Factors affecting an acquisition of companies in Vietnam

Any acquisition will have its own details and structures. That being said, a foreign investor intending to do deal in Vietnam should take into account the following factors, among other things:

Corporate form of the target company

A target company in Vietnam may be:

  1. a limited liability company (LLC) (công ty trách nhiệm hữu hạn) incorporated under the Enterprise Law. A LLC may be a single-member LLC (One Member LLC), which is owned by a single member, or a two or more members LLC (Multiple Member LLC), which is owned by two or more members; or
  2. a joint stock company (JSC) (công ty cổ phần) incorporated under the Enterprise Law. A JSC can be a public JSC (which usually has 100 or more shareholders) or a private JSC. A public JSC may also be a “listed company” (công ty niêm yết) if the shares of the relevant company is listed on a stock exchange.

The corporate form of the target company may affect a transaction significantly. For example, a foreign investor may not be able to acquire more than 49% of a public JSC while it can acquire 100% of a LLC doing the same business. The selling shareholders in a public JSC can be subject to substantially lower capital gain tax than the selling shareholders in a private JSC.

Nature of the existing owner(s) of the target company:

A target company in Vietnam may be owned and controlled by:

  1. local private investors, in which case the target company is considered as a domestic company. Investing in a domestic company may or may not require an Investment Certificate;   
  2. foreign investor, in which case the target company is considered as a foreign invested enterprise. A foreign invested company incorporated on or after 1 July 2006 should operate either as a LLC or JSC under the Enterprise Law. However, a foreign invested company which was incorporated before 1 July 2006 and has not re-registered as a LLC under the Enterprise Law will operate in a legal vacuum and be subject to many uncertainties. Investing in a foreign invested company is usually subject to an Investment Certificate; or
  3. Vietnamese Government, in which case the target company is considered as a State-owned enterprise. Investing in a State-owned enterprise may be subject to separate rules on equitisation (or privatisation) of State-owned enterprises.

Nature of the business of the target company

Depending on the business of the target company, there may be specific restrictions on foreign investment or other special requirements applicable to the proposed acquisition or the target company.

Vietnam Business Law Blog

The State Bank of Vietnam (SBV) officially issued Circular 38/2026/TT-NHNN dated 31 July 2026 on foreign exchange management for foreign investment activities in Vietnam (Circular 38/2026). Effective from 18 August 2026, Circular 38/2026 replaces Circular 06/2019/TT-NHNN (Circular 06/2019) as amended by Circular 03/2025/TT-NHNN (Circular 03/2025), which has governed the direct investment capital account (DICA) regime since 2019. Circular 38/2026 also terminates Articles 11.3 and 11.4 of Circular 03/2025 on opening and use of VND-denominated accounts for conducting foreign indirect investment in Vietnam and amends Circular 16/2014/TT-NHNN on the use of foreign currency and Vietnamese dong accounts of residents and non-residents.

A typical share sale agreement (SPA) takes effect on signing. Closing, when the buyer and the seller exchange money and title to the shares, usually comes later, once conditions have been met. One might expect tax on the sale to be imposed when the shares are sold, that is, at closing. But where a foreign enterprise with no permanent establishment (Foreign Seller) in Vietnam sells shares in an unlisted Vietnamese company to a resident buyer, Article 5.2(a) of Circular 20/2026 provides that revenue is taxed when the initial capital-transfer contract takes effect. On the face of that Article, the SPA can be that contract, and signing can be when it takes effect. The fact that closing has not yet occurred might not, by itself, defer the tax. Until Circular 20/2026, that was not so.

Similar to the Enterprise Law 2005 and the Enterprise Law 2014, the Enterprise Law 2020 is silent on whether founding shareholders may hold voting preference shares newly issued after the issuance date of the enterprise registration certificate (ERC), and only provides at Article 116.1 that the voting preference of founding shareholders is effective for three years from that date. This blog will examine different views on this issue.

On the one hand, one may support the view that founding shareholders are entitled to hold voting preference shares issued after ERC issuance date because:

Based on Resolution No. 206/2025/QH15 of the National Assembly on special mechanisms to address difficulties and obstacles arising from legal regulations, the Government has issued several Resolutions on administrative procedure reduction (such as Resolution 66.16/2026/NQ-CP, Resolution 66.18/2026/NQ-CP, etc.). Most of these provisions remain effective until 28 February 2027. If new provisions covering the same subject matter are promulgated to replace them during this period, the relevant provisions of these Resolutions will automatically cease to be effective.

On 16 March 2026, the Ministry of Public Security (MPS) issued the draft decree on administrative sanctions in the fields of cybersecurity and personal data protection (the Draft Decree) for public consultation. It is the first step to put concrete penalties behind the PDPL 2025, which took effect on 1 January 2026 but left the enforcement details to the Government. The Draft covers a wide range of sectors, such as cybersecurity, personal data, AI, telecommunications, and digital signatures. This post focuses on the personal data provisions (Articles 57 to 69 of the Draft Decree), which raise potential concerns for businesses.

Foreign ownership limit in a public-turned-private shareholding company.


Under the new Decree 58/2012, a company, which ceases to be a public company, will still be subject to the restrictions applicable to a public company for a period of one year after the date on which it is no longer a public company. This effectively means that a public-turned-private shareholding company is still subject to the 49% foreign ownership limit applicable to public companies for a period of one year after ceasing being a public company.

However, the restriction under the new Decree 58/2012 does not apply if the relevant company is turned private due to “consolidation, merger, bankruptcy, dissolution, change of form of enterprise or acquisition by another entity”. Among these exceptions, the “change of form of an enterprise” seems to be easier to implement. Under the Enterprise Law, a shareholding company can change its corporate form by turning it into a limited liability company. However, this will likely require the public shareholding company to reduce its number of shareholders from more than 100 to 50 or less. 

Certain Limitations on Privately Issued Shares



Under the controversial Decree 1/2010,  a private placement of shares in a private shareholding company was subject to various restrictions under Decree 1/2010, including:
  • shares privately issued were subject to a lock-up period of 1 year;
  • there had to be a six-month gap between two tranches of a private placement; and
  • the proceeds resulting from the sale of shares had to be kept in an escrow account.


Decree 58/2012 of the Government dated 20 July 2012 implementing the Securities Law has repealed Decree 1/2010 and therefore has removed these restrictions. However, except in certain limited circumstances, private placement of shares by a public shareholding company is still subject to the first two restrictions, which are provided in the amended Securities Law rather than in Decree 1/2010.

Summary of the equitisation process of a Vietnamese State-owned Enterprise


Below is a quick summary of the process to equities a wholly State-owned enterprise (SOE) in Vietnam. The summary is taken from my book “Equitisation of Vietnamese State-owned Enterprises”, which is currently available in the Amazon Kindle Store. I will make this book available for free download on 15 December 2012. Anyone interested in the book should open an Amazon account (credit card is required) and download it. Kindle books can be read by Amazon Kindle e-reader or free Kindle reading apps on  smartphones, tablets, web browser,  PC or Mac computers.
  
·         Definition: Generally, equitisation is the process of privatising an SOE (the Equitised SOE) by (1) setting up a new joint stock company (the Equitised JSC), (2) transferring assets and liabilities of the Equitised SOE to the Equitised JSC and (3) selling shares in the to-be-established Equitised JSC to private sectors in the meantime.

·         Authorities involved: Various Government authorities will be involved in the equitisation of an Equitised SOE, including (1) the Equitisation Authority, who decides the most important issues relating to the equitisation, (2) the Valuation Authority, who determines the valuation of the Equitised SOE, and (3) the Steering Committee, who is in charge of the day-to-day operation. The law does not clearly provide powers and responsibilities of Government authorities with respect to an equitisation, as such, it may sometimes be difficult to determine the powers or even identity the Government authorities involved in the equitisation.

·         Investors: Investors purchasing shares during the equitisation of an Equitised SOE may be classified as (1) Vietnamese or foreign investors; (2) Strategic Investors or Non-strategic Investors; or (3) employees of the Equitised SOE and “outside” investors.

·         Preparation for sale of shares: During this step, various preparatory tasks need to be completed to commence the equitation and to prepare for next steps. This step includes (1) establishment of the Steering Committee, (2) appointment of Equitisation Advisors, and (3) collection of information and documents regarding the Equitised SOE.

·         Valuation of the Equitised SOE:  During this step, the Equitised SOE must (1) take an inventory of its assets and liabilities, (2) restructure its assets and liabilities and (3) determine the value of the Equitised SOE. Through the restructuring of assets and liabilities, the Equitisation Authority and the Equitised SOE will do their homework in shaping and, potentially, cleaning up the balance sheet of the Equitised JSC and, to the extent possible, resolving any past issues or mistakes before making the Equitised SOE available to the public. The Equitised SOE can be valued by the following valuation methods: assets method, discounted cash flow method or other valuation method. However, the valuation result obtained from the assets method is the minimum threshold. The valuation of a Special SOE may need to be verified by the State Auditor.

·         Equitisation Plan: Based on the valuation result, the Equitised SOE will prepare an Equitisation Plan, which covers many important issues regarding the Equitised JSC, including the Minimum Offer Price, the proposed capital and shareholding structure of the Equitised JSC.

·         Sale of shares - investors: During this step, the Equitised SOE will arrange to sell shares in the Equitised JSC to (1) public investors through a public auction (Equitisation IPO), (2) Strategic Investors either directly or through a strategic sale auction, and/or (3) employees and trade unions of the Equitised SOE. The shares to be sold during this step could come from the State’s existing capital in the Equitised SOE (equivalent to existing shares) and/or through new shares to be issued by the Equitised JSC at a later stage.

·         Sale of shares – sale conditions: The number of shares in the Equitisation JSC that an investor is allowed to subscribe to during the equitisation will depend on the proposed shareholding structure of the Equitised JSC set out in the Equitisation Plan. A public investor purchasing shares in the Equitisation IPO or a Strategic Investor purchasing shares before the Equitisation IPO must pay a price higher than the Minimum Offer Price. A Strategic Investor purchasing shares after the Equitisation IPO must pay a price higher than the lowest successful auction price. The shares purchased by a Strategic Investor cannot be transferred in the first five years of incorporation of the Equitised JSC unless otherwise approved by the General Meeting of Shareholders of the Equitised JSC.

·         Sale of shares – allocation of proceeds: Normally, when an existing shareholder sells its shares in a joint stock company, the existing shareholder will keep all profits, including the difference between the sale price and par value of the shares sold. Similarly, when a joint stock company issues new shares, the company will be entitled to profits arising from such issuance, including any premium paid for the shares. However, under equitisation regulations, where new shares of the Equitised JSC are issued, the State and the Equitised JSC will “share” the aggregate sale premium obtained from the sale of both new shares and existing shares in proportion to their respective percentage in the charter capital of the Equitised JSC.

·         Sale of shares – delay in delivery of shares: The Equitised SOE is not a joint stock company and therefore cannot issue shares of its own. As such, shares in the Equitised JSC can only be issued after the Equitised JSC has been incorporated. This results in a substantial delay between the time of payment for shares by the investors participating in equitisation of an Equitised SOE and the time when the shares are actually issued to investors.

·         Conversion and hand-over process: During this step, various tasks are taken so that the Equitised JSC can be up and running, including (1) holding the first General Meeting of Shareholders, (2) incorporating the Equitised JSC, (3) issuance of shares, (4) re-evaluating the State’s capital in the Equitised JSC, (5) preparing an Opening Account of the Equitised JSC, and (6) handing over the assets and liabilities of the Equitised SOE to the Equitised JSC.

·         Conversion and hand-over – potential adverse effects: The actions taken by the Equitised SOE and the equitisation authorities during the hand-over may have an adverse effect on investors purchasing shares in the Equitised JSC. These actions include (1) tax finalisation of the Equitised SOE and (2) revaluation of State’s capital in the Equitised JSC.

·         Timing: The law does not provide a clear timeline for the equitisation process, but does stipulate certain time limits for specific steps. The Prime Minister, however, is given broad authority in determining the schedule and process for the equitisation of a special SOE.