Who Is Prohibited from Establishing and Managing Enterprises?

Short answer: The law specifically provides subjects prohibited from establishing and managing enterprises in Vietnam, including: state agencies and armed force units using state assets to conduct business for their own profit; cadres, civil servants, public employees (where prohibited by law); professional officers and military personnel; minors and persons lacking/restricted in civil act capacity; persons under criminal prosecution or serving prison sentences; persons during a period of professional/office prohibition. Legal basis: Clause 2, Article 17 of the Law on Enterprises 2020 (amended by Law No. 76/2025/QH15).

Legal basis

• Law on Enterprises 2020, as amended and supplemented by Law No. 76/2025/QH15 — Clause 2, Article 17 (organizations and individuals prohibited from establishing and managing enterprises in Vietnam).

Subjects prohibited from establishing and managing enterprises

1. State agencies, armed force units

State agencies and people’s armed force units that use state assets to establish enterprises conducting business for the profit of their own agency or unit.

2. Cadres, civil servants, public employees

Cadres, civil servants and public employees as defined by laws on cadres, civil servants and public employees — where prohibited by law (not all public employees are absolutely prohibited; the degree of restriction depends on position and field of work).

3. Professional officers and military personnel

Officers, non-commissioned officers, professional military personnel, defense workers and employees in agencies and units of the People’s Army; professional officers and non-commissioned officers in agencies and units of the Vietnam People’s Public Security (except those appointed as authorized representatives to manage State capital contributions in enterprises).

4. Minors; persons lacking/restricted in civil act capacity

Persons under 18 years of age; persons declared by a court to be restricted in or lacking civil act capacity; persons with difficulties in cognition or behavioral control.

5. Persons under criminal prosecution or serving sentences

Persons under criminal prosecution, in temporary detention, serving prison sentences, undergoing administrative handling measures at compulsory detoxification or compulsory education facilities; persons undergoing educational measures at communes/wards.

6. Persons during a prohibition period

Persons prohibited by a court from holding positions, practicing a profession or performing certain work — during the prohibition period, they may not establish or manage enterprises within the prohibited scope.

7. Commercial legal entities banned from business

Organizations that are commercial legal entities banned from conducting business or operating in certain sectors under the Criminal Code.

Distinguishing “establishment” from “management”

• Establishment: being named in the registration dossier as owner, member or founding shareholder;
• Management: holding a managerial title (member of the Members’ Council, Board of Directors, Director, General Director, Supervisor…);
• A prohibited subject may do neither. Example: a civil servant may not both be named as founder and serve as company director.

How are violations handled?

• The business registration authority refuses the registration dossier when it detects the founder is a prohibited subject;
• Where an Enterprise Registration Certificate was issued on the basis of dishonest declarations: the certificate is revoked and administrative penalties are imposed;
• Both the person “lending their name” and the person “borrowing the name” may incur legal liability when disputes arise.

Frequently asked questions

Can a retired civil servant establish a company?

Yes, once retired and no longer an incumbent cadre or civil servant — except post-employment restrictions for certain special positions under anti-corruption regulations.

Can a public university lecturer open a company?

Public employees are subject to restrictions under the Law on Public Employees; public university lecturers are public employees, so in principle they may not establish or manage enterprises. Specific cases need checking against current regulations.

Can a person banned from holding office contribute capital?

During the prohibition period, they may not perform activities within the prohibited scope; contributing capital as a member/shareholder (without participating in management) requires careful assessment against the specific prohibition decision.

Notes on applying current legal provisions

The prohibition list spans multiple legal texts (Law on Enterprises, Law on Cadres and Civil Servants, Law on Public Employees, Criminal Code); “grey zone” cases (public employees, relatives of officials, persons who have served sentences) should be carefully reviewed before filing. Contact ANT Legal’s lawyers at 0966.475.966 for advice on subject eligibility.

Common risks to note

• A prohibited person named as founder — the certificate will be revoked;
• Asking another person to stand in as nominee without a clear agreement;
• Misunderstanding the scope of prohibition for public employees (not all are absolutely prohibited);
• Failing to check “currently banned” status under a court decision.

How can ANT Legal help?

ANT Legal advises on and reviews subject eligibility for establishing and managing enterprises; designs lawful ownership plans for special cases; and carries out enterprise registration procedures. For quick advice, please contact our lawyers at 0966.475.966.

Related articles

• Who has the right to establish a company/enterprise? In Vietnam
• Can university lecturers establish and manage enterprises in Vietnam?
• Company and enterprise establishment services nationwide in Vietnam
• Procedures for registering a private enterprise in Vietnam
• Key legal notes when establishing an enterprise in Vietnam