Technically, a transfer of shares by foreign shareholders in an “Upcom” joint stock company will need to be notified to the Business Registration Authority. However, unlike a private joint stock company, there are several issues relating to such notification procedures for an Upcom company.

At first, an approved notification to the Business Registration Authority is legally required because:

an Upcom company is still considered as an unlisted company under Vietnamese law even its shares are registered for trading in UpCom market in a manner similar to a listed company;
the transfer will result in changes in details of foreign shareholders of the company; and
according to Article 32 of the Enterprise Law 2014 and Article 52 of Decree 78/2015, as an unlisted company, an Upcom company must notify Business Registration Authority about the changes in its foreign shareholder(s) within 10 days from such change.

The Business Registration Authority has the discretion to approve or reject such change within three working days from the date of receiving application documents. Therefore, a prospective buyer may need to require completion of the required approved notification as a condition precedent for the transfer. However, the seller may resist such a requirement for the following reasons, among other things:

An approved notification is to be made by the company not by the parties to the transfer. If the parties to the transfer are minority shareholders and are not controlling the company then obtaining the approved notification could be difficult for the parties;
An approved notification is usually made after the transfer of title is complete. In the case of an Upcom company, this means that the parties have completed the transfer of purchase price and shares via Vietnam Securities Depository (VSD) system. Unwinding the process in case the approved notification is not obtained could be also difficult; and
The approved notification requires a list of foreign shareholder of the Upcom company. Since shares of an Upcom company are managed by VSD, producing an updated list of foreign shareholder will require coordination with the VSD.

Whether or not completion of the required approved notification should be a condition precedent will depend on the negotiation between buyers and sellers and their relationship with the Upcom company. However, in similar situation under Enterprise Law 2005 (e.g. transfer of shares by founding shareholders or transfer of capital contribution by members of a limited liability companies), it is quite common to have the procedures with the Business Registration Authority completed before closing of the transfer to the extent possible.

Vietnam Business Law