VIETNAM Law and Practice Contributed by: Thang Nguyen, Minh Nguyen and Nguyet Le, ACSV Legal
3.5 Directors’, Officers’ and Shareholders’ Liability Overview
Liability of Shareholders Shareholders are generally liable only up to their capital contributions. However, they may be personally liable if they abuse the corporate structure for fraud, evade legal obligations, or engage in unlawful conduct – allowing courts to “pierce the corporate veil”. Liability may also arise from statutory violations or personal guar - antees made on behalf of the company. Consequences Depending on the offence and the person or entity having committed the offence, the pun - ishment can be a monetary fine, restraining measures, a forced suspension or termination of business operations, or a ban on conducting certain business activities and/or raising capital. In the case of aggravating circumstances such as recidivism, committed in a professional way or by a group, in the case of abuse of power and position, committed in the name of an agency or organisation, punishments can be higher. Additional measures that can be applied include: • compulsory dismantlement of works; • compulsory removal from Vietnam’s territory; • destruction of goods; and • bans and confiscatory measures. 4. Employment Law 4.1 Nature of Applicable Regulations Governing Law The 2019 Labour Code, which came into effect on 1 January 2021, applies to all individuals – foreign and Vietnamese – working for Vietnam- based organisations or Vietnamese individu - als, but also to Vietnamese nationals working overseas. Exceptions to this rule exist where an
Since 1 January 2018, Vietnam’s Criminal Code has aligned more closely with international standards and allows for criminal liability of corporate entities. Violations in tax, competi - tion, environment, and trade may result in either criminal or administrative sanctions. Administra - tive penalties are generally lighter with shorter limitation periods. The Code applies to both local and foreign legal entities. While subsidiaries are treated inde - pendently, parent companies may be liable for actions of branches or representative offices. Criminal liability does not transfer automatically within corporate groups, and the extent of parent company responsibility remains unclear. If a convicted entity is restructured, the succes - sor inherits its liabilities. Corporate liability does not preclude individual accountability. Liability of Legal Representatives The legal representative acts on behalf of the enterprise in transactions, litigation, arbitra - tion, and other legal matters. If the company is subject to enforcement of tax or administrative decisions, the legal representative may face exit restrictions from Vietnam. They may also be liable for violations under the 2019 Labour Code (eg, unlawful dismissal, anti- competitive conduct, or evasion of insurance obligations). While Vietnamese law lacks pro - visions on liability for failure to prevent crimes, individuals may be criminally liable for conceal - ing or failing to report criminal acts.
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