Is “business transfer” a “share transfer”, “project transfer” or “assets transfer”?

A business transfer can generally understood as the transfer of, among other things, the assets, employees, contracts, clients and goodwill associated with a particular business. However, “business transfer” is not clear legal concept under Vietnamese law. In Vietnam, when one mentions "business transfer", it is not clear whether it refers to the transfer of (1) shares of the company that runs such business or (2) the assets and other components that constitute such business.

In case of (1), then a business transfer should probably better called as a share transfer transaction. In case of (2), commercially, a business transfer could be structured as the transfer of an “investment project” (see earlier post here) as provided under Article 66 of Decree 108/2006. However, there is no clear procedures under Decree 108 for a "project transfer" transaction which does not involve the transfer of shares of the project company. In particular,

  • Article 66.2 of Decree 108 provides that in the case of assignment of a project of an economic organization not associated with the termination of operation of the assigning economic organization, the assignment of the project will comply with the conditions and procedures for assignment of capital;
  • Article 66.3 of Decree 108 provides that in the case of assignment of a project of an economic organization associated with the termination of operation of the assigning economic organization, the assignment of the project shall comply with the conditions and procedures for merger with or acquisition of an enterprise;
  • Article 66.4 of Decree 108 provides that in the case of assignment of an investment project associated with the termination of operation of the assigning organization and the assignee establishing an economic organization to continue implementation of the project, the investment procedures stipulated by this Decree must be carried out.

A “project transfer”, which is not a share transfer, is not associated with the termination of the assigning organization so Articles 66.3 and 66.4 of Decree 108 are not applicable. However, Article 66.2 of Decree 108 requires a transfer of project not associated with the termination of the assigning organization to follow procedures for assignment of capital. It is not clear how a project transfer by way of selling assets could comply with the procedures for assignment of capital.

As such, in case of (2), to avoid all the complications of a project transfer regulations, the parties can just structure a business transfer as a transfer of assets and other components of the transferred business.

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Pre-emptive rights of existing shareholders over new shares issued by a joint stock company

It has never been clear whether an existing shareholder of a joint stock company (JSC) has pre-emptive rights over new shares issued by the JSC. However, in the past, under Decision 12/2007 of the Ministry of Finance on corporate governance rules applicable to public listed JSCs, “shareholders may refuse to exercise their priority right to purchase new shares. This right of refusal shall be clearly stated in the relevant resolution of the  general meeting of shareholders.” Many legal practitioners have relied on this provision of Decision 12/2007 to take the view that in case a public listed company issues new shares to a strategic investor by way of private placement,

  • a collective waiver of pre-emptive rights recorded in the Shareholder resolutions of the target company approving the transaction is sufficient; and
  • there is no need for the target company to collect individual waiver from each individual shareholder regarding their potential pre-emptive over the new shares to be issued to the strategic investor.

This view was particularly helpful to parties who want to expedite the deal process.

Decision 12/2007 has now been repealed by Decision 121/2012, which does not contain the provision on collective waiver of pre-emptive rights. On the contrary, Decision 121/2012 just basically repeats the provision in the Enterprise Law, which serves as the basis for pre-emptive rights of existing shareholders. While the model charter attached to Decision 121/2012 still contains a provision similar to the provision under Decision 12/2007, the legal arguments for not obtaining individual waiver from each individual shareholder regarding their potential pre-emptive over the new shares to be issued to the strategic investor have clearly become weaker.

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Foreign investors purchasing assets of a Vietnamese company

Purchasing existing assets of a Vietnamese company may be an option for a foreign investor who wants to overcome the foreign ownership limit applicable to a public company or wants to avoid (or cheery pick) the liabilities associated with the target company. However, there are certain issues associated with an asset deal:

  • Usually, the foreign investor cannot directly own assets especially land use rights and buildings in Vietnam. Accordingly, the foreign investor would need to set up its own subsidiary in Vietnam (Buyer Sub) to acquire the target assets from the Vietnamese seller. And the asset transfer agreement needs to be entered into between the Vietnamese seller and the Buyer Sub. However, from the seller’s perspective, the Buyer Sub is not a company of substance at least until the Buyer Sub’s capital is fully paid up and as such the foreign investor may need to act as a party to the asset purchase agreement and to be liable for the Buyer Sub’s performance;
  • There is a risk that the foreign investor cannot set up the Buyer Sub as this may involve a discretionary investment evaluation process by the licensing authority. So even if the foreign buyer and the Vietnamese seller have agreed to a definitive agreement, the agreement cannot be completed until the Buyer Sub is set up. This is a risk that both the Buyer Sub and a target company have to consider when negotiating an asset deal;
  • An asset purchase agreement between the Buyer Sub and a target company being a contract between two companies in Vietnam is likely to be subject to Vietnamese governing law. In addition, it is more likely than not that land use right and buildings are part of the target assets. In such case, the asset purchase agreement (or at least the part relating to land use right and buildings) may be subject to jurisdiction of the Vietnamese courts;
  • An asset purchase agreement between the Buyer Sub and a Vietnamese seller being a contract between two companies in Vietnam will need to be settled in Vietnamese Dong under the foreign exchange regulations. As such, it may be difficult for the Vietnamese seller to fix the transfer price in US$;
  • If the transferred assets include assets the ownership of which is subject to registration such as trademarks, buildings and land use rights then the parties may need to enter into separate transfer instruments for the purpose of filing with the relevant authorities. Transfer instruments relating to real estate in Vietnam must usually be notarized. As such there is a risk that there is inconsistency between the notarized transfer instrument and the asset transfer agreement which are not notarised;
  • The transferred assets might involve numerous contracts and require third party’s consents. The Civil Code requires the transfer of rights to demand to be notified to the obligors. In addition, transfer of receivables will need to be registered with the National Department of Registration of Security Interests. The Civil Code requires the transfer of obligations to be consented by the obligee. Therefore, if the target company has substantial external debts and has granted security interest over its assets, it may be difficult to obtain consents from the target company’s lenders for the transfer of assets unless simultaneous or escrowed closing can be arranged to ensure that the lenders will be repaid.
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Vietnam investment regulations – Direct investment v.s. indirect investment

Under the Investment Law, direct investment means a form of investment whereby the investor invests its invested capital and participates in the management of the investment activity. On the other hand, indirect investment means a form of investment through the purchase of shares, share certificates, other valuable papers or a securities investment fund and through other intermediary financial institutions and whereby the investor does not participate directly in the management of the investment activity.

The confusing point here is what “participating in the management” of investment activity. If having purchased shares of a listed company in Vietnam, a foreign investor attends the shareholders meeting of such company and exercises its voting rights then arguably the investor has “participated in the management” of the company in Vietnam. A more relevant example is a foreign investor purchases a minority stake in a domestic joint stock company and nominates its personnel to hold position in the Board of Directors of such company. In such case, it is not clear if the investor could be deemed to have “participated in the management” of the company in Vietnam.

The consequences of being treated as a direct investment and an indirect investment may be material. If an investment is an indirect investment then the parties may not need to obtain an Investment Certificate and must settle the transaction in Vietnamese Dong through a VND capital contribution account.  If an investment is a direct investment then the parties may need to obtain an Investment Certificate and could settle the transaction in foreign currency.

It would have been clearer if the Investment Law replaces the concept of “participating in the management” with “control”. In such case, an investor will be deemed to make a direct investment if it has “control” of the investment activity. In other cases, the investor will be deemed to make an indirect investment. 

Vietnam Business Law Blog
A few comments on Vietnam’s Legal Concept of Digital Assets

In recent years, digital assets have been at the forefront of regulatory discussions worldwide. Vietnam is also making an effort to create a legal framework for its 100-billion-dollar market with the issuance of the 2025 Law on Digital Technology Industry – which is the first to introduce the legal definition of “digital assets”, and the Resolution 05/2025/NQ-CP greenlighting pilot program for the cryptographic digital assets market (Resolution 05/2025).

With the effective date of the Law on Digital Technology Industry fast approaching, we have a few comments on the current legal concept of digital assets in Vietnam, which we find to be rudimentary and raises more questions than answers.

Vietnam’s Housing Law: Can Housing Developers Offer Non-Residential Products to Capital Contributors?

For a long time, Vietnam’s housing law has restricted housing developers (generally, “master developer”) from distributing houses or residential land use rights within a project as in-kind profit to capital-contributing partners (generally, “secondary investors”). This restriction aims to prevent the master developers from using capital contribution arrangements to sell off-plan houses to customers before those properties are legally qualified for sale. In particular, Article 116.1(e) of the Housing Law 2023 currently provides that:

What Is the Scope of the Redemption Right of Ordinary Shareholders in Vietnam?

Under the Enterprise Law 2020, a minority ordinary shareholder voting against certain important decisions of the General Meeting of Shareholders may request the relevant joint stock company to redeem the shares held by such dissenting shareholder.  However, the law is not clear about the scope of this redemption. In particular,

  • It is not clear whether the redemption right covers both ordinary shares and preference shares held by the dissenting shareholder. The law provides that in the request for redemption, the shareholder will specify the number of shares of each class. This suggests that the redemption right covers preference shares in addition to ordinary shares.

  • A conflict arises if the redemption right is found to cover preference shares, but the terms of those shares (as defined in the charter) do not permit redemption. In this situation, it is not clear whether the company can lawfully refuse the request. Since a shareholder needs to comply with the charter which contains the terms of the preference shares, the dissenting shareholder cannot require the company to redeem the relevant preference shares. On the other hand, since the provisions on the content of a redemption request do not clearly exclude shares which cannot be redeemed, the dissenting shareholder can argue that it has the right to specify all the shares (including non-redeemable preference shares) in the redemption request.

Key Highlights On The Vietnam New Personal Data Protection Law (PDPL 2025)

In June 2025, the National Assembly passed a new Law on Personal Data Protection (PDPL 2025), set to take effect on 1 January 2026. This new law represents a significant evolution from the foundational framework established by Decree 13/2023, introducing a far more comprehensive and stringent regime for personal data protection. This post will analyze some critical highlights of the new PDPL 2025, with some important implications for businesses. To offer a comprehensive perspective, we also include a summary generated by Google's Gemini AI for comparison and reference (see here).

A narrower extraterritorial scope of application

The PDPL 2025 narrows its extraterritorial application compared to previous regulations. Instead of a broad rule for "foreigners' data, the PDPL 2025 explicitly applies to foreign entities that are directly involved in or related to the processing of personal data of Vietnamese citizens and people of Vietnamese origin residing in Vietnam. This new provision successfully addressed the confusion and uncertainty that the earlier draft of PDPL 2025 had introduced (see our discussions here).

However, this scope of application still has the following issues:

·       It has not addressed the existing ambiguity under Decree 13/2023 of whether the applicable subjects under the PDPL 2025 apply to the processing entities or data subjects (see our discussions here)

·       The PDPL 2025 is also unclear on its application to foreign organizations processing the data of non-Vietnamese individuals (e.g., tourists, expatriates) within Vietnam. While Article 1.2 of the PDPL 2025 does not explicitly cover this scenario, Article 5.1 states the law applies to all "personal data protection activities on the territory of Vietnam", which may arguably cover this case.

Key Amendments to Vietnam Law on Advertising in 2025

In June 2025, the National Assembly adopted several amendments to existing 2012 Law on Advertising (Advertising Law Amendments 2025). The amended law will take effect from 1 January 2026. In this post, we discuss some of the material changes introduced by Advertising Law Amendments 2025. To offer a comprehensive perspective, we also include a summary generated by Google's Gemini AI for comparison and reference (see here).

New Carve-out To The Prohibition On Comparative Advertising

The Advertising Law Amendment 2025 allows comparative advertising between one’s own products/goods/services and those of other entities of the same kind when there is “legitimate supporting documentation”. Before this, all comparative advertising was prohibited. The new carved out opens the door for lawful and transparent comparative advertising.

Key Changes In New Draft Business Investment Law 2025

The Ministry of Finance has recently collected opinions on a new draft of the Business Investment Law, which proposes certain changes to the current Investment Law 2020. The draft law is expected to take effect from 1 July 2026. We discuss some key changes proposed in the draft Business Investment Law.

Lack of bold reforms directed by the Politburo  

Earlier this year, the Politburo of the Communist Party of Vietnam (the highest decision- making authority in Vietnam) issued Resolution 68/2025 on developing the private business sector. At the time, Resolution 68 was widely reported as a bold move to start a “new dawn” for Vietnam private business sector (see here for example). Following Resolution 68, the National Assembly duly issued Resolution 198/2025 to make Resolution 68 the law of the land. However, since Resolution 198/2025 simply copied and pasted from the text of Resolution 68, it is difficult to know how the instructions and reforms directed by the Politburo are to be implemented in practice. The National Assembly nevertheless requires complete changes to the “investment law” to implement the instructions from the Politburo by December 2025 which includes a reduction of at least 30% of business conditions.

One would expect that the amendments to the Investment Law will provide further implementation and guidance to Resolution 198/2025. However, it appears this is not the case. For example, the new draft Business Investment Law has 212 areas of conditional business a reduction of mere 10% (not 30%). The new draft Business Investment Law retains  the investment licensing procedures introduced 30 years ago under the Foreign Investment Law 1987 with some unclear tinkering.

Key Changes to the Law on the Promulgation of Legal Normative Documents

Shortly after the issuance of the Law on Promulgation of Legal Normative Documents early this year, on 25 June 2025, it enacted a law amending such law (the Amending Law) (collectively known as the Law on Law 2025). Below are the key changes:

1. Enhancing certainty

1.1. A crucial reform for legal certainty is the revised provision on effectiveness for guiding documents. Under the Amending Law, when a parent law is replaced or expires, any documents issued to detail it (such as decrees) will now automatically expire as well. They will only remain in effect if a state agency makes a formal, public announcement that they will continue.

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