VIETNAM Law and Practice Contributed by: Tran Thai Binh and Duong Thi Minh Han, LNT & Partners
If listed, the sale of its shares will be governed by the laws on securities. As with an LLC, shareholder liabil - ity to the company is proportionate to the number of
The companies must also report periodically to the authorities on their investment activities.
shares held. 5.3 REITs
6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time Entities or individuals will be granted the land either in the form of allocation or lease by the state for a speci - fied period, always subject to the purpose of using the land. While the land-use term of a land lease is for a limited period, land allocation may either be for a limited period or for long-term use. The terms are extendable, subject to the discretion of the state. These primary land users may use the land, undertak - ing construction on it and leasing it out for a limited term under a commercial lease, but may not exceed the term granted by the state. 6.2 Types of Commercial Leases A commercial lease is not classified by type, and payment by the tenant is dependent on negotiation between the parties. However, besides basic real estate rent, tenants usually have to bear: • utilities charges; • management and maintenance fees; and • insurance. In the case of lease of a retail space, tenants may incur a “percentage rent”. 6.3 Regulation of Rents or Lease Terms General rules on commercial leasing real estate are provided under the Civil Code 2015, the Law on Real Estate Trading 2023 and the Law on Commerce 2005. Terms on rent are freely negotiable between the par - ties to the lease, as long as they are not contrary to, or prohibited by, regulations under the law. Lease rent in industrial parks may be subject to certain regulations by industrial park management authority. 6.4 Typical Terms of a Lease Typical terms are subject to the nature and purpose of the lease, provided that the terms of a commercial lease do not exceed the terms of a land allocation/
The concept of a trust does not exist in Vietnam, so there are no real estate investment trusts, or REITs, within the sector. 5.4 Minimum Capital Requirement There is no minimum capital required to set up an entity. However, if the entity is chosen to be the developer of a real estate project under the Law on Investment, it must have equity capital equivalent to at least 20% of the total investment capital in the real estate project below 20 hectares, and at least 15% in a project of more than 20 hectares. There must be proof of such capital capacity for the authority to approve the pro - ject. 5.5 Applicable Governance Requirements When an entity/individual is investing in a real estate project, the following conditions must be satisfied: • the entity must be duly established as a corporate under the laws of Vietnam; • it must have the role of project developer and the name of the real estate must be published; • it/they must not be prohibited from conducting real estate business, subject to temporary business suspension, or a termination order by a court judg - ment, or a competent state authority; • the entity must have equity capital of at least 20% of the total investment capital in the real estate project below 20 hectares, and at least 15% in a project of more than 20 hectares; and • it must have a satisfactory debt-to-equity ratio for credit and/or corporate bonds. 5.6 Annual Entity Maintenance and Accounting Compliance Foreign-invested companies must maintain finan - cial statements and have these audited annually for submission to the tax authorities. The cost may vary depending on the complexity of the work required.
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