	Social Enterprise Law Surveys
	Vietnam
	(Asia Pacific) Firm Tilleke & Gibbins
What jurisdiction(s) do you practice in?	Vietnam
What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ...	The Vietnamese corporate laws specify four forms of Enterprises: (i) joint-stock company (“JSC”), (ii) limited liability company (“LLC”), (iii) partnership company (“PC”), and (iv) sole proprietorship (“SP”). They are classified based on several criteria, but mainly the complexity of the company structure, and the number and liability of owners. JSCs and LLCs are the most common forms of Enterprises in Vietnam. A JSC is established by at least three shareholders (a shareholder could be an individual or an organization), and there is no limit on the maximum number of shareholders. An LLC, based on the number of owners, takes the form of a single-member limited liability company (“1-LLC”) – owned by only one member – or a multiple-member limited liability company (“M-LLC”) – owned by from two to 50 members. (A “member” vs. a “shareholder” is the distinguishing feature between the owner of an LLC or a JSC, but they are basically the same.) Both JSCs and LLCs have legal capacity and, generally, the owners (i.e., members or shareholders) are only liable for debts and other liabilities of the company up to the value of capital they contributed. With regard to the ability to mobilize capital, both JSC and LLC are able to issue corporate bonds, but only a JSC is allowed to issue and offer shares. A PC must be established by at least two individuals, called general partners. General partners are liable for debts and other liabilities of the company according to their entire equity. There may be limited partners, but limited partners are only liable for debts up to the value of capital they promise to contribute to the PC. An SP is a company owned by a single individual, and s/he also has unlimited liability for debts and other liabilities of the company. PCs and SPs are not allowed to issue any securities. Given the unlimited liability over the company’s debts, the PC and SP forms are less popular and mostly used for companies operating in certain fields, such as professional services, and for companies with a small-medium scale. a. JSCs and M-LLCs are the most common forms of Enterprises. b. Vietnamese laws do have any specific definition of Social Enterprise nor do they provide any specific organization form for one, but they provide a set of requisite conditions for a Social Enterprise, in particular: It is established and operating under one of the aforementioned forms; Its operation is for the purposes of resolving social and/or environmental issues for the public interest; and It uses at least 51% of its annual post-tax profit for re-investment to achieve its registered purposes. Thus, a Social Enterprise can be established in the form of a JSC, LLC, PC, or SP. However, the JSC and LLC are the most common forms.
Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required...	Generally, the consideration of an Enterprise’s board must serve the benefits of the Enterprise and its shareholders. However, in some specific cases, a decision/resolution of the board or the managers must prioritize statutory requirements such as redemption of the capital contribution from members of an M-LLC in certain cases. For a Social Enterprise, it is further required to prioritize its registered purpose for public interest over the owner(s) by using at least 51% of the annual post-tax profit for re-investment instead of distributing to owners. If the Social Enterprise fails to meet the requirement, it may lose its Social Enterprise status.
Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ...	No, it doesn’t. As described above, there are four forms of Enterprises, and a Social Enterprise can be established in the form of a JSC, LLC, PC, or SP There is a minor difference in the procedures for establishing a Social Enterprise versus a traditional Enterprise. Accordingly, an Enterprise that wishes to register as a Social Enterprise needs to submit a form called the Notice on Commitments to Fulfill Social and Environmental Objectives along with the standard application file for establishing a traditional Enterprise. The commitments clarify, among other things, the social and/or environmental problem(s) that the Social Enterprise would likely address, business methods applied to solve the problem(s), and the timeline for fulfillment of the objectives. Social Enterprises are not very common in Vietnam. They are mainly in public service or charity-like areas.
Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat...	Under Vietnamese laws, Social Enterprises are fairly similar to Nonprofits within the meaning of these terms in the definitions above. Nevertheless, Vietnam also has non-profit organizations which are not (Social) Enterprises. Those non-profit organizations include NGOs, social funds, and charity funds whose activities are for charitable, religious, cultural, educational and social purposes, but not for profit purposes.
Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms.	Under Vietnamese laws on cooperatives, a cooperative is established by at least seven owners (who could be individuals such as farmers, workers, drivers, etc.; households; or organizations). A cooperative allows the co-owners to control, manage, and decide on the management of the cooperative on the basis of autonomy, self-responsibility, equality, and democracy. The co-owners must use the products and services of their cooperative. They may lose their co-owner status if they fail to meet this requirement for a continuous period of time as prescribed under the cooperative charter. Cooperatives operating in the agriculture, forestry, aquaculture, or salt production sectors enjoy a favorable tax rate of 10% (it is 20% for normal enterprises). However, since the level of financial investment does not determine control, cooperatives may experience difficulties in raising capital as co-owners may not be incentivized to make large investments.
Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to.	Yes, there are. If a Social Enterprise receives incentives, aid, or sponsorships, it must send a prescribed annual report on assessment of social impacts of its activities to the Department of Planning and Investment (“DPI”) or sponsorship management agency of the People’s Committee of the province where the Social Enterprise’s headquarters is situated within 90 days from the end of the fiscal year. The report is to specify, among other things, the incentives, aid, or sponsorships received, the social and/or environmental activities undertaken by the Social Enterprise, its achievements and degree of completion.
In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.	No, only the laws and regulations on Social Enterprises have evolved over time in Vietnam (although they are still general and lack detail by nature).
Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.	ESG requirements are not provided under Vietnamese laws. However, Enterprises are generally obligated to comply with all requirements on environmental protection of Vietnam during their operation. Enterprises that are involved in manufacturing and generating waste will be subject to preparation and submission of an environmental protection plan or environmental impact assessment report to the environment management authorities for examination and approval before commencing the business. In addition, Vietnamese laws regulate certain requirements on the governance of Enterprises. Each form of Enterprise has different corporate governance. Depending on the form, the Enterprise must comply with statutory governance requirements accordingly.
Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe.	Public interest is considered the mission of the operation of Social Enterprises. Thus, compliance with registered social and/or environmental objectives is an obligation of Social Enterprises. Further, Social Enterprises have to comply with all general requirements of a normal Enterprise (see discussion in Sub-sections I.2 & I.4 above).
Does your jurisdiction have any ESG requirements for investors? If it does, please describe.	Generally, no. As discussed in Sub-section I.9 above, ESG requirements are not specifically provided in Vietnam. However, there are regulations on environment and governance, which enterprises must comply with. Such regulations are not applicable directly to investors but applicable to enterprises, which are established by investors.
Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi...	No, there aren’t. ESG requirements are not provided under Vietnamese laws. See discussion in Sub-sections I.9 & I.11 above.
What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?	Social Enterprises in Vietnam may receive grants or aid in the form of money or property donation or technical assistance from domestic and designated foreign entities. However, there seems to be no charitable investment or traditional investment in Vietnam.
How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?	For-profit impact investments are not yet available in Vietnam.
What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government...	There is no special government funding (or funding restrictions) specifically available to Social Enterprises as such. However, a Social Enterprise that is small to medium-sized may receive state support as discussed in Sub-section IV.2 below.
Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?	There is currently no Social Enterprise listed on leading securities exchange(s) in Vietnam.
To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction.	There are no such specific requirements. However, subject to the registered activities, publicly traded Enterprises in Vietnam may be required to report to the state authorities regarding their compliance with regulations and/or plans on environmental protection as well as their commitment to fulfill social and environmental objectives. These requirements are applicable to all Enterprises.
How prevalent, if at all, are impact bonds in your jurisdiction?	Impact bonds are not available in the Vietnamese market.
In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?	No, there aren’t.
Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a...	The Vietnamese laws have yet to regulate the legal framework for crowdfunding. There are no rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under applicable statutes.
Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe...	There are no separate provisions on tax incentives for Social Enterprises under the current Law on Corporate Income Tax of Vietnam. However, there is an implication that if an Enterprise’s operations/business are for public interest, such Enterprise may be given tax incentives. Subject to the registered business and the business conditions of a Social Enterprise, the following income may be tax-exempt: Income earned from cultivation, breeding, farming, and processing of agricultural and aquatic products in areas with extremely difficult socio-economic conditions; Income earned from production activities and business in goods and services by enterprises employing an average of 20 or more employees in a year, with 30% or more of those employees being disabled people, reformed drug addicts, or people infected with HIV/AIDS; Income earned from occupational training activities especially reserved for ethnic minorities, people with disabilities, children living in particularly difficult conditions, and reformed offenders; Aid funds received for use in educational, scientific research, cultural, artistic, charitable, humanitarian, or other social activities in Vietnam; and The portion of undistributed income earned by establishments conducting socialization in education and training, medical health, and other sectors which is retained for investment in development of such establishments in accordance with specialized branch laws in the sectors of education and training, culture, medical health, or other socialization sectors. In addition, Enterprises that earn income from conducting socialization activities in the sectors of education and training, vocational training, medical health, culture, sports, and the environment may enjoy a preferential tax rate of 10% (with no limit on the duration) from the first year the Enterprise has turnover. They may also be able to enjoy up to four years of tax exemption and 50% of tax deduction for no more than nine subsequent years. The exemption and deduction will be calculated from the first year the Enterprise has turnover or the fourth year from the date of operation if there is no turnover after three years of operation, whichever comes first.
Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?	No.
Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)	No.
Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?	No.
Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.	No.
What government operational support, resources, training or services, are available for small businesses or Social Enterprises?	Under the Law on Provision of Assistance for Small and Medium-Sized Enterprises, the government provides certain support to small and medium-sized Enterprises related to credit access, production premises, tax and accounting regime, etc. In particular, if small and medium-sized Enterprises lease premises in industrial parks and/or hi-tech parks, the government may consider providing rent support for up to five years. A business or Social Enterprise which is operating for the public interest may also receive the tax incentives as discussed in Sub-section III.1 above.
Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.	As discussed above, a Social Enterprise must use at least 51% of its annual post-tax profit for re-investment to achieve its registered purposes. In addition, if a Social Enterprise receives donations, aid and/or sponsorships to cover its administrative expenses and operating costs, it must send a prescribed annual report on assessment of social impact of its activities to the relevant authority within 90 days from the end of the fiscal year.
Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.	The provincial People’s Committee (a governmental authority at the provincial level) where the Social Enterprise is situated is responsible to monitor the Social Enterprises in the province. A People’s Committee monitors Social Enterprises via the following: Requesting Social Enterprises to submit reports on their adherence to their commitments to fulfill social and environmental objectives where necessary; or Directly inspecting or requesting relevant authorities (e.g., the provincial DPI) to inspect a Social Enterprise to ensure if the latter complies with the laws and their commitments to the public interest. The details on the effectiveness of the activities are not fully statistical or updated. However, the monitoring, in some ways, helps the government to track the level of commitment as well as contribution to the public interest of Social Enterprises.
Is there a different bankruptcy system available for Social Enterprises?	No.
What are the average time and filing fees to form an Enterprise in your jurisdiction?	To establish an Enterprise, the investor(s) must submit an application for the issuance of a license called the Enterprise Registration Certificate (“ERC”). Under the law, it takes the provincial DPI where the Enterprise is located three working days from the date of receiving the application to proceed with the request. In practice, it may be slightly prolonged due to requests for additional clarification or amendment. However, the procedure is considered quite straightforward. The registration is free of charge, but investors will need to pay VND 100,000 (approx. USD 4)[1] for the announcement of the company established on the National Business Registration Portal of Vietnam. If the investor is foreign, then it will first apply for approval for its investment into the Vietnamese market (i.e., Investment Registration Certificate) before it can request the issuance of the ERC. Subject to the complexity, scale, and impact of the project, the timeline for the relevant authority to consider and accept the investment of the investor may be from 15 days to several months. [1] At the exchange rate of USD 1 = VND 23,100.
What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well...	There are no such certifications or accreditations in Vietnam yet.
Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.	Yes, startups can be fairly easily formed and are flourishing in Vietnam. As discussed in Sub-section VI.1 above, incorporation processes are fairly fast, inexpensive, and simple. It may take longer for an investor who is a foreigner.
Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.	Social Enterprises can be formed under one of the four forms of Enterprises as discussed in Subsection I.2 above. As a Social Enterprise is also considered a normal Enterprise, the establishment of a Social Enterprise is relatively simple. See discussion in Sub-sections VI.1 & VI.3 above.
Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc...	Generally, no.
In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.	Generally, no.
What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?	None anticipated in the near future.
What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?	None anticipated in the near future.
Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?	No.

Social Enterprise Law Surveys

Back XLS

What jurisdiction(s) do you practice in?

Vietnam

What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ...

The Vietnamese corporate laws specify four forms of Enterprises: (i) joint-stock company (“JSC”), (ii) limited liability company (“LLC”), (iii) partnership company (“PC”), and (iv) sole proprietorship (“SP”). They are classified based on several criteria, but mainly the complexity of the company structure, and the number and liability of owners.

JSCs and LLCs are the most common forms of Enterprises in Vietnam. A JSC is established by at least three shareholders (a shareholder could be an individual or an organization), and there is no limit on the maximum number of shareholders. An LLC, based on the number of owners, takes the form of a single-member limited liability company (“1-LLC”) – owned by only one member – or a multiple-member limited liability company (“M-LLC”) – owned by from two to 50 members. (A “member” vs. a “shareholder” is the distinguishing feature between the owner of an LLC or a JSC, but they are basically the same.) Both JSCs and LLCs have legal capacity and, generally, the owners (i.e., members or shareholders) are only liable for debts and other liabilities of the company up to the value of capital they contributed. With regard to the ability to mobilize capital, both JSC and LLC are able to issue corporate bonds, but only a JSC is allowed to issue and offer shares.

A PC must be established by at least two individuals, called general partners. General partners are liable for debts and other liabilities of the company according to their entire equity. There may be limited partners, but limited partners are only liable for debts up to the value of capital they promise to contribute to the PC. An SP is a company owned by a single individual, and s/he also has unlimited liability for debts and other liabilities of the company. PCs and SPs are not allowed to issue any securities. Given the unlimited liability over the company’s debts, the PC and SP forms are less popular and mostly used for companies operating in certain fields, such as professional services, and for companies with a small-medium scale.

a. JSCs and M-LLCs are the most common forms of Enterprises.

b. Vietnamese laws do have any specific definition of Social Enterprise nor do they provide any specific organization form for one, but they provide a set of requisite conditions for a Social Enterprise, in particular:

It is established and operating under one of the aforementioned forms;
Its operation is for the purposes of resolving social and/or environmental issues for the public interest; and
It uses at least 51% of its annual post-tax profit for re-investment to achieve its registered purposes.
Thus, a Social Enterprise can be established in the form of a JSC, LLC, PC, or SP. However, the JSC and LLC are the most common forms.

Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required...

Generally, the consideration of an Enterprise’s board must serve the benefits of the Enterprise and its shareholders. However, in some specific cases, a decision/resolution of the board or the managers must prioritize statutory requirements such as redemption of the capital contribution from members of an M-LLC in certain cases.

For a Social Enterprise, it is further required to prioritize its registered purpose for public interest over the owner(s) by using at least 51% of the annual post-tax profit for re-investment instead of distributing to owners. If the Social Enterprise fails to meet the requirement, it may lose its Social Enterprise status.

Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ...

No, it doesn’t. As described above, there are four forms of Enterprises, and a Social Enterprise can be established in the form of a JSC, LLC, PC, or SP

There is a minor difference in the procedures for establishing a Social Enterprise versus a traditional Enterprise. Accordingly, an Enterprise that wishes to register as a Social Enterprise needs to submit a form called the Notice on Commitments to Fulfill Social and Environmental Objectives along with the standard application file for establishing a traditional Enterprise. The commitments clarify, among other things, the social and/or environmental problem(s) that the Social Enterprise would likely address, business methods applied to solve the problem(s), and the timeline for fulfillment of the objectives.

Social Enterprises are not very common in Vietnam. They are mainly in public service or charity-like areas.

Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat...

Under Vietnamese laws, Social Enterprises are fairly similar to Nonprofits within the meaning of these terms in the definitions above. Nevertheless, Vietnam also has non-profit organizations which are not (Social) Enterprises. Those non-profit organizations include NGOs, social funds, and charity funds whose activities are for charitable, religious, cultural, educational and social purposes, but not for profit purposes.

Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms.

Under Vietnamese laws on cooperatives, a cooperative is established by at least seven owners (who could be individuals such as farmers, workers, drivers, etc.; households; or organizations). A cooperative allows the co-owners to control, manage, and decide on the management of the cooperative on the basis of autonomy, self-responsibility, equality, and democracy. The co-owners must use the products and services of their cooperative. They may lose their co-owner status if they fail to meet this requirement for a continuous period of time as prescribed under the cooperative charter.

Cooperatives operating in the agriculture, forestry, aquaculture, or salt production sectors enjoy a favorable tax rate of 10% (it is 20% for normal enterprises). However, since the level of financial investment does not determine control, cooperatives may experience difficulties in raising capital as co-owners may not be incentivized to make large investments.

Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to.

Yes, there are. If a Social Enterprise receives incentives, aid, or sponsorships, it must send a prescribed annual report on assessment of social impacts of its activities to the Department of Planning and Investment (“DPI”) or sponsorship management agency of the People’s Committee of the province where the Social Enterprise’s headquarters is situated within 90 days from the end of the fiscal year.

The report is to specify, among other things, the incentives, aid, or sponsorships received, the social and/or environmental activities undertaken by the Social Enterprise, its achievements and degree of completion.

In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.

No, only the laws and regulations on Social Enterprises have evolved over time in Vietnam (although they are still general and lack detail by nature).

Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.

ESG requirements are not provided under Vietnamese laws. However, Enterprises are generally obligated to comply with all requirements on environmental protection of Vietnam during their operation. Enterprises that are involved in manufacturing and generating waste will be subject to preparation and submission of an environmental protection plan or environmental impact assessment report to the environment management authorities for examination and approval before commencing the business.

In addition, Vietnamese laws regulate certain requirements on the governance of Enterprises. Each form of Enterprise has different corporate governance. Depending on the form, the Enterprise must comply with statutory governance requirements accordingly.

Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe.

Public interest is considered the mission of the operation of Social Enterprises. Thus, compliance with registered social and/or environmental objectives is an obligation of Social Enterprises.

Further, Social Enterprises have to comply with all general requirements of a normal Enterprise (see discussion in Sub-sections I.2 & I.4 above).

Does your jurisdiction have any ESG requirements for investors? If it does, please describe.

Generally, no. As discussed in Sub-section I.9 above, ESG requirements are not specifically provided in Vietnam. However, there are regulations on environment and governance, which enterprises must comply with. Such regulations are not applicable directly to investors but applicable to enterprises, which are established by investors.

Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi...

No, there aren’t. ESG requirements are not provided under Vietnamese laws. See discussion in Sub-sections I.9 & I.11 above.

What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?

Social Enterprises in Vietnam may receive grants or aid in the form of money or property donation or technical assistance from domestic and designated foreign entities. However, there seems to be no charitable investment or traditional investment in Vietnam.

How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?

For-profit impact investments are not yet available in Vietnam.

What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government...

There is no special government funding (or funding restrictions) specifically available to Social Enterprises as such. However, a Social Enterprise that is small to medium-sized may receive state support as discussed in Sub-section IV.2 below.

Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?

There is currently no Social Enterprise listed on leading securities exchange(s) in Vietnam.

To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction.

There are no such specific requirements.

However, subject to the registered activities, publicly traded Enterprises in Vietnam may be required to report to the state authorities regarding their compliance with regulations and/or plans on environmental protection as well as their commitment to fulfill social and environmental objectives. These requirements are applicable to all Enterprises.

How prevalent, if at all, are impact bonds in your jurisdiction?

Impact bonds are not available in the Vietnamese market.

In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?

No, there aren’t.

Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a...

The Vietnamese laws have yet to regulate the legal framework for crowdfunding. There are no rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under applicable statutes.

Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe...

There are no separate provisions on tax incentives for Social Enterprises under the current Law on Corporate Income Tax of Vietnam. However, there is an implication that if an Enterprise’s operations/business are for public interest, such Enterprise may be given tax incentives. Subject to the registered business and the business conditions of a Social Enterprise, the following income may be tax-exempt:

Income earned from cultivation, breeding, farming, and processing of agricultural and aquatic products in areas with extremely difficult socio-economic conditions;
Income earned from production activities and business in goods and services by enterprises employing an average of 20 or more employees in a year, with 30% or more of those employees being disabled people, reformed drug addicts, or people infected with HIV/AIDS;
Income earned from occupational training activities especially reserved for ethnic minorities, people with disabilities, children living in particularly difficult conditions, and reformed offenders;
Aid funds received for use in educational, scientific research, cultural, artistic, charitable, humanitarian, or other social activities in Vietnam; and
The portion of undistributed income earned by establishments conducting socialization in education and training, medical health, and other sectors which is retained for investment in development of such establishments in accordance with specialized branch laws in the sectors of education and training, culture, medical health, or other socialization sectors.

In addition, Enterprises that earn income from conducting socialization activities in the sectors of education and training, vocational training, medical health, culture, sports, and the environment may enjoy a preferential tax rate of 10% (with no limit on the duration) from the first year the Enterprise has turnover. They may also be able to enjoy up to four years of tax exemption and 50% of tax deduction for no more than nine subsequent years. The exemption and deduction will be calculated from the first year the Enterprise has turnover or the fourth year from the date of operation if there is no turnover after three years of operation, whichever comes first.

Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?

No.

Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)

No.

Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?

No.

Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.

No.

What government operational support, resources, training or services, are available for small businesses or Social Enterprises?

Under the Law on Provision of Assistance for Small and Medium-Sized Enterprises, the government provides certain support to small and medium-sized Enterprises related to credit access, production premises, tax and accounting regime, etc. In particular, if small and medium-sized Enterprises lease premises in industrial parks and/or hi-tech parks, the government may consider providing rent support for up to five years. A business or Social Enterprise which is operating for the public interest may also receive the tax incentives as discussed in Sub-section III.1 above.

Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.

As discussed above, a Social Enterprise must use at least 51% of its annual post-tax profit for re-investment to achieve its registered purposes.

In addition, if a Social Enterprise receives donations, aid and/or sponsorships to cover its administrative expenses and operating costs, it must send a prescribed annual report on assessment of social impact of its activities to the relevant authority within 90 days from the end of the fiscal year.

Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.

The provincial People’s Committee (a governmental authority at the provincial level) where the Social Enterprise is situated is responsible to monitor the Social Enterprises in the province. A People’s Committee monitors Social Enterprises via the following:

Requesting Social Enterprises to submit reports on their adherence to their commitments to fulfill social and environmental objectives where necessary; or
Directly inspecting or requesting relevant authorities (e.g., the provincial DPI) to inspect a Social Enterprise to ensure if the latter complies with the laws and their commitments to the public interest.

The details on the effectiveness of the activities are not fully statistical or updated. However, the monitoring, in some ways, helps the government to track the level of commitment as well as contribution to the public interest of Social Enterprises.

Is there a different bankruptcy system available for Social Enterprises?

No.

What are the average time and filing fees to form an Enterprise in your jurisdiction?

To establish an Enterprise, the investor(s) must submit an application for the issuance of a license called the Enterprise Registration Certificate (“ERC”).

Under the law, it takes the provincial DPI where the Enterprise is located three working days from the date of receiving the application to proceed with the request. In practice, it may be slightly prolonged due to requests for additional clarification or amendment. However, the procedure is considered quite straightforward.

The registration is free of charge, but investors will need to pay VND 100,000 (approx. USD 4)[1] for the announcement of the company established on the National Business Registration Portal of Vietnam.

If the investor is foreign, then it will first apply for approval for its investment into the Vietnamese market (i.e., Investment Registration Certificate) before it can request the issuance of the ERC. Subject to the complexity, scale, and impact of the project, the timeline for the relevant authority to consider and accept the investment of the investor may be from 15 days to several months.

[1] At the exchange rate of USD 1 = VND 23,100.

What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well...

There are no such certifications or accreditations in Vietnam yet.

Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.

Yes, startups can be fairly easily formed and are flourishing in Vietnam. As discussed in Sub-section VI.1 above, incorporation processes are fairly fast, inexpensive, and simple. It may take longer for an investor who is a foreigner.

Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.

Social Enterprises can be formed under one of the four forms of Enterprises as discussed in Subsection I.2 above. As a Social Enterprise is also considered a normal Enterprise, the establishment of a Social Enterprise is relatively simple. See discussion in Sub-sections VI.1 & VI.3 above.

Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc...

Generally, no.

In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.

Generally, no.

What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?

None anticipated in the near future.

What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?

None anticipated in the near future.

Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?

No.

Social Enterprise Law Surveys

Vietnam

Social Enterprise Law Surveys

Vietnam

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