Drafting a company charter in accordance with the law

Drafting a company charter is a common matter of concern for many enterprises during the process of establishment and operation. The following article outlines the applicable legal provisions on drafting a company charter and addresses certain related questions in order to help individuals and organizations safeguard their lawful rights and interests.

I. Introduction to issues relating to the drafting of a company charter

A company charter establishes the operating framework of an enterprise and is regarded as the most important internal legal instrument of the enterprise. The charter governs core and fundamental matters relating to the organization and operation of the company. It must comply with the law, be agreed upon by members or shareholders, and serve as the legal basis for the settlement of internal disputes.

II. Understanding the drafting of a company charter

To gain a clearer understanding of the drafting of a company charter, let us consider the following contents together with NPLaw.

1. When is it necessary to draft a company charter and what is the primary purpose of drafting a company charter?

Pursuant to Clause 1, Article 24 of the Law on Enterprise 2020 (as amended in 2025), a company charter includes the charter at the time of enterprise registration and the charter as amended and supplemented during the course of operation. Accordingly, the drafting of the Company Charter is a mandatory legal procedure and must be carried out at the following two main points in time:

• Upon registration of enterprise establishment with the competent authority;
• Upon amendment or supplementation during the course of operation.

The charter is one of the mandatory documents to be submitted to the business registration authority when carrying out enterprise registration. The owner/contributing members/shareholders are required to prepare the charter in accordance with the law prior to establishment for the business registration authority to review and approve.

The primary purpose of drafting a company charter is to establish an internal legal framework that clearly regulates the organizational structure, management, and operation of the enterprise in accordance with the Law on Enterprise 2020 (as amended in 2025). This is a mandatory document that functions as the “constitution” of the enterprise, delineating the rights and obligations of members/shareholders and serving as the legal basis for dispute resolution.

2. What core contents must be included when drafting a company charter to ensure stable operation?

Pursuant to Clause 2, Article 24 of the Law on Enterprise 2020 (as amended in 2025), a company charter must contain the following principal contents:

• Name and address of the head office of the company; the names and addresses of branches and representative offices (if any);
• Business lines and sectors;
• Charter capital; total number of shares, classes of shares, and par value of each class of shares in the case of a joint-stock company;
• Full name, contact address, and nationality of general partners in a partnership; of the owner and members in a limited liability company; and of founding shareholders in a joint-stock company. Capital contributions and the value of each member’s contribution in a limited liability company and partnership; number of shares, classes of shares, and par value of each class of shares held by founding shareholders in a joint-stock company;
• Rights and obligations of members in a limited liability company or partnership; and of shareholders in a joint-stock company;
• Organizational and management structure;
• Number and titles of managers and the rights and obligations of the legal representative(s) of the enterprise; allocation of rights and obligations among legal representatives in cases where the company has more than one legal representative;
• Procedures for adoption of company decisions; principles for settlement of internal disputes;
• Basis and method for determining salaries, remuneration, and bonuses of managers and Controllers;
• Circumstances under which members or shareholders may request the company to repurchase capital contributions in a limited liability company or shares in a joint-stock company;
• Principles for distribution of post-tax profits and handling of business losses;
• Cases of dissolution, order of dissolution, and procedures for liquidation of company assets;
• Procedures for amendment and supplementation of the company charter.

Accordingly, to ensure stable operation, the company charter must include the above mandatory contents as prescribed by law.

3. What is the difference between drafting a company charter and drafting a company formation contract?

Pursuant to Clause 1, Article 24 of the Law on Enterprise 2020 (as amended in 2025), a Company Charter may be understood as a document setting out the rules, operating principles, and organizational structure of a company.

Pursuant to Article 385 of the 2015 Civil Code and Clause 1, Article 18 of the 2020 Law on Enterprise (as amended in 2025), a contract is an agreement between parties on the establishment, modification, or termination of civil rights and obligations. Founders may enter into contracts serving the establishment and operation of the enterprise before and during the enterprise registration process. Accordingly, a company formation contract is one way of understanding pre-establishment contracts; it is entered into prior to the company’s legal establishment based on the parties’ mutual agreement to establish, modify, or terminate legal rights and obligations relating to capital contribution and the establishment of a new economic organization among investors.

The fundamental differences between drafting a company charter and drafting a company formation contract are as follows:

- Legal nature and purpose:

• Company charter: A mandatory document governing organizational management, the rights and obligations of members/shareholders, and the operation of the company throughout its existence. Its purpose is to regulate internal governance.
• Company formation contract: Typically executed before the company is granted its establishment registration, reflecting capital contribution agreements among investors for the purpose of establishing and operating the enterprise.

- Mandatory nature:

• Company charter: A compulsory document in the enterprise registration dossier and effective throughout the company’s operation.
• Company formation contract: Not mandatory; it is based on the agreement and consensus of investors for purposes of establishment and operation before and during registration.

- Scope of application:

• Company charter: Binding on all members/shareholders, the Members’ Council/Board of Directors, the executive management (Director/General Director), and all employees of the enterprise.
• Company formation contract: Binding only on the contracting parties.

Based on the above analysis, the principal differences between drafting a company charter and a company formation contract are evident.

4. Who has the authority to decide the contents of the company charter in a joint-stock company, limited liability company, or partnership?

Pursuant to Clauses 3 and 4, Article 24 of the Law on Enterprise 2020 (as amended in 2025), the following applies:

• The charter at the time of enterprise registration must contain the full names and signatures of:
• General partners in the case of a partnership;
• The owner (if an individual) or the legal representative of the owner (if an organization) in the case of a single-member limited liability company;
• Members who are individuals and the legal representative or authorized representative of organizational members in a multiple-member limited liability company;
• Founding shareholders who are individuals and the legal representative or authorized representative of organizational founding shareholders in a joint-stock company.
• An amended or supplemented charter must contain the full names and signatures of:
• The Chairperson of the Members’ Council in a partnership;
• The owner or the legal representative of the owner, or the legal representative in a single-member limited liability company;
• The legal representative in a multiple-member limited liability company and a joint-stock company.
• For multiple-member limited liability companies: Pursuant to Point k, Clause 2, Article 55 of the Law on Enterprise 2020 (as amended in 2025), the Members’ Council is the highest decision-making body of the company, comprising all individual members and authorized representatives of organizational members, and has the authority to amend and supplement the company charter and decide its contents.
• For single-member limited liability companies: Pursuant to Points a, Clauses 1 and 2, Article 76 of the Law on Enterprise 2020 (as amended in 2025), the owner (whether an organization or individual) has the authority to decide the contents of the company charter and to amend and supplement it.
• For joint-stock companies: Pursuant to Clause 1 and Point đ, Clause 2, Article 138 of the Law on Enterprise 2020 (as amended in 2025), the General Meeting of Shareholders, comprising all voting shareholders, is the highest decision-making body and has the authority to decide amendments and supplements to the company charter.
• For partnerships: Pursuant to Point b, Clause 3, Article 182 of the Law on Enterprise 2020 (as amended in 2025), the Members’ Council has the authority to decide all business matters of the company. Where the charter does not otherwise provide, amendments and supplements to the charter must be approved by at least three-quarters of the total number of general partners. Accordingly, the authority to decide the contents of the company charter rests with the general partners.

In summary, the authority to decide the contents of the company charter in joint-stock companies, limited liability companies, and partnerships is as set out above.

III. Legal provisions relating to the drafting of a company charter

Understanding the legal provisions governing the drafting of a company charter is a common need among many stakeholders. Accordingly, NPLaw outlines the applicable legal framework under the most recent regulations.

1. Which law governs the drafting of a company charter and what key points should be noted under current law?

• The drafting of a company charter is primarily governed by the Law on Enterprise 2020 (as amended in 2025), which regulates the establishment, organization and management, reorganization, dissolution, and related operations of enterprises, including limited liability companies, joint-stock companies, partnerships, and private enterprises, as well as regulations on corporate groups.
• Key points when drafting a company charter are set out in Article 24 of the Law on Enterprise 2020 (as amended in 2025), including the mandatory contents listed above. In addition to the required contents, members/shareholders may agree on additional provisions suitable to business operations, provided that they do not contravene the law.
• The charter at the time of enterprise registration must evidence the approval of the following persons pursuant to Clause 3, Article 24 of the Law on Enterprise 2020 (as amended in 2025): general partners in partnerships; the owner or legal representative of the owner in a single-member limited liability company; individual members and the legal representative or authorized representative of organizational members in multiple-member limited liability companies; and founding shareholders and their legal or authorized representatives in joint-stock companies.

This is a critically important principle, evidencing that the charter is adopted based entirely on the consensus of all founders.

Accordingly, drafting a company charter must strictly comply with the above legal provisions.

2. What are the typical internal procedures for approval and promulgation when drafting a company charter?

Based on Article 24 of the Law on Enterprise 2020 (as amended in 2025) and the agreements of members, shareholders, and owners, internal procedures for approval and promulgation of the company charter typically involve the following steps:

• Drafting the charter: Usually prepared by the legal department or advisory team based on standard templates and the specific characteristics of the enterprise in compliance with the law.
• Internal consultation: The draft is circulated to founding shareholders or contributing members and relevant stakeholders for comments, whether through meetings or written consultations, to ensure consensus on profit distribution and voting rights.
• Review and finalization: Verification of legal compliance, practical suitability, and clarity of provisions.
• Approval and Adoption: Convening a meeting to adopt resolutions by voting or written consent on the draft charter in accordance with the relevant provisions applicable to each type of enterprise under Articles 59 and 147 of the Law on Enterprise 2020 (as amended in 2025).
• Execution and promulgation: The approved charter must be signed by the competent persons in accordance with Clause 3, Article 24 of the Law on Enterprise 2020 (as amended in 2025).

Accordingly, the internal approval and promulgation process generally follows the above steps.

3. What common mistakes in drafting a company charter lead to internal disputes?

Common mistakes leading to internal disputes mainly arise from copying standard templates without tailoring them to the company’s specific type and circumstances, or from unclear provisions on authority, profit distribution, and dispute resolution mechanisms, including:

• Use of generic templates: Applying template charters without adapting them to the company’s scale, business lines, and capital structure, resulting in vague provisions that fail to address specific issues.
• Unclear rights and obligations of members/shareholders: Failure to clearly define rights and obligations in matters of profit distribution and decision-making may lead to disputes.
• Lack of provisions on capital transfer: A frequent cause of disputes when a member seeks to withdraw capital or transfer capital to third parties.
• Inadequate provisions on legal representatives: Where a company has multiple legal representatives but the charter does not clearly define their respective authorities, confusion in management and contract execution may arise.

Therefore, careful attention should be paid when drafting the company charter to avoid such mistakes and internal conflicts.

IV. Questions relating to the drafting of a company charter

1. Are there any specific legal conditions to note when drafting a charter for a foreign-invested company?

Pursuant to Clauses 18 and 22, Article 3 of the Law on Investment 2025, investors include domestic investors, foreign investors, and economic organizations with foreign investment. An economic organization with foreign investment is one in which foreign investors are members or shareholders.

When drafting the charter for a foreign-invested company in VietNam, compliance with the Law on Enterprise 2020 (as amended in 2025) and the Law on Investment 2025 is required. In principle, the charter must contain the minimum contents prescribed under Clause 2, Article 24 of the Law on Enterprise 2020 (as amended in 2025).

Consistency with the Investment Registration Certificate: The charter must not contradict the contents of the Investment Registration Certificate. Information on project objectives, capital scale, and duration stated in the charter must be fully consistent with the issued certificate.

Language: The charter is drafted in Vietnamese. For companies with foreign elements, a bilingual charter (Vietnamese and a foreign language) may be prepared pursuant to Article 5 of Decree 31/2021/ND-CP. Accordingly, dossiers submitted to competent authorities must be in Vietnamese; where documents are in a foreign language, a Vietnamese translation must be enclosed; and where documents are bilingual, the Vietnamese version prevails for administrative procedures.

Accordingly, the above matters should be observed when drafting a charter for a foreign-invested company.

2. Are there legal limits on charter contents relating to business lines?

Pursuant to Point b, Clause 2, Article 24 of the Law on Enterprise 2020 (as amended in 2025), business lines and sectors are mandatory contents to be stated in the charter. The drafting of charter provisions on business lines must comply with the law to ensure legality and feasibility:

• Prohibited business lines: The charter must not include business lines prohibited from investment and business under Article 6 of the Law on Investment 2025, including narcotics trading, toxic chemicals, endangered wildlife specimens, prostitution, trafficking in persons or human organs, and activities related to human cloning.
• Conditional business lines: Where the charter specifies conditional business lines, the enterprise may only conduct such activities upon satisfying statutory conditions, including professional practice certificates, confirmations or approvals of competent authorities, or sub-licenses as required under Clause 5, Article 7 of the Law on Investment 2025.
• Consistency: The business lines stated in the charter must be consistent with those stated in the enterprise registration application under Article 23 of the Law on Enterprise 2020 (as amended in 2025).

Accordingly, the company charter contents relating to business lines are subject to statutory limits and must comply with the above provisions.

3. What are the legal consequences if a charter contains unlawful or invalid provisions?

Pursuant to Clause 1, Article 24 of the Law on Enterprise 2020 (as amended in 2025), a company charter includes the charter at registration and as amended during operation. The charter is a mandatory document in the enterprise registration dossier and must comply with legal requirements on both substance and form. Where the charter contains unlawful or invalid provisions, the company may be subject to administrative sanctions depending on the nature and severity of the violation. Under Article 3 of Decree 122/2021/ND-CP, principal sanctions include warnings and fines, and violators may also be subject to remedial measures as prescribed.

For example, pursuant to Clauses 2 and 3, Article 75 of the Law on Enterprise 2020 (as amended in 2025), failure to fully contribute committed capital requires registration of a reduction of charter capital within 30 days from the last day of the contribution deadline. Failure to register such adjustment may result in a fine of 30,000,000 VND to 50,000,000 VND and mandatory adjustment of charter capital under Point a, Clause 3 and Point b, Clause 5, Article 46 of Decree 122/2021/ND-CP.

Accordingly, unlawful or invalid provisions in the charter may lead to invalidity of such provisions or related provisions and expose the company to administrative penalties.

4. How can omission of shareholder voting rights in the charter lead to disputes?

Pursuant to Points đ and h, Clause 2, Article 24 of the Law on Enterprise 2020 (as amended in 2025), the charter must provide for shareholders’ rights and obligations and procedures for adoption of company decisions and internal dispute resolution. Omission of voting rights provisions may result in serious disputes, including:

• Invalidation of General Meeting of Shareholders’ resolutions due to procedural defects or failure to meet statutory voting thresholds;
• Disputes over voting rights, particularly in capital increases or restructuring;
• Governance disputes arising from lack of clarity regarding voting rights attached to different classes of shares, often leading to conflicts over nomination or appointment of members of the Board of Directors and the Supervisory Board.

Overall, failure to stipulate shareholder voting rights in the charter may lead to complex legal disputes.

5. What is the procedure for amending a charter and what conditions are required for amendments to take effect?

Pursuant to Clause 4, Article 24 of the Law on Enterprise 2020 (as amended in 2025), amended or supplemented charters must bear the full names and signatures of the competent persons specified by law, depending on the type of enterprise.

The procedure for amendment varies by enterprise type. For example, in a multiple-member limited liability company, the basic steps include convening a meeting of the Members’ Council to discuss and adopt resolutions on amendments to the charter by voting at the meeting pursuant to Article 55 and Point a, Clause 2, Article 59 of the Law on Enterprise 2020 (as amended in 2025), unless otherwise provided in the charter.

In addition, where amendments result in changes to information stated on the Enterprise Registration Certificate (such as charter capital, business lines, or legal representative), the company must notify the business registration authority within 10 days pursuant to Clause 2, Article 31 of the Law on Enterprise 2020 (as amended in 2025).

In conclusion, amendments to the company charter and the conditions for their effectiveness must comply with the above statutory procedures.

V. Are you seeking a reputable legal expert to assist with matters relating to drafting a company charter?

The above provides reference information on issues relating to drafting a company charter as shared by NPLaw. With a team of experienced lawyers and legal professionals, NPLaw provides reputable and professional legal services to best safeguard clients’ lawful rights and interests. Should you require legal support, you may contact NPLaw for consultation and assistance.

The above information is for reference purposes only. For case-specific advice, please contact NPLaw for prompt consultation.