Can You Recover Money Lent to a Company Without Any Paperwork?

Internal transfers within a company—especially advance payments for essential operations—are often not formally documented. When the company changes its legal representative or management structure, legal disputes about repaying these amounts can easily arise. This is a real issue many Vietnamese SMEs face, but they lack robust internal controls to prevent it.

Legal Update: Internal Company Loans

Internal loans usually stem from flexibility and trust among founders, shareholders, or executives. However, in today’s stricter legal environment, failure to clearly record internal financial transactions can lead to disputes once staffing or legal representatives change. What does the current legal framework say about repayment obligations for such funds?

Is an Internal Advance a Legal Obligation?

Under current law, any money used to support business operations that benefits the company—whether or not there’s a formal loan contract—can be considered a repayable obligation if:

  • The lender can prove the funds were transferred into the company account or used for lawful company liabilities;

  • The recipient (the company) cannot demonstrate that the funds were a gift or non-refundable grant;

  • The funds were actually used to benefit the company;

Then the company may be ordered to repay the amount—even without a formal loan agreement.

How Do Courts Handle Similar Disputes?

In recent rulings, Vietnamese courts have clarified that:

  • When a former representative or senior staff member advances money for salaries, debts, or operational needs, and these align with company interest;

  • Even without a written repayment promise, internal assignments, bank transfers, or confirmations from partners or employees can serve as legal evidence;

  • If the legal representative changes, the successor cannot deny the company’s legal obligation on the grounds of “not knowing,” unless fraud or misconduct is proven.

⛑ Preventive Advice for Companies to Avoid Legal Risks

To prevent being sued or facing unclear repayment demands, especially SMEs should establish clear internal control mechanisms. Here are practical legal recommendations to help safeguard interests and maintain financial stability:

  1. Document All Internal Transactions
    Any personal advance to the company must be recorded in a memorandum, repayment agreement, or at least via signed internal emails specifying date, purpose, amount, and conditions.

  2. Promptly Update Legal Representative Data
    Whenever there’s a change in legal representative or financial officer, complete all formal updates with business registration, banks, social insurance, etc., to ensure continuity of authority and legal responsibility.

  3. Implement Transparent Internal Approval Systems
    Establish clear approval processes across departments and leadership tiers. Personal funds used for significant company expenses must go through documented evaluation and board or CFO approval.

  4. Be Ready for Dialogue and Negotiation
    If internal disputes arise, proactively negotiate based on documented evidence to avoid litigation, protecting the company’s reputation and reducing legal costs.

A change in legal representation does not nullify previously incurred financial obligations. When personal funds are used to directly benefit the company, the company—as a legal entity—remains liable to repay, regardless of leadership turnover.

DEDICA Law Firm accompanies businesses in building transparent, secure internal legal systems to protect them from legal risks. Don’t let goodwill turn into legal disputes just due to a lack of documentation.

📞 Hotline: (+84) 39 969 0012 (WhatsApp, WeChat, Zalo)
🏢 Head office: 144 Võ Văn Tần, Võ Thị Sáu Ward, District 3, Ho Chi Minh City
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Contact DEDICA today for a free initial consultation with our legal experts!

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