Handling Social Enterprises That Misuse Mobilized Sponsorship Funds

1. What is a social enterprise?

Under Clause 1, Article 2 of Decree 47/2021/ND-CP on social enterprises:

A social enterprise is an enterprise meeting the criteria prescribed in Clause 1, Article 10 of the Law on Enterprises.

These criteria include:

• Being an enterprise registered and established in accordance with this Law;
• Having operational objectives aimed at resolving social and environmental issues for the benefit of the community;
• Using at least 51% of the enterprise’s annual after-tax profit for reinvestment to implement the registered objectives.

2. May a social enterprise receive aid? What are its responsibilities?

Under Article 4 of Decree 47/2021/ND-CP on the receipt of aid and sponsorship by social enterprises:

“Article 4. Receipt of aid and sponsorship.

1. Social enterprises may receive foreign non-governmental aid to implement objectives of resolving social and environmental issues in accordance with the law on receipt of foreign non-governmental aid.

2. Social enterprises may receive sponsorship in assets, finance or technical support to implement objectives of resolving social and environmental issues from domestic individuals, agencies and organizations, and from foreign organizations registered to operate in Vietnam, as follows:

a) The enterprise prepares a Sponsorship Receipt Document including: information about the sponsoring individual or organization, the type of assets, the asset value or sponsorship amount, the time of sponsorship; requirements for the enterprise receiving the sponsorship; and the name and signature of the sponsoring party’s representative (if any).

b) Within 10 working days from the date of receipt of the sponsorship, the enterprise must notify the aid and sponsorship management agency under the provincial or centrally-run city People’s Committee where the enterprise’s head office is located of the receipt of sponsorship; the notice must be accompanied by a copy of the Sponsorship Receipt Document.”

Accordingly, social enterprises have responsibilities during operation under Article 3 of Decree 47/2021/ND-CP as follows:

• Social enterprises must maintain the social and environmental objectives, the level of retained profit for reinvestment, and other contents stated in the Commitment to Implementing Social and Environmental Objectives throughout their operation. Except for cases of early termination of social and environmental objectives before the committed deadline, social enterprises must refund all incentives, aid and sponsorship received for implementing the registered social and environmental objectives if they fail to implement, or incompletely implement, the Commitment to Implementing Social and Environmental Objectives and the level of retained profit for reinvestment.
• The private enterprise owner, general partners for a partnership, members of a limited liability company, and related persons who are shareholders for a joint-stock company, as well as members of the Board of Directors, Directors and General Directors in the relevant term or period, bear joint liability for damage arising where the social enterprise violates Clause 1 of this Article.

Under the above provisions, social enterprises are permitted to receive aid from the following sources: foreign non-governmental aid, and sponsorship in assets, finance or technical support from domestic individuals, agencies and organizations, and foreign organizations registered to operate in Vietnam as prescribed. Social enterprises must fully perform their responsibilities in using these sponsorship sources during operation.

3. How is a social enterprise handled if it misuses mobilized sponsorship funds?

Under Point b, Clause 1, Article 60 of Decree 122/2021/ND-CP, as amended and supplemented by Decree 288/2026/ND-CP (effective from 21/7/2026), on handling violations by social enterprises that misuse mobilized sponsorship funds, the applicable fine is VND 20,000,000 to VND 30,000,000.

Accordingly, this fine applies to organizations. For the same administrative violation, the fine for an individual is 1/2 (one half) of the fine for an organization, under Clause 2, Article 4 of Decree 122/2021/ND-CP as amended and supplemented by Decree 288/2026/ND-CP (effective from 21/7/2026).

In addition to the above fine, the enterprise is also subject to the remedial measure of being compelled to return the misused sponsorship funds, under Point b, Clause 2, Article 60 of Decree 122/2021/ND-CP as amended and supplemented by Decree 288/2026/ND-CP (effective from 21/7/2026).

Thus, a social enterprise is an enterprise meeting the criteria prescribed by law. A social enterprise has the right to receive aid and sponsorship from sources as prescribed by law and must perform its responsibilities in using these sponsorship sources. Where a social enterprise misuses mobilized sponsorship funds, it shall be handled under Decree 122/2021/ND-CP as amended and supplemented by Decree 288/2026/ND-CP (effective from 21/7/2026).

Notes on applying current legal provisions

This article belongs to the Enterprise Knowledge & M&A group and is presented for reference, helping readers understand the legal issue at an overview level before preparing dossiers or conducting transactions.

Legal provisions may change depending on timing, locality, dossier type and specific circumstances. Where it is necessary to determine the exact legal basis applicable to your dossier, you should contact an ANT Legal lawyer at 0966.475.966 for review and advice before proceeding.

Common risks to note

• Applying legal texts that have been amended, supplemented or replaced.
• Preparing incomplete dossiers, documents or evidence.
• Misunderstanding the applicable conditions, procedures, time limits or competent authority.
• Signing, filing or conducting transactions without fully assessing legal risks.

How can ANT Legal help?

ANT Legal assists in reviewing specific situations, checking dossiers, identifying the applicable legal basis, advising on handling plans, and representing you in working with individuals, organizations or competent authorities when necessary.

For quick advice, you may contact a lawyer at 0966.475.966.

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