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.
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.
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.
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.
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.
On 16 June 2025, the National Assembly of Vietnam officially passed the Employment Law 2025, replacing the Employment Law 2013. The new law will take effect on 1 January 2026. Among its most significant revisions are changes to unemployment insurance (UI) regulations, aimed at expanding coverage, increasing benefits, and clarifying the responsibilities of both employers and employees. This article summarizes the most notable updates to Vietnam’s unemployment insurance system and other key changes under the new Employment Law 2025.
1. Major Changes to the Unemployment Insurance System
· Broader Scope of Participants: The Employment Law 2025 broadens the scope of mandatory UI participation to include (1) employees with labor contracts of at least one month and (2) part-time employees under similar contracts whose monthly salary exceeds the minimum wage.
· Additional Exclusions: The Employment Law 2025 now excludes the following groups from UI participation: (1) employees who meet the conditions for receiving retirement pensions (not just those already receiving them, as under the 2013 Law), (2) employees receiving other social insurance benefits or monthly government allowances, and (3) employees on probationary contracts. The new law also broadens the situations where UI contributions are not required. Now, employees who do not receive a salary for 14 working days or more in a month will not be subject to UI contributions. (Previously, under Decree 28/2015, this only applied to those on maternity or sick leave for that duration).
· Contribution Rates and Salary Basis: The UI contribution rate is set at a maximum of 1% of the employee’s monthly salary, giving the government flexibility to adjust the rate below this ceiling if needed. The salary basis for UI contributions now includes the monthly salary plus any allowances or other regular additional payments. This is a change from the Employment Law 2013, which based UI contributions only on the salary used for social insurance.
On 14 June 2025, the National Assembly passed the amended Corporate Income Tax Law 2025 (CIT Law 2025). Among other things, this legislation is expected to bring significant changes in determining the method of calculating tax for capital transfer and securities transfer transactions (Capital Gains Tax) undertaken by foreign companies. This post aims to provide a comprehensive and clear overview by analyzing and comparing these new regulations with those stipulated in the Corporate Income Tax Law 2008 (CIT Law 2008).
1) Definition of Taxable Income Arising in Vietnam for Foreign Companies
A key area of adjustment in the CIT Law 2025 relates to the definition of taxable income arising in Vietnam for foreign companies, making it more transparent.
Under the CIT Law 2008, the specific definition of such income was not explicitly clarified within the law itself; rather, it was detailed in Decree 218/2013 guiding the CIT Law 2008. In contrast, the CIT Law 2025 has directly incorporated this definition, clearly stating that taxable income arising in Vietnam for foreign companies is income originating from Vietnam, irrespective of the location where business activities are conducted.
On 27 June 2025, as a foundational step for establishing an international financial hub in Vietnam, the National Assembly of Vietnam adopts the Resolution 222 on the International Financial Center (IFC) in Vietnam (specifically in Ho Chi Minh City and Da Nang City) (Resolution 222). However, when compared to international best practices, the Resolution reveals several weaknesses that may deter international investors.
Based on a comparative analysis, here are the main drawbacks:
Isolation from Vietnam domestic markets – Perhaps the most important benefits of investing in an IFC in Vietnam is the opportunity to access Vietnam domestic capital and financial market. Unfortunately, Resolution 222 does not clearly contemplate how an IFC member can invest or interact with Vietnam domestic capital and financial market. Without a better access to Vietnamese domestic markets, investors from regional financial centers may have less incentives to move to the IFC in Vietnam.
Unstable and unpredictable legal framework: Resolution 222 took effect from 1 September 2025. After five years, the legal framework contemplated by Resolution 222 will be reviewed by the National Assembly and may be replaced by a Law on International Financial Center. Existing projects can continue to operate under “existing” legal frameworks at such time. Given the amount of implementing legislation and the infrastructure required, it may take one to two years for the IFC to be up and running. Accordingly, investors may only have around three to four years to actually run theirs businesses before a potential new law will be issued. During the operation of the IFC, a regulation can be issued to limit the rights of IFC members to ensure “national interests” and “prevent threats against national security”. This provision is very broad and vague and could allow IFC regulators to change their regulations at any time.
The Vietnamese Government has recently issued Decree 168/2025 on enterprise registration, which replaces the previous Decree 1/2021. This blog post highlights several significant changes and clarifications to enterprise registration procedures under Decree 168/2025.
1) Additional forms of documents evidencing the completion of capital contribution and transfer
Decree 168/2025 introduces new options for documenting the completion of capital contributions or capital transfers in the enterprise registration application dossiers as follows:
For evidence of the completion of a transfer, one of the following documents is now accepted:
• A copy or extract of the member register or shareholder register.
• A copy or original of the liquidation minutes of the transfer contract.
• Bank confirmation of completed payment.
• Other documents validly proving the completion of share or capital contribution transfer as prescribed by law.
Decree 153/2020 (as amended), which governs private corporate bond offerings, creates ambiguity concerning the permissible use of bond proceeds, especially when parent companies aim to finance their subsidiaries.
Decree 153/2020 stipulates that bond proceeds can be used for implementing investment programmes and projects, restructuring debts of the issuing enterprise itself, or for other purposes sanctioned by specialised laws. The ambiguity stems specifically from how the qualifier “of the issuing enterprise itself” applies to these permissible uses. This leads to two primary interpretations:
The recently enacted law amending the Investment Law 2020 (Amendment Law 2025), effective 1 July 2025, introduces the following key changes:
1. Major Decentralization of Approval Authority
1.1. Under the Amendment Law 2025, the Provincial People's Committees, rather than the Prime Minister under the previous law, have the authority to grant investment policy approval for the following projects: