Tiếng ViệtIn 2025, Vietnam’s startup ecosystem is booming across technology, education, finance, and e-commerce. However, statistics show that 70% of startups fail within the first three years, and over 40% of those failures stem from legal risks. Many founders focus heavily on product development and fundraising while neglecting their legal foundation — only to later face internal disputes, loss of shareholding control, investor rejection, or even brand forfeiture in their own markets.
In this article, LexConsult & Partners introduces the startup legal framework in Vietnam 2025 — a comprehensive roadmap covering business structure selection, business licensing, capital contribution and shareholding arrangements, intellectual property protection, labor management, and legal risk prevention strategies for sustainable growth.
1. Types of Business Entities Suitable for Startups
1.1. Choosing the Right Company Structure for Startups in 2025
Selecting the appropriate form of business entity is among the first and most critical legal decisions every startup must make. The chosen structure directly affects the founders’ legal liability, fundraising capacity, governance mechanism, taxation, and long-term scalability. Below is an analysis of the most common legal entity types currently available for startups in Vietnam:
Table: Recommended Entity Types by Development Stage
| Entity Type | Advantages | Disadvantages | Suitable Stage |
|---|---|---|---|
| Sole Proprietorship | – Quick registration, low setup cost; – Simple tax obligations. |
– No legal personality; – Unlimited liability with all personal assets in case of business risks; – Cannot issue equity, attract investors, or scale up operations. |
– Suitable for small-scale business or early idea testing; – Appropriate when there is no expansion plan or the founder is not ready to operate a formal legal entity. |
| Limited Liability Company (LLC) – Single-Member or Multi-Member | – Has legal personality; – Limited liability protection; – Flexible charter capital adjustment; – Members can be individuals or organizations. |
– Cannot issue shares, thus limiting fundraising from investors or expansion via equity sharing; – Restricted access to large-scale financing. |
– Appropriate during the product testing (MVP) stage or early revenue phase, typically with 2–5 founders; – Once operations stabilize, the startup can convert into a joint stock company for easier capital raising. |
| Joint Stock Company | – Can issue shares, facilitating capital raising; – Capable of attracting substantial domestic and foreign investment; – Transparent structure enabling clear benefit allocation among founders, investors, and employees. |
– More complex governance structure; – Requires more internal procedures. |
– Suitable for startups targeting rapid growth, scale expansion, or investment attraction; – Ideal for startups entering the fundraising phase, planning an IPO, or expanding to domestic and international markets; – For tech startups, the joint stock company model is ideal to standardize ownership structure and attract Series A, B, and C investments. |
1.2. Recommended Legal Structures by Startup Growth Stage
At the idea validation or MVP stage, startups may choose to establish a single-member LLC for simplicity and cost efficiency. When the product enters the commercialization stage, with growing clientele and teamwork needs, conversion to a multi-member LLC is advisable to allocate equity and profit shares among co-founders.
Once the startup proceeds to the fundraising stage (seed round) or seeks scalability, conversion into a joint stock company becomes necessary to enable share issuance, attract investors, and manage equity in a transparent and legally recognized manner. For startups aiming at public listing (IPO) or accessing capital markets, the joint stock company is a mandatory and most appropriate choice.
1.3. Updated Legal Provisions on Enterprise Registration and Business Lines (Effective 2025)
Under the latest legal updates effective in 2025, enterprise registration procedures have been fully digitized via the National Business Registration Portal. Applications can be submitted online with a digital signature, and the results may be received through email or courier delivery.
The Enterprise Code and Tax Identification Number are issued simultaneously to shorten registration time.
Startups should particularly note the following:
– Select business lines in accordance with the Vietnam Standard Industrial Classification and review conditional business lines under Appendix I of Decree No. 31/2021/NĐ-CP, especially where foreign investment is involved;
– Certain emerging technology sectors (e.g., AI, big data, blockchain, edtech) remain without comprehensive legal frameworks — hence startups should seek specialized legal consultation prior to registration;
– The legal representative must possess full civil act capacity and a verifiable residence address in Vietnam (in case of foreign individuals).
1.4. Legal Advice and Recommendations for Startups from the Outset
– Do not choose a company structure merely because it is simple or inexpensive; instead, assess it against long-term growth objectives, fundraising strategy, and anticipated team size;
– The startup should standardize its company charter (articles of association) from the beginning, covering provisions on capital contribution, share/interest transfer, voting rights, and intellectual property ownership;
– Where there are two or more founders, it is advisable to execute a Founders’ Agreement, clearly defining ownership and management structure to avoid future disputes;
– Engage a corporate lawyer early on to establish an optimal legal framework and ensure compliance throughout the startup’s formation and development phases.
2. Legal Procedures for Newly Established Enterprises & Required Licenses for Startups
To be legally recognized as a lawful entity under Vietnamese law, a startup must register its enterprise and complete the relevant legal procedures. This is a mandatory prerequisite for opening a corporate bank account, filing taxes, entering into contracts, and raising investment capital in the future.
2.1. Procedures for Registering a Startup with the Business Registration Authority
The first step is to submit the enterprise registration dossier to the Business Registration Office under the Department of Planning and Investment (currently reorganized under the Department of Finance) of the province or city where the enterprise’s head office is located.
The basic application dossier includes:
-
Application for enterprise registration (in the prescribed form);
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Company Charter (agreed upon by all founding members or capital contributors);
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List of founding members or shareholders (with proper verification);
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Copies of Citizen Identification Cards / ID Cards / Passports of the legal representative and all founding members;
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Power of attorney and relevant documents (if the dossier is submitted through an authorized representative).
Note: If the startup includes foreign investment capital or operates in conditional business sectors, additional documents such as an Investment Registration Certificate (IRC) or Cooperation Agreement must be prepared in advance.
2.2. Post-Licensing Legal Procedures to Be Carried Out Immediately After Registration
| Step | Legal Requirement / Task |
|---|---|
| 1 | Register the company seal (currently, notification of seal specimen to the Department of Finance is no longer required; however, internal retention is mandatory). |
| 2 | Register for a digital signature certificate to enable online tax declaration. |
| 3 | Open a corporate bank account and notify the competent authority accordingly. |
| 4 | Register for electronic tax filing and electronic invoicing with the local tax authority. |
2.3. Conditional Business Licenses (“Sub-licenses”) for Certain Business Lines
For certain regulated business sectors commonly pursued by startups, specific operational licenses are required before commencing business activities. Examples include:
– Food & Beverage / Catering services: Certificate of Food Safety and Hygiene;
– Education / Training centers: Decision permitting the establishment of a training institution;
– E-commerce: Notification or registration of the e-commerce website with the Ministry of Industry and Trade;
– Publishing / Media: Press operation license or distribution license, as applicable.
Processing time:
– Enterprise registration: approximately 3–7 working days;
– Conditional business licenses: 15–30 working days, depending on the business sector.
Practical recommendation: When selecting business lines, startups should cross-check against the list of conditional business sectors under Decree No. 31/2021/NĐ-CP and seek legal consultation to ensure full compliance and the preparation of suitable supporting documents.
3. Capital Contribution, Founders’ Agreement & Fundraising Legal Framework for Startups
One of the most crucial components of a solid legal foundation for any startup is the capital contribution mechanism, share allocation, and binding commitments among founders through a Founders’ Agreement. Without early legal standardization, a startup risks losing control, facing internal disputes, or eroding investor confidence.
3.1. Initial Capital Contribution: Cash, Assets & Intellectual Property
Under the Law on Enterprises 2020, capital contributions may take various forms as follows:
| Form of Contribution | Example | Legal Risks if Not Properly Recorded |
|---|---|---|
| Cash | VND or foreign currency | Difficult to prove ownership if no contribution minutes or receipts are prepared |
| Tangible Assets | Machinery, equipment, vehicles | Disputes over ownership; difficulty in valuation |
| Intellectual Property | Software, source code, copyrights | Risk of misappropriation if ownership transfer agreement is not executed |
| Land Use Rights, Technology, or Trade Secrets | Land, production processes | Legal risks if not properly registered or valued according to law |
For startups — particularly in technology sectors — the initial value often lies in intellectual creativity, software, or developing platforms. However, if such assets are not properly valued and recorded in the capital contribution dossier, it may lead to legal disputes over ownership, shareholding ratio, or rights in case of member withdrawal or dissolution.
Therefore, every contribution must be accompanied by a written record, clear valuation report, and recognition in the Company Charter or incorporation documents.
In cases involving intellectual property, there should be a written transfer of ownership or lawful license agreement to ensure proper legal recognition.
3.2. The Role of the Founders’ Agreement in Startup Legal Frameworks
A Founders’ Agreement is a document that records the initial understanding among founders regarding how they will build and operate the company together. Though not mandatory under Vietnamese law, it serves as a critical preventive legal instrument to mitigate internal risks, especially when a startup scales up or enters investment rounds.
Essential contents of a Founders’ Agreement include:
– Capital contribution ratio and contribution conditions for each founder;
– Commitment period or vesting schedule;
– Mechanism for handling withdrawal or breach by a founder;
– Intellectual property ownership policy (clearly defining which assets belong to the company);
– Dispute resolution clause and arbitration or court jurisdiction.
The Founders’ Agreement should be signed prior to or at the time of company registration and may be attached to the Company Charter for enforceability. Startups are encouraged to engage corporate lawyers or legal advisors to draft a customized agreement suited to their structure and growth stage.
3.3. Company Charter and Shareholding Structure
The Company Charter (Articles of Association) is the most important internal legal document governing the organization, operation, and management of a company. For startups, special attention should be paid to:
– Founders’ shareholding ratios and corresponding voting rights;
– Conditions for share transfer (whether subject to approval of the Members’ Council or General Meeting of Shareholders);
– Mechanisms for capital increase/decrease, profit distribution, and asset handling upon dissolution;
– Rights of investors participating in Seed or Series A funding rounds.
A well-drafted Charter not only prevents internal conflicts but also facilitates investor negotiations and due diligence later on. Simultaneously, the capitalization table (cap table) must remain clear and transparent, preventing undue dilution of the founders’ controlling interests.
3.4. Legal Preparation Before Fundraising – Minimizing Legal Risks for Startups
When entering a fundraising stage, a startup’s success depends significantly on the readiness and professionalism of its legal documentation.
Mandatory documents to prepare before engaging investors include:
– Latest Company Charter;
– Enterprise Registration Certificate (certified copy);
– Updated shareholder list and cap table;
– Proof of ownership of intellectual property assets;
– Founders’ Agreement and key employment contracts;
– Standard investment documents (e.g., Term Sheet, Shareholders’ Agreement – SHA).
In addition, startups should understand and negotiate key investment terms, such as:
– Anti-dilution provisions;
– Pre-emptive rights to purchase newly issued shares;
– Veto rights on major corporate decisions;
– Exit mechanisms (exit strategy, buyback rights, or IPO terms).
Recommendation: A startup should engage a lawyer or legal advisor throughout the fundraising process to avoid losing control, misvaluation, or agreeing to disadvantageous investment terms.
Capital contribution, the Founders’ Agreement, and the Company Charter together form the “legal cornerstone” of every startup. By standardizing these instruments from the outset, startups can ensure operational stability, successful fundraising, and long-term protection against legal risks.
4. Intellectual Property and Brand Protection in Startup Legal Frameworks
Intellectual Property (IP) represents an intangible yet core asset of a startup, particularly in sectors such as technology, creative industries, and e-commerce. Neglecting IP protection can lead to severe consequences — from brand loss, product duplication, to difficulties in valuation during fundraising rounds.
4.1. Importance of Intellectual Property Protection for Startups
Although many startups may not yet generate significant revenue, they often possess innovative ideas, software, applications, technological solutions, or distinctive brands — all of which constitute intellectual property requiring legal protection.
Registering IP rights helps the startup to:
– Establish lawful ownership over its trade name, logo, products, and solutions;
– Prevent competitors from copying, misappropriating, or registering similar marks beforehand;
– Facilitate valuation and due diligence in investment rounds;
– Enhance professionalism and credibility with clients and investors.
Several Vietnamese startups have been refused trademark registration because their brands were identical or confusingly similar to existing filings — forcing costly rebranding and disrupting communication and market strategies.
4.2. Types of Intellectual Property Assets Startups Should Register Early
Depending on the business model, startups should proactively secure legal ownership over the following categories of IP assets:
| Type of IP Asset | Examples | Purpose of Protection |
|---|---|---|
| Trademark / Brand | Company name, product or service name, logo, brand symbol | Protect brand identity and recognition |
| Copyright (for software, websites, applications) | Source code, user interface, digital content | Prevent unauthorized copying or replication |
| Industrial Design | Product design, packaging, device appearance | Preserve distinctiveness and visual differentiation |
| Patent / Utility Solution | Algorithm, core technology, proprietary systems | Assert competitive advantage and exclusivity |
| Domain Name | Website domain aligned with the brand | Prevent impersonation and protect online brand identity |
4.3. International Trademark Registration (Madrid / WIPO) for Global Expansion
For startups planning international expansion or raising capital from foreign investors, it is advisable to register IP rights globally through:
– The Madrid System (Madrid Protocol): Enables protection of a trademark in multiple jurisdictions with a single application, centrally managed through WIPO;
– Copyright or trademark registration in the United States or the European Union, if targeting those markets.
Startups may first register domestically; once the trademark certificate is issued, they can extend protection internationally to maintain priority rights and prevent brand hijacking abroad.
4.4. Intellectual Property Legal Checklist for Startups
– File IP registrations before any public launch;
– Execute Non-Disclosure Agreements (NDAs) and IP transfer or assignment contracts with designers, developers, and partners;
– Conduct trademark searches prior to use to avoid conflicts;
– Engage IP lawyers for professional advice and application monitoring;
– Check trademark registrability with the National Office of Intellectual Property (NOIP) before finalizing a brand name;
– If multiple founders jointly develop software or applications, clearly stipulate IP ownership in the Founders’ Agreement or Company Charter;
– Establish internal policies for confidentiality, source code control, and technical documentation management to prevent data leakage or appropriation;
– During fundraising, prepare evidence of IP ownership to strengthen investor confidence and valuation accuracy.
5. Human Resource Management and Labor–Insurance Compliance in Startups
Even when operating with only two to five initial employees, startups must still comply with labor and social insurance laws to minimize legal risks and maintain a professional working environment.
5.1. Labor Obligations and Social Insurance under the Law for Newly Established Enterprises
Execution of Employment Contracts:Startups are legally required to execute written employment contracts with employees working for more than one month, whether definite-term, indefinite-term, or probationary contracts. For collaborators or freelancers, it is advisable to use service contracts to clarify the independent nature of the working relationship.
Mandatory Social Insurance Registration: Once employing even one person, an enterprise must register for and contribute to Social Insurance (SI), Health Insurance (HI), and Unemployment Insurance (UI) in accordance with law. Failure to comply may result in significant administrative penalties and damage to corporate reputation.
5.2. Confidentiality, ESOP, and Legal Retention of Key Personnel
Startups should prepare specialized agreements to protect key human resources and proprietary information, including:
– Non-Disclosure Agreement (NDA): Prevents leaks of confidential data, source codes, and business strategies;
– Training and Retention Agreement: Ensures employees trained at company expense remain for a minimum commitment period;
– Employee Stock Ownership Plan (ESOP): Incentivizes and retains core personnel, especially during investment rounds.
5.3. Foreign Employees and Work Permit Procedures for Startups (2025 Update)
For startups employing foreign workers, the following procedures are mandatory:
– Obtain approval of foreign labor demand from the competent authority;
– Apply for a work permit at the Department of Labor, Invalids, and Social Affairs (DOLISA).
Processing time: typically 10–20 working days, depending on document validity and completeness.
From the outset, startups should develop a basic HR legal documentation set, including:
– Standard employment contracts;
– NDA templates;
– Internal labor regulations;
– Procedures for termination, resignation, and disciplinary actions — to prevent disputes and ensure compliance with Vietnamese labor law.
6. LexConsult’s Recommendations & Legal Advisory Services for Startups
With extensive experience advising startups across diverse sectors — including technology, education, healthcare, digital agriculture, and e-commerce — LexConsult & Partners has observed that:
The earlier a startup standardizes its legal foundation, the more cost-effective, risk-controlled, and scalable its growth will be.
Below are several practical recommendations for startups in 2025:
6.1. Establish a Legal Foundation from the Ideation Stage
Many founders adopt a “build first, fix later” mindset — using unregistered brands, contributing capital without written records, or hiring staff without contracts. The consequence: when fundraising or facing disputes, they lack the legal basis to protect their own rights.
Therefore, from the ideation stage, every startup should establish:
– A Founders’ Agreement clearly defining ownership, responsibilities, and commitments;
– A Company Charter (Articles of Association) specifying voting rights, shareholding, and transfer restrictions;
– An internal confidentiality framework (NDAs, IP assignment agreements, etc.).
6.2. Do Not Underestimate the Importance of Brand Protection
A great product and strong brand can be lost overnight if not registered in time. Many startups in Vietnam have lost the right to use their own brand in the very market they built — simply because another party registered it first.
To avoid this, startups should register trademarks and copyrights immediately upon public launch of their product or service. If international expansion is planned, prepare to file through the Madrid System to secure protection in multiple countries under a single application.
6.3. Optimize Fundraising Legally – Avoid Losing Control of Your Startup
Many early-stage startups have lost voting power or even management control after investment rounds due to signing investment agreements without fully understanding their legal implications. Such outcomes can permanently affect the company’s direction and the founder’s long-term position.
Before fundraising, carefully review:
– The Company Charter, capitalization table (cap table), and ownership structure;
– Investment terms such as anti-dilution provisions, drag-along rights, and liquidation preferences;
– Mechanisms protecting founding shareholders’ rights.
Startups should engage a qualified lawyer to represent them throughout the negotiation process, especially during Seed or Series A investment rounds.
6.4. Tax and Financial Compliance – Legal Foundation for New Enterprises
Even in the absence of revenue, startups are legally required to:
– File tax declarations;
– Pay the business license fee; and
– Maintain accounting compliance in accordance with Vietnamese standards.
Failure to comply may result in late-filing penalties, accounting deficiencies, and future difficulties in audits or investment due diligence.
For inexperienced founders, it is advisable to outsource accounting services during the first operational year to ensure proper organization of accounting, financial, and tax data. Once the business scales up, the startup may establish an internal accounting department and continue to consult external experts periodically.
6.5. Build a Sustainable Legal Ecosystem for Long-Term Startup Growth
A fast-growing and investment-ready startup must maintain:
– Comprehensive and professional legal documentation;
– A transparent governance structure;
– Clear internal procedures; and
– Protected intellectual property assets.
Startups should regard their lawyer as a strategic team member, involved even before product launch — helping to develop legal awareness from a preventive perspective, ensuring readiness for funding and international market entry.
In the competitive landscape of 2025, startup legal compliance is the key to sustaining competitive advantage and attracting investors.
A transparent legal record, well-drafted contracts, and protected intellectual property will help your startup operate safely, inspire investor confidence, and expand globally with confidence.
Are You a Founder Preparing to Launch a Startup? Do not let legal risks hinder your growth. Contact LexConsult & Partners today for comprehensive, compliant, and strategically aligned legal advisory services tailored to your startup’s development roadmap.
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– [Capital Contribution by Assets: Standard Procedure & Legal Considerations for Enterprises]
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