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Business capital contribution contract disputes in Vietnam are common and can cause significant legal and financial repercussions for the involved parties.
What Are Business Capital Contribution Contract Disputes in Vietnam?
Business capital contribution contract disputes in Vietnam are conflicts or disagreements that arise between the parties involved in a capital contribution contract concerning the fulfillment of agreed-upon rights and obligations. These disputes can relate to various aspects, such as capital contribution, management, profit distribution, and other business-related issues.
Causes of Business Capital Contribution Contract Disputes in Vietnam
Disputes over business capital contribution contracts can arise from various causes, often related to breaches of contract agreements, differences in management, and financial factors. Below are some common causes of these disputes:
1/ Violation of Capital Contribution Obligations
Insufficient or Late Capital Contribution: A party fails to contribute the promised amount or does not meet the contribution deadline specified in the contract.
Contribution of Assets with Incorrect Value: Capital is contributed in the form of assets, but the actual value of the assets is lower than the agreed value.
2/ Management and Business Operations
Disagreement on Management Strategies: Parties do not agree on management strategies, development plans, or business operation methods.
Abuse of Management Power: A party abuses their power in management, making non-transparent decisions without the consensus of the other parties.
3/ Profit and Risk Distribution
Non-transparent Profit Distribution: Disputes arise when profits are not distributed according to the capital contribution ratio or the agreement in the contract.
Unclear Risk Handling: There is no consensus on how to handle losses or risks arising during business operations.
4/ Financial Information and Reporting
Lack of Transparency in Financial Reporting: A party does not provide sufficient or hides financial information, leading to suspicions and disputes about the financial status of the business.
Inaccurate Financial Reporting: Information in financial reports does not accurately reflect reality, causing misunderstandings and disputes among the parties.
5/ Unclear Rights and Obligations
Ambiguous Contract Terms: The terms in the contract are not clear, leading to misunderstandings and conflicts about the parties’ rights and obligations.
Breach of Contract Terms: A party fails to fulfill or improperly fulfills the obligations committed in the contract.
6/ Capital Contribution Transfer
Unauthorized Capital Contribution Transfer: A party transfers their capital contribution to a third party without the consent of the other parties or in violation of the transfer terms in the contract.
7/ Changes in Circumstances
Economic and Market Fluctuations: Market or economic conditions change, affecting the performance of the contract and causing disputes over contract adjustments.
Changes in Legal Regulations: Changes in legal regulations can affect the rights and obligations of the parties, leading to disputes over contract compliance.
8/ Conflict of Interest
Personal Interest Conflicts: Conflicts over personal interests or business goals among the contributing parties can lead to disagreements and disputes.
Jurisdiction for Resolving Business Capital Contribution Contract Disputes in Vietnam
The jurisdiction for resolving business capital contribution contract disputes depends on legal regulations and the terms agreed upon in the contract. Below are common dispute resolution bodies and methods in Vietnam:
1/ Court
The jurisdiction of the people’s court in resolving capital contribution contract disputes is divided according to the type of case, the level of the court, and the territorial jurisdiction.
The correct people’s court with jurisdiction is determined based on the characteristics of the disputing parties, the residence or headquarters of the defendant, and the place where the contract was performed.
2/ Commercial Arbitration
Commercial arbitration has jurisdiction to resolve capital contribution contract disputes if at least one of the disputing parties is a merchant and all disputing parties agree to choose commercial arbitration to resolve the dispute.
The agreement to resolve disputes through arbitration can be recorded in the capital contribution contract or agreed upon by the parties after the dispute arises.
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DCNH LAW
Address: 38B Tran Nhat Duat, Phuoc Hoa ward, Nha Trang city, Khanh Hoa province, Vietnam.
Phone: (+84) 343320223 – 974278893
Email: [email protected]
