Risks Of Using The Sample Articles

 Risks Of Using The Sample Articles

In Vietnam today, setting up a business is relatively simple. With strong support from government agencies, it only takes about three working days to establish a company. However, this simplicity often leads many business owners to overlook one crucial step — carefully reviewing and drafting the company charter before incorporation. Instead, they rush to register the business and rely on standard, pre-made charter templates just to meet legal requirements.

While these standard charters may be convenient for registration purposes, they often create limitations and risks in corporate governance and daily management. Some of the key issues include:

Rigid Application and Poor Fit

Standard charters contain only the most basic provisions required by law. They do not reflect the unique operational realities of each business. For example, timelines for meeting invitations, voting thresholds for shareholder or member resolutions, or detailed rights and obligations of directors, general directors, chairpersons, and supervisory boards.
Vietnamese corporate law allows shareholders or members to tailor these provisions to suit their company’s needs — a flexibility that standard templates fail to take advantage of.

Difficult to Amend Without Majority Approval

Under Vietnamese enterprise law, any amendment to the company charter must be approved by the Members’ Council or the General Meeting of Shareholders. In practice, this can be challenging if major shareholders perceive that proposed changes might affect their rights. As a result, necessary updates may be blocked, leaving the company stuck with outdated or unsuitable provisions.

Failure to Utilize Open Provisions in the Law

Using a standard charter often leads to business owners not fully understanding the intent or flexibility of each provision. Drafting a customized charter before incorporation allows founders to better understand corporate governance, legal requirements, and risk management — laying a stronger foundation for smooth operations.

Conclusion

Investing time in reviewing and drafting a tailor-made company charter before incorporation is essential. Founders should meet, discuss, and agree on a unified document that reflects their shared vision and operational expectations. This process not only clarifies roles and responsibilities but also helps determine whether the parties are truly aligned for a long-term partnership.

A well-prepared charter is more than a legal formality — it’s a strategic tool for effective governance, risk prevention, and sustainable growth.