Solutions for foreign companies seeking consultation on corporate restructuring

In the context of an increasingly fluctuating market, many foreign companies seek consultation on corporate restructuring in order to optimize operations, improve efficiency, and adapt to the new business environment. However, such a process is not merely a matter of changing the organizational structure; it also involves numerous complex legal risks, especially when foreign elements are involved. Have you fully prepared to avoid legal complications and unnecessary financial losses? Join NPLaw in exploring the challenges and comprehensive legal solutions that will help your enterprise achieve sustainable success and stability in the future.

I. Common legal risks related to foreign companies seeking consultation on corporate restructuring

For foreign companies seeking consultation on corporate restructuring in Vietnam, they face many common legal risks arising from differences in legal systems, business cultures, and regulations governing foreign investment. Failure to anticipate and properly manage these risks may lead to serious consequences.

Common legal risks include:

• Violations of investment and enterprise regulations: Restructuring activities (such as division, separation, merger, conversion of enterprise type, or capital changes) must strictly comply with the Law on Investment 2020, the Law on Enterprise 2020, and their guiding decrees. Errors in documents or procedures may result in rejection of applications, administrative sanctions, or invalidation of restructuring transactions.
• Tax liabilities and financial obligations: Changes in the corporate structure may lead to complex tax obligations (corporate income tax, value-added tax, capital transfer tax, foreign contractor tax, etc.) and may also affect existing debts and contractual obligations. Failure to accurately calculate and declare taxes may result in tax reassessment and sanctions.
• Labor-related issues: Restructuring is often accompanied by employee transfers, dismissals, or changes in employment conditions. If the enterprise fails to comply with the Labor Code 2019 regarding employee rights, termination procedures, and compensation obligations, it may face labor disputes and litigation costs.
• Risks arising from existing contracts: Contracts with partners, customers, and suppliers may need to be reviewed, amended, or transferred during restructuring. Improper handling may lead to breaches of contract, damages, or legal claims from counterparties.
• Conflicts of international laws: Where foreign elements are involved, conflicts may arise between Vietnamese law and the law of the investor’s country. The selection of governing law and dispute resolution mechanisms must therefore be carefully considered.

II. Understanding foreign companies seeking consultation on corporate restructuring

1. What is corporate restructuring and why do foreign companies need consultation on this matter?

Corporate restructuring refers to the process of reorganizing and rearranging an enterprise in various aspects (capital structure, finance, personnel, business operations, etc.) in order to remedy internal weaknesses, optimize resources, and improve operational efficiency so as to adapt to changes in the business environment.

In practice, foreign companies seek consultation on restructuring for the following main reasons:

• Complexity of the Vietnamese legal system: Vietnamese laws on investment, enterprises, labor, taxation, and related matters contain many specific regulations. Professional consultants help enterprises navigate these regulations and avoid unnecessary violations.
• Strategic optimization: Consultants assist enterprises in selecting the most suitable restructuring model (M&A, division, separation, capital restructuring, etc.) to achieve strategic objectives.
• Risk management: Legal advisors can anticipate and develop response strategies for legal, financial, and operational risks.
• Time and cost savings: Instead of navigating the process independently, having a clear advisory roadmap helps accelerate implementation and avoid unnecessary costs caused by mistakes.

In summary, consultation services are not merely legal support but also a strategic partnership that helps foreign companies conduct restructuring effectively and safely.

2. What factors may be included in corporate restructuring that foreign companies need to consider?

Restructuring is a comprehensive process affecting every aspect of an enterprise. Foreign companies should consider the following major factors:

Legal restructuring:

• Changing the enterprise type (e.g., from a limited liability company to a joint-stock company).
• Implementing forms of enterprise reorganization such as division, separation, consolidation, merger, or conversion in accordance with the Law on Enterprise 2020, as amended and supplemented in 2025.
• Changing capital contribution structures and foreign ownership ratios.

Financial restructuring:

• Restructuring capital sources (loans and equity).
• Handling debts and managing cash flow.
• Optimizing tax obligations.

Human resource restructuring:

• Reorganizing the organizational structure and departmental functions.
• Revising personnel policies, including workforce reductions where necessary.

Business operation restructuring:

• Changing business strategies and focusing on core business areas.
• Divesting from inefficient sectors.
• Applying new technologies to optimize production and operational processes.

III. Legal regulations related to foreign companies seeking consultation on corporate restructuring

1. What legal regulations must foreign companies comply with during corporate restructuring?

First and foremost, the most important legal framework is the Law on Investment 2020, as amended and supplemented in 2025. Enterprises must review market access conditions applicable to foreign investors under Article 9 of this Law, as guided by Section 2, Chapter II of Decree No. 31/2021/ND-CP. In cases where restructuring involves project transfer, enterprises must satisfy the strict conditions set out in Article 46 of this Law to ensure project continuity.

Secondly, regarding organizational structure, the Law on Enterprises 2020, as amended and supplemented in 2025, governs activities such as division, separation, consolidation, merger, and conversion of enterprise type under Articles 198 to 205. Enterprises must pay particular attention to joint liability for financial obligations. In cases of enterprise division, the newly established companies shall jointly assume liability for unpaid debts under Clause 4, Article 198. In cases of enterprise separation, both the separated enterprise and the newly separated enterprise shall jointly take liability under Clause 4, Article 199. If restructuring results in changes to the legal representative under Article 12 or the Board of Directors structure under Article 153, enterprises must comply with residency and authority requirements prescribed therein.

Thirdly, labor matters constitute one of the most significant legal risks. Pursuant to Article 42 of the Labor Code 2019 regarding employer obligations in cases of organizational restructuring, technological changes, or economic reasons, and Article 44 concerning labor utilization plans, employers must formulate and implement labor utilization plans when restructuring affects employment structures.

Fourthly, regarding market competition, enterprises must comply with the Law on Competition 2018. If restructuring activities (particularly mergers and acquisitions) constitute economic concentration, enterprises must notify the National Competition Commission prior to implementation if the transaction falls within the notification thresholds under Article 33.

2. How important is financial management consultation for foreign companies during restructuring?

Financial management is a crucial element of the restructuring process. Financial consultation not only helps enterprises secure resources but also optimizes post-restructuring performance. Its importance is reflected in the following aspects:

• Enterprise and asset valuation: Providing a fair and transparent basis for M&A transactions and capital transfers.
• Optimization of capital structure: Assisting enterprises in selecting an appropriate balance between debt and equity in order to reduce capital costs and financial risks.
• Tax planning: Developing lawful strategies to minimize tax liabilities arising from restructuring activities.
• Cash flow control: Ensuring sufficient liquidity to maintain continuous operations during and after the restructuring period.

Without a well-planned financial strategy supported by professional consultation, even the best restructuring plan may fail due to resource shortages.

3. What risks may foreign companies face if they restructure without proper consultation?

Implementing restructuring activities without accurate and professional consultation may seriously affect the enterprise. Potential risks include:

• Improper legal procedures: Resulting in denial of approvals by state authorities, invalid transactions, and significant time and cost expenditures for rectification.
• Unexpected tax liabilities: Failure to anticipate payable taxes may place substantial pressure on the company’s financial situation.
• Claims from employees, partners, or shareholders: Restructuring may adversely affect their rights and interests if not handled properly and lawfully.
• Failure to achieve intended objectives: Restructuring plans that are inconsistent with the company’s actual conditions and business environment may produce unsatisfactory outcomes.
• Administrative sanctions: State authorities such as Departments of Finance, tax authorities, and competition authorities may impose strict administrative sanctions. 

Accordingly, the cost of obtaining professional consultation is always significantly lower than the potential losses arising from improperly implemented restructuring activities.

IV. Questions related to foreign companies seeking consultation on corporate restructuring

1. What should foreign companies pay attention to when implementing and receiving consultation on corporate restructuring?

When conducting and receiving consultation on corporate restructuring, foreign companies should pay attention to the following matters:

• Clearly defining restructuring objectives: Whether the purpose is optimization, expansion, downsizing, overcoming operational difficulties, or preparing for divestment. Clearly identified objectives will guide the entire advisory process.
• Providing complete and accurate information: It enables lawyers or consulting firms to accurately assess the legal and financial condition of the enterprise.
• Reviewing the experience and capability of the consulting firm: It should seek firms with extensive experience in Vietnamese investment, enterprise, labor, and tax laws, particularly those that have advised foreign-invested enterprises.
• Clearly understanding the scope of advisory services: Enterprises should expressly agree on the tasks to be performed, implementation stages, and expected deliverables.
• Actively participating in the consultation process: Enterprises should ask questions and discuss available options to ensure that the restructuring plan aligns with corporate strategy.
• Paying attention to language and cultural factors: Information must be communicated accurately in order to avoid misunderstandings caused by linguistic or cultural differences.

2. How does the consultation process for foreign companies on corporate restructuring usually proceed?

Step 1: Legal review and assessment of the current situation

• The consulting firm conducts a legal review to assess the enterprise’s current status. Such a stage focuses on reviewing market access conditions and project implementation requirements under Article 9 on sectors, trades, and market access conditions applicable to foreign investors, and Article 41 on amendment of investment projects under the Law on Investment 2020, as amended and supplemented in 2025. The review helps determine whether project adjustments or capital transfers may be implemented without violating restrictions applicable to foreign investors under Section 2, Chapter II of Decree No. 31/2021/ND-CP.

Step 2: Designing the restructuring model

• Based on the enterprise’s objectives, consultants propose appropriate restructuring forms such as division, separation, consolidation, merger, or conversion of enterprise type in accordance with Articles 198 to 205 of the Law on Enterprise 2020, as amended and supplemented in 2025. In particular, where restructuring affects the workforce scale, the consulting firm must assist the enterprise in formulating a labor utilization plan in compliance with Article 44 of the Labor Code 2019 to prevent future disputes.

Step 3: Implementing administrative procedures

• It includes preparing dossiers and representing the enterprise before the Investment Registration Authority and the Business Registration Authority. Procedures must strictly comply with Article 47 of Decree No. 31/2021/ND-CP, as amended by Clause 16, Article 1 of Decree No. 239/2025/ND-CP regarding amendment procedures for investment projects that have already been granted Investment Registration Certificates and are not subject to approval for adjustment of investment policy. If restructuring results in economic concentration transactions, the consulting firm must also conduct notification procedures pursuant to Article 33 of the Law on Competition 2018.

Step 4: Completing post-restructuring internal governance

• The enterprise is advised on amending its Charter, reissuing governance regulations, and appointing main personnel to ensure that the new organizational structure operates in accordance with the authority framework set out in Article 12 regarding legal representatives and Article 153 regarding the Board of Directors under the Law on Enterprise 2020, as amended and supplemented in 2025.

3. What types of consultation are suitable for foreign companies seeking corporate restructuring?

When foreign companies seek consultation on corporate restructuring, the following types of advisory services are generally appropriate:

• Comprehensive legal consultation: Including legal due diligence, consultation on the Law on Investment 2020, as amended and supplemented in 2025, the Law on Enterprise 2020, as amended and supplemented in 2025, and the Labor Code 2019, preparation of legal documents, and representation before state authorities. This is the core advisory service.
• Tax consultation: Focusing on analyzing tax implications of restructuring options, optimizing tax obligations, and ensuring compliance with regulations concerning capital transfer tax and corporate income tax.
• Financial consultation: Supporting enterprise valuation, cash flow analysis, debt management, and capital structure planning.
• Governance and operational consultation: Assisting in redesigning organizational structures, workflows, and internal policies after restructuring.
• Human resources and labor consultation: Specializing in labor utilization plans, employee benefit settlements, and prevention of labor disputes.

4. What factors should foreign companies pay attention to in consulting service agreements for corporate restructuring?

When foreign companies seek consultation on corporate restructuring and enter into consulting service agreements, they should pay particular attention to the following factors:

• Scope of services: Clearly defining the tasks to be performed, advisory stages, and specific deliverables (e.g., due diligence reports, legal dossiers, representation for filing procedures).
• Service fees and payment methods: Clearly stipulating total fees, fee calculation methods (hourly, phased, or fixed package), payment schedules, and additional expenses (state fees, travel expenses, etc.).
• Implementation timeline and progress: Clearly agreeing on deadlines for completion of tasks and important milestones.
• Obligations of the parties: Defining the enterprise’s obligation to provide information and the consulting firm’s obligations regarding advisory services and confidentiality.
• Confidentiality provisions: Ensuring that all sensitive corporate information is kept strictly confidential.
• Dispute resolution: Clearly stipulating the dispute resolution body (Vietnamese courts or commercial arbitration) and the governing law applicable to the consulting service agreement. Such provisions must comply with the Civil Code 2015 and the Commercial Law 2005 regarding contractual matters.

V. Are you looking for a reputable law firm to assist with matters related to foreign companies seeking consultation on corporate restructuring?

Corporate restructuring involving foreign elements is a complex matter requiring profound understanding of both business strategy and the Vietnamese legal system. This process is not merely a matter of administrative changes but has a significant impact on the future and sustainability of the enterprise.

If you are experiencing difficulties in selecting an appropriate restructuring model, carrying out legal procedures, or managing risks throughout the process, contact NPLaw today. With our team of experienced lawyers, we are committed to providing comprehensive, effective, and secure advisory solutions, accompanying your enterprise throughout its transformation and development journey.

The above information is provided for reference purposes only. Should you require detailed consultation for your specific case, please contact NPLaw for immediate assistance.