Many business owners are surprised—and frustrated—when their company is fined despite having what appears to be all required licenses and permits. From their perspective, the logic seems simple: if the business is properly licensed, why would authorities impose penalties?
In Vietnam, however, having licenses is only the starting point of legal compliance, not the finish line. In practice, many companies—especially SMEs and FDI enterprises—are penalized not because they operate illegally, but because they fail to comply with ongoing legal obligations after licensing.
This article explains why businesses with sufficient licenses still get penalized, the most common compliance gaps behind these penalties, and how ongoing legal consultancy helps businesses avoid costly mistakes.
Business licenses allow a company to operate, but they do not replace ongoing compliance responsibilities.
In Vietnam, most licenses:
Approve a specific business scope
Impose ongoing conditions and obligations
Require periodic reporting or renewal
Are subject to inspection and enforcement
Many businesses mistakenly assume that once a license is granted, compliance is automatic. In reality, licenses come with conditions that must be continuously satisfied throughout the company’s operation.
One of the most common reasons businesses are penalized is operating beyond their licensed business scope.
This often happens when:
The business expands services gradually
New revenue streams are added without legal review
Management assumes similar activities are already covered
Even small deviations—such as offering additional services related to the core business—can be considered unlicensed activities. Authorities often detect these issues during inspections, leading to penalties despite the company holding valid licenses.
Many licenses and legal frameworks require regular reporting, notifications, or declarations to authorities.
Common examples include:
Investment and FDI reports
Changes in shareholders, capital, or legal representatives
Labor-related declarations
Industry-specific operational reports
Penalties frequently arise not from illegal activity, but from late, incomplete, or missing reports. Businesses often overlook these obligations because they are not part of daily operations.
Some licenses impose operational conditions rather than one-time requirements. These conditions must be satisfied continuously.
Examples include:
Maintaining qualified personnel
Ensuring compliance with technical or safety standards
Meeting capital or facility requirements
Implementing internal procedures
If authorities find that these conditions are not met during inspections, penalties may be imposed—even if the license itself is valid.
Vietnam’s legal framework changes frequently. New regulations may:
Modify license conditions
Introduce additional compliance requirements
Change enforcement thresholds
Businesses that continue operating under old assumptions may unknowingly violate new rules. This is a common reason why companies are penalized despite having licenses issued under previous regulations.
In many companies, compliance responsibilities are fragmented across departments:
Accounting handles financial reports
HR manages labor matters
Operations focus on daily activities
Without centralized legal oversight, compliance gaps emerge. Legal obligations related to licensing often fall between departments and are not monitored consistently.
This fragmented approach increases the risk of penalties during inspections.
Foreign-invested enterprises face unique risks even when fully licensed.
Common challenges include:
Language barriers in legal documents
Differences between local law and group policies
Slower adaptation due to headquarters approval processes
Misalignment between operational practice and local enforcement
As a result, FDI companies may technically comply on paper but fail to meet local implementation expectations, leading to penalties.
Vietnamese authorities increasingly focus on actual operations, not just documentation.
During inspections, authorities assess:
Whether activities match licensed scope
Whether internal practices comply with regulations
Whether reporting obligations are fulfilled
Whether legal conditions are met in reality
A company may have complete paperwork but still be penalized if its day-to-day operations do not align with legal requirements.
Many businesses consult lawyers only when:
They plan major changes
Inspections occur
Penalties are already imposed
At that point, options are limited. Legal advice becomes reactive and focused on damage control rather than prevention.
Ad-hoc legal support does not provide:
Continuous compliance monitoring
Early detection of legal changes
Regular review of operational practices
As a result, businesses remain exposed to recurring compliance risks.
Ongoing legal consultancy helps businesses move beyond “having licenses” to maintaining continuous compliance.
With ongoing legal support, businesses benefit from:
Regular review of licensed business scope
Monitoring of reporting and notification obligations
Early alerts on legal changes affecting licenses
Practical guidance on operational compliance
Support during inspections and authority interactions
Legal compliance becomes proactive and systematic rather than reactive.
Penalties do more than cause financial loss. They can:
Trigger repeated inspections
Delay licensing amendments or expansion
Damage reputation with authorities and partners
Distract management from core business activities
Preventing penalties protects not only compliance, but also business continuity and growth potential.
DEDICA provides ongoing legal consultancy services designed to help businesses in Vietnam maintain compliance after licensing.
As an outsourced legal department, DEDICA supports clients by:
Reviewing licensed scope against actual operations
Tracking ongoing compliance and reporting obligations
Advising on legal changes affecting licensed activities
Supporting inspection preparation and responses
Helping management align operations with legal requirements
DEDICA’s approach is practical, prevention-focused, and business-oriented, ensuring that licenses translate into real compliance—not just paperwork.
Having sufficient licenses does not guarantee compliance in Vietnam. Many businesses are penalized not because they lack permits, but because they fail to meet ongoing legal obligations tied to those licenses.
Operating beyond licensed scope, missing reports, ignoring new legal changes, or inconsistent internal compliance can all lead to penalties—even for fully licensed companies.
By engaging ongoing legal consultancy, businesses gain continuous legal oversight, reduce compliance gaps, and protect themselves from avoidable penalties.
📞 Hotline: (+84) 39 969 0012 (Available via WhatsApp, WeChat, Zalo)
🕒 Working Hours: Monday – Friday (8:30 – 18:00)
Contact us today for a free initial consultation with our experienced lawyers!
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