterprises 2020 and the Law on Investment 2020, joint ventures can be established as limited liability companies or joint stock companies, each with distinct governance and liability implications.
Foreign ownership caps vary significantly by industry sector. While many sectors now allow 100% foreign ownership, certain industries such as telecommunications, media, and transportation still impose limits. Understanding these restrictions early in the structuring process is crucial to avoid costly restructurings later.
Governance structures should carefully address decision-making authority, dead-lock resolution mechanisms, and minority shareholder protections. Vietnamese law provides certain mandatory protections for minority shareholders, but contractual agreements can often provide additional safeguards beyond the statutory minimum.
Exit strategies are frequently overlooked in joint venture negotiations but are essential for protecting investor interests. Common exit mechanisms include share transfer rights, put and call options, tag-along and drag-along provisions, and initial public offering pathways.
Tax considerations in joint venture structuring can significantly impact the overall return on investment. Proper planning around transfer pricing, withholding taxes on dividends, and potential tax incentives can create substantial value for both local and foreign partners.