Can a foreign bank acquire 100% shares in a Vietnamese joint stock bank?
There has been an argument that under the new Decree 1/2014 a foreign bank may acquire 100% of the shares in a Vietnamese joint stock bank (Local Bank) if (1) the Local Bank is, among other things, a “weak credit institution”, and (2) the Prime Minister approves to increase the foreign ownership limit in the relevant Local Bank to 100%. However, in order for a foreign bank to acquire 100% of the shares in a Local Bank, various legal issues still need to be clarified. In particular,
- It is not clear if Decree 1/2014 is applicable to the scenario where a foreign bank acquires shares in Local Bank and becomes a single-member LLC bank owned by the foreign bank. Decree 1/2014 allows the Prime Minister to increase the foreign ownership limit in a Local Bank. However, Decree 1/2014 appears to be drafted on the assumption that the Local Bank will remain to be a joint stock bank even after the acquisition by a foreign bank. For example, all of the provisions in Decree 1/2014 regarding rights and obligations of a foreign investor after acquiring a Local Bank refer to “share” and “shareholders”.
- A Local Bank is required to have at least 100 shareholders under the Law on Credit Institutions. If a foreign investor acquires 100% of the shares in a Local Bank, the Local Bank will become a 100% foreign-invested bank existing in the form of a single member limited liability company (LLC). The Law on Credit Institutions and Decree 59/2009 currently do not have any specific procedures for converting a local joint stock bank into a single-member LLC bank owned by a foreign bank. Instead, the Law on Credit Institutions and Decree 59/2009 only generally provide that conversion (chuyển đổi) of legal corporate form of a joint stock bank requires State Bank’s approval. As such presumably, the conversion of a local joint stock bank into a single-member LLC bank will need to follow the procedures under the Enterprise Law and Decree 102/2010. This means that, among other things, the conversion would require (1) super majority approval by the General Meeting of Shareholder of the Local Bank and (2) the share purchase price by the foreign bank to be determined according to market price or price determined by certain valuation methods.
- After a 100% acquisition, the Local Bank will become a 100% foreign-invested bank. Therefore, presumably, the foreign investor will need to satisfy the conditions of setting up a 100% foreign-invested bank in Vietnam in addition to the conditions of acquiring shares in Local Bank in Vietnam.
- A Local Bank is also a public joint stock company in Vietnam. Therefore, acquiring 100% shares in a Local Bank will be subject to the tender offer rules under the securities law unless an exemption is granted by the General Meeting of Shareholders.
- A conversion of a Local Bank into a single-member LLC bank owned by a foreign bank would require (1) consent by all of the shareholders of the Local Bank for selling their shares to the foreign bank and (2) super majority approval by the Local Bank’s shareholders. If a shareholder in the Local Bank objects to the 100% acquisition, it may be difficult to complete the acquisition voluntarily. Under the Law on Credit Institutions, only when a Local Bank is put under “special control” (kiểm soát đặc biệt) by the State Bank, the State Bank may compel the Local Bank to be acquired by another bank or by the State Bank itself. Even in case of special control, the legal ground and procedures for a compulsory transfer of shares is still unclear and untested.
The Government officially issued Decree 102/2026/NĐ-CP (Decree 102/2026), which introduces critical amendments and supplements to Decree 75/2019/NĐ-CP (Decree 75/2019) regarding administrative penalties for violations in the competition sector. Effective from 20 May 2026, Decree 102/2026 provides clearer enforcement guidelines and adjusts penalty frameworks, particularly for economic concentrations.
Below is a summary of the key changes introduced by Decree 102 that will directly affect M&A transactions subject to merger control (economic concentration notification) requirements in Vietnam.
In March 2026, Vietnam’s Ministry of Finance (MOF) released a draft decree (Draft Decree) implementing the Law on Personal Income Tax 2025 (PIT Law 2025) for public consultation. One proposal drew strong feedback from businesses and investors: a change to how individuals are taxed on the transfer of shares in non-public/unlisted joint-stock companies (JSCs). Following the consultation, the MOF now appears poised to step back from that change – welcome news for investors and companies engaged in M&A and private share transactions.
On 5 June 2026, the Government issued Decree 200 on private placement and trading of corporate bonds on domestic market and offering of corporate bonds on international market (Decree 200/2026). Decree 200/2026 will replace Decree 153/2020 on the same subject. In the past, Decree 153/2020 has been amended by Decree 65/2022 and Decree 8/2023. Decree 200/2026 introduces more conditions for private bond issuance.
5x debt/equity ratio
1.1. Decree 200/2026 reflects the 5x debt/equity requirement established under the 2025 amendment to the Enterprise Law. In particular, the debt of a bond issuer (including the value of the bonds to be issued) must not exceed 5 times of the equity of such issuer as recorded in the audited financial statements of the year preceding the issuance.
On 15 May 2026, the Government issued Resolution No. 66.17/2026/NQ-CP (the Resolution 66.17 or the new), slimming down the list of conditional business sectors currently set out in Appendix IV of Investment Law 2025 (the old).
Resolution 66.17 will take effect on 1 July 2026 and is set to expire on 28 February 2027, by which time the Government expects the National Assembly to formalise these adjustments through an amendment to Appendix IV. Although there would be a question about the effectiveness of the Resolution 66.17 over the Appendix 4 of Investment Law 2025 and how the investment authority will apply in practice, the investor may, in the meantime, treat the Resolution 66.17 as the working text for the next 9–10 months while following up on the law amendments.
Under Article 41 of the Law on Real Estate Business 2023 (Real Estate Business Law), a real estate project (Project) eligible for transfer may follow one of two sets of legal procedures, depending on how it was approved. While the difference may appear procedural at first glance, it has significant implications for when the transfer transaction is legally completed, and for what the parties can (or cannot) do if the transaction ultimately falls through. This post discusses the two procedures and the practical implications arising from the distinction between them.
Vietnam has temporarily raised several general economic concentration notification thresholds under Resolution No. 66.18 of the Government dated 18 May 2026 (Resolution 66/2026), a practical change for M&A transactions as fewer deals should be caught solely by Vietnamese assets, Vietnamese turnover or transaction value.
On 3 September 2025, the Ministry of Finance (MOF) released the Official Letter no. 13629 addressing questions related to difficulties and obstacles arising from legal regulations in the finance and investment sector. This correspondence has several notable issues that are summarized below. While some of the MOF’s guidance offers welcome flexibility and operational reassurance, others fall short of providing clear or comprehensive clarification, leaving important gaps unresolved and inconsistencies with other legislation unaddressed.
Delegation by the General Meeting of Shareholders endorsed in principle (Query no. 29)
Query/Issue raised:
Current regulations regarding delegation/authorisation (both could be translated to/from "uỷ quyền" in Vietnamese) by the General Meeting of Shareholders (GMS) to the Board are unclear and conflicting. […]
A recurring issue in Vietnam corporate governance is whether a former member of the Board of Directors can be appointed as an “independent” Board member in the subsequent term, provided that all other statutory criteria are satisfied. This typically arises where companies want to retain a former board member while still complying with independence requirements under Article 155.2 of the Enterprises Law 2020 as amended in 2025 (Enterprises Law 2020).
Under Article 155.2(dd) of Enterprises Law 2020, an independent Board member must “not hold the position of member of the Board of the company within the last 05 years or longer unless he/she was designated in 02 consecutive terms.”
Vietnamese law currently lacks a formal definition of “latent defect” (khiếm khuyết ẩn) and a clear mechanism for allocating liability once such defects arise. This regulatory vacuum often leads to prolonged disputes between the Employer and the Contractor, particularly when the construction contracts do not include explicit risk allocation.
For the purpose of our discussion below, a “latent defect” is defined as a fault or flaw in construction works/item that is not discoverable through a reasonably thorough inspection at the time of handover.