New Circular on exchange control over foreign indirect investment
Earlier this week, the State Bank of Vietnam (SBV) issued Circular 5/2014 regulating exchange control over foreign indirect investment. Circular 5/2014 will take effects from 28 April 2014 replacing the old Circular 3/2004 on similar issue. Circular 5/2014 reinforces the requirement under Decree 160/2006 and the Ordinance on Foreign Exchange that all foreign indirect investment must be made in Vietnamese Dong and through an indirect investment capital account (tài khoản vốn đầu tư gián tiếp) which is commonly named as the “CCA”. That being said, a quick read of Circular 5/2014 raises the following issues:
- Circular 5/2014 does not apply to foreign investors who are resident under the foreign exchange regulations including foreign individuals residing in Vietnam for 12 months or more.
- A foreign investor cannot use the Vietnamese Dong amount in the CCA to make fixed-term deposit or saving deposit. This restriction appears to restrict foreign investors using the CCA to conduct carry trades in Vietnamese Dong.
- Investment entrustment (ủy thác đầu tư) is now regarded as a form of indirect investment.
- Circular 5/2014 does not apply to a foreign investor who purchases shares or makes capital contribution and who does not “directly” participate in the management and operation of the target company. However, as in other earlier legislation, Circular 5/2014 fails to clarify which activity could amount to direct participation in the management and operation of a company.
- If an indirect investment becomes a direct investment and the foreign investor does not have any other indirect investment, Circular 5/2014 requires the foreign investor to open a “direct investment capital account in Vietnamese Dong” and closes the CCA. However, a “direct investment capital account in Vietnamese Dong” is a new concept and has not been contemplated in earlier regulations such as Decree 160/2006 or the Ordinance on Foreign Exchange.
- Circular 5/2014 also does not contemplate necessary procedures in case where a direct investment becomes an indirect investment.
- By around 28 July 2014, all capital contribution and share purchase accounts opened under Circular 3/2006 must be renamed to indirect investment capital accounts. In addition, all foreign currencies deposited by foreign investors with securities companies must be converted into Vietnamese Dong and transferred to the CCA under Circular 5/2014.
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.