Transplantation of Derivative Actions to Vietnam Tip-Offs from Absence of Academic Debate

Abstract

Derivative actions were just newly introduced into Vietnamese company law in 2010. Adoption of the derivative action is a strike signal of Vietnam’s affiliation to the litigation bandwagon of East Asia countries. However, differ from the Asian countries where matters of derivative actions’ transplantation and their functioning are oft-debated topics of corporate governance literature, the discussion has not begun yet in Vietnam. In fact, the derivative action was adopted without a domestic academic debate to pave the way for its introduction. The lack of discussion on the one hand would troublesome those who want to review the transplantation of the derivative action to Vietnam. On the other hand, this absence would detach the Vietnamese academic debate from on-going international debate. Seeking the possible explanations for absence of such debate is the first aim of this article. Towards this end, the article proposes three assumptions which help to explain why the derivative action has never been widely discussed in Vietnam before its introduction. Such assumptions enables us to better understand the context in which the action was introduced. Moreover, the assumptions are hints for us to predict feasibility of the derivative action in the jurisdiction. The second aim of this article is giving some suggestions to improve the newly-adopted regulations of derivative actions. For this purpose, some ambiguity and deficiencies of the regulations are discussed. Based on the understanding of its surrounding context and its own deficiencies, finally the article comes up with conclusion of future for the derivative action in Vietnam.