Tiếng ViệtIn 2025, Vietnamese enterprises must operate in an environment of significant volatility — with constant changes in tax and social insurance laws, and increasingly fierce market competition.The most dangerous threats are external legal risks — from failed fundraising rounds and poorly drafted partner contracts to brand loss caused by counterfeiting or imitation.
Many companies have paid a heavy price for prioritizing growth while neglecting their “legal shield.” When incidents arise, the cost of remediation often far exceeds the cost of prevention. So, what types of legal risks should businesses recognize, and how can they achieve sustainable growth while remaining secure in the eyes of investors, regulators, and the market?
In this article, LexConsult & Partners analyzes key external legal risks, provides practical solutions, and offers insights on how businesses can work with corporate legal services and business lawyers to prevent risks early — rather than dealing with them too late.
1. External Legal Risks in Fundraising, Investment, and Ownership Structure
For any business — particularly startups — fundraising is an essential activity for growth. However, without careful legal preparation, the fundraising process can expose a company to serious risks affecting its control, shareholding structure, and even its long-term viability.
Common Legal Risks in Fundraising
| Legal Risk | Potential Consequences |
|---|---|
| Lack of a clear Investment Agreement | Relying only on simple documents such as a “memorandum of understanding” or template forms without binding legal effect can easily lead to disputes over disbursement timing, voting rights, or exit conditions. |
| Failure to control voting rights and dilution terms | Many enterprises lose control because they do not fully understand clauses such as veto rights, pre-emptive rights, or anti-dilution provisions. |
| Absence of a Founders’ Agreement | Without internal commitments, conflicts often arise among founders — including withdrawal, ownership disputes, and disagreements over intellectual contributions — a situation frequently seen in early-stage startups. |
| Unclear or unregistered ownership structure | Some startups distribute “informal” shares without registration at the business authority, resulting in no legal validity during disputes or subsequent funding rounds. |
| Improper share transfer | Transferring shares without proper notification or registration with the Department of Planning and Investment (now the Department of Finance) may be deemed invalid under Article 127 of the Law on Enterprises 2020. |
From LexConsult’s advisory experience, many startups fail at Series A or B rounds not because of weak potential, but due to incomplete legal documentation, uncontrolled equity dilution, and unclear ownership structures.
Investors often require a full legal “clean-up” before disbursement — delaying or even derailing the deal entirely.
Legal Measures to Mitigate Fundraising and Shareholding Risks
To manage legal risks effectively, enterprises should:
– Prepare a complete legal dossier before fundraising, including: the Company Charter, Shareholder List, Founders’ Agreement, Cap Table, and Minutes of the Members’ Council/Shareholders’ Meetings, ensuring accurate reflection of all capital contributions.
– Establish a clear and transparent Cap Table showing who owns how many shares, the amount contributed, and corresponding voting rights — an indispensable basis for valuation and investor negotiation.
– Sign a professional Investment Agreement with clear legal terms on: capital contribution, disbursement schedule, shareholder rights, exit rights, confidentiality, and binding provisions in case of changes in founding shareholders.
– Consult with a corporate lawyer before accepting investment from foreign investors or venture capital funds — as these transactions are governed by the Law on Investment 2020, Law on Enterprises 2020, and Decree No. 31/2021/NĐ-CP on market access and conditional business sectors.
– Execute an internal Founders’ Agreement among founding shareholders — defining responsibilities, commitment periods, and withdrawal procedures — a crucial but often neglected step that prevents future disputes.
Fundraising is a double-edged sword. With a sound legal foundation, it enables rapid and sustainable growth; without it, the business risks loss of control, autonomy, and even founding value.
Therefore, before receiving capital — especially from foreign investors — enterprises should seek legal counsel to ensure full compliance with the Law on Investment 2020, the Law on Enterprises 2020, and relevant regulations on market entry conditions.
2. External Legal Risks from Changes in Legal and Regulatory Policies
One of the key reasons many businesses find themselves in a passive or vulnerable position is their inability to keep pace with the rapid evolution of Vietnam’s legal system. Regulations on taxation, labor, social insurance, and investment are frequently amended or supplemented to align with economic realities. If enterprises fail to timely update and adjust their internal processes, the risk of violations, penalties, and reputational damage becomes extremely high.
Illustrative Examples:
– Amended Law on Social Insurance 2024 (effective from 1 July 2025): introduces changes to pension calculation methods, expands the scope of compulsory social insurance participants, and requires enterprises to update their declaration and contribution procedures under a new system. Failure to comply in time may result in retroactive insurance payments, administrative fines, or labor disputes.
– Amended Law on Corporate Income Tax 2025: affects the allocation of profits, recognition of deductible expenses, and preferential tax rates. Late or incorrect application of these rules can lead to multi-year tax arrears, cash flow disruption, and loss of tax credibility.
Control Solutions
| Risk | Consequence | Recommended Solution |
|---|---|---|
| Failure to update new regulations | Fines, tax arrears, reputational harm | Establish a periodic legal update mechanism through an in-house legal department or cooperation with a law firm. |
| Internal procedures not adjusted in time | Errors in tax filing, HR or accounting management | Conduct internal legal training, revise templates, software, and HR policies accordingly. |
| Lack of monitoring of decrees and guiding circulars | Misinterpretation or misapplication of laws | Closely follow sub-law documents and update operational processes promptly. |
In short: policy changes are an inevitable risk — but enterprises can control them through regular legal updates, ongoing training, and consultation with legal experts.
3. External Legal Risks from Partners, Customers, and Third Parties
In business, no enterprise operates in isolation. Relationships with commercial partners, suppliers, customers, and third-party service providers are both opportunities for growth and sources of potential legal exposure. These risks are often underestimated, especially when companies rely on “long-standing relationships” or execute vague contracts lacking protective provisions.
Common Risks
– Breach of contract claims: A company may be sued by a partner or drawn into a chain dispute if a supplier in its ecosystem defaults.
– Brand counterfeiting: Competitors may register similar domain names, imitate products, or copy brands, causing customer confusion and brand dilution.
– Data leakage from third parties: Tech startups using cloud storage or CRM systems may inadvertently violate the Law on Cybersecurity 2018 or Law on Personal Data Protection 2023 if they fail to secure third-party compliance.
Summary Table of Legal Risks & Control Solutions
| Type of Risk | Legal & Business Consequences | Recommended Solution |
|---|---|---|
| Poorly drafted or incomplete contracts | Exposure to litigation, loss of rights, supply chain disruption | Implement partner due diligence procedures before contracting; use standardized agreements with clauses on penalties, confidentiality, and dispute resolution. |
| Trademark or domain name infringement | Brand confusion, reputational loss, decline in brand value | Register trademarks, trade names, and domains early; monitor and act promptly against infringements. |
| Data leakage from third-party providers | Violations of data and cybersecurity laws; loss of customer information | Sign Data Protection Agreements (DPA); invest in IT security; conduct periodic system audits and monitoring. |
Risks stemming from partners, customers, or third parties can directly affect a company’s cash flow, reputation, and long-term sustainability.
While trust is important, it cannot replace a robust legal framework.
In the context of 2025, external legal risks are no longer distant or hypothetical — they are immediate and tangible, potentially arising from failed fundraising, tax audits, or brand misappropriation. What these incidents share in common is the high cost of remediation, which often slows growth and erodes business credibility.
The most effective solution is long-term cooperation with professional corporate legal services and experienced business lawyers who can help enterprises both prevent legal risks and sustain stable growth.
Are You Preparing to Raise Capital, Expand Your Business, or Build a Brand in Vietnam? LexConsult & Partners is ready to accompany your enterprise with:
– Legal due diligence prior to fundraising and M&A transactions;
– Comprehensive corporate legal risk management advisory;
– Trademark and intellectual property protection;
– Regular legal updates and in-house compliance training.
Contact LexConsult & Partners today for tailored legal solutions to help your business remain secure – transparent – and sustainably competitive in the global market.
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