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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Written by Nguyen Quang Vu On In

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
New Foreign Exchange Rules for Foreign Investment in Vietnam

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.

When Does CIT Arise on a Foreign Seller’s Share Transfer — At Signing or at Closing?

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.

Whether a JSC may issue new voting preference shares to founding shareholders after ERC issuance?

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:

Major Reductions in Fire Safety and Environmental Administrative Procedures in Vietnam

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.

Key Concerns In Draft Cyber & PDP Sanctions Decree On Personal Data Protection

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.

New Decree on private bonds (Part 2)

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 (as amended) on the same subject. We have discussed certain contents of Decree 200/2026 in New Decree on private bonds (Part 1) — Vietnam Business Law.

New Changes to Administrative Sanctions for Merger Control Violations

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.

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