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FOREIGN OWNERSHIP IN VIETNAMESE ENTERPRISES: LEGAL PROCEDURES & REQUIREMENTS

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Foreign ownership ratio is a key factor affecting investment activities in Vietnam. Depending on specific industries and international commitments, ownership ratio limits may vary. Determining the appropriate ownership ratio helps investors comply with legal procedures and protect their interests during business operations. The article below will provide detailed insights and analysis on foreign ownership ratios in Vietnamese enterprises, helping investors better understand the relevant legal regulations and prepare more effectively before carrying out investment transactions.

FOREIGN OWNERSHIP IN VIETNAMESE ENTERPRISES: LEGAL PROCEDURES & REQUIREMENTS
FOREIGN OWNERSHIP IN VIETNAMESE ENTERPRISES

What Is Foreign Ownership?

Foreign ownership refers to foreign investors purchasing shares or contributing capital to an economic organization in Vietnam. The foreign ownership ratio is the percentage of capital contributed by foreign investors to a Vietnamese economic organization.

Pursuant to Article 8 of Law on Invesment 2025, the ownership ratio is one of the market access conditions applicable to foreign investors under the List of Restricted Investment Sectors, including:

        • Sectors with No Market Access: In this case, foreign investors are not permitted to invest or conduct business in such sectors; therefore, the ownership ratio is 0%.
        • Sectors Subject to Conditional Market Access: In this case, certain sectors impose a maximum foreign ownership limit. For example: (i) In the banking sector, total ownership ratio in a Vietnamese bank is generally capped at 30%; (ii) In the aviation sector, the ownership ratio limit is 34%.

For sectors not included in the List of Restricted Investment Sectors, foreign investors are entitled to the same market access conditions as domestic investors. In such cases, foreign investors may own up to 100% of the charter capital.

Cases of Foreign Ownership in Vietnam

Foreign investors seeking to hold ownership interests in Vietnamese enterprises generally proceed through one of the following methods: (i) Establishing a new economic organization; or (ii) Contributing capital, purchasing shares, or acquiring capital contributions.

Establishment of Foreign Invested Enterprise in VietNam

Establishing a foreign-invested enterprise is one of the most common methods for foreign investors to own capital in Vietnam. The process generally includes the following steps:

        • Step 1: Determine licensing conditions and operational scope
        • Step 2: Prepare investment documents and legal structure
        • Step 3: Submit the application and work with competent authorities
        • Step 4: Complete legal procedures and activate business operations
        • Step 5: Obtain business licenses and ensure post-establishment compliance

Capital Contribution, Share Purchase, or Acquisition of Capital Contributions

The ownership ratio in capital contribution or share acquisition transactions depends on the ownership limitations applicable to the relevant business sector. Different legal procedures apply depending on the foreign ownership ratio.

Foreign investors must carry out registration procedures for capital contribution or share acquisition in the following cases:

        • The capital contribution, share purchase, or acquisition increases the foreign ownership ratio in an economic organization operating in sectors subject to conditional market access for foreign investors.
        • The transaction results in:
                • Foreign investors or economic organizations specified holding more than 50% of the charter capital of the economic organization; or
                • An increase in foreign ownership from 50% or below to above 50%; or An increase in foreign ownership where foreign investors already hold more than 50% of the charter capital.
        • Foreign investors contribute capital or acquire shares/capital contributions in economic organizations holding land use rights certificates located in:
                • Islands or border communes/wards/townships;
                • Coastal communes/wards/townships;
                • Other areas affecting national defense and security.

Procedures for Capital Contribution or Share Acquisition:

        • Step 1: Review of legal conditions applicable to the transaction
        • Step 2: Conduct legal due diligence on the target enterprise
        • Step 3: Structure the transaction and negotiate agreements
        • Step 4: Carry out registration procedures for share or capital acquisition
        • Step 5: Complete the transfer and payment process
        • Step 6: Conduct post-transaction legal updates

In Conclusion, ownership ratio in Vietnam depends significantly on the market access conditions applicable to each business sector. Therefore, before contributing capital, purchasing shares, or establishing an enterprise in Vietnam, investors should carefully review the relevant legal conditions, foreign ownership limits, and procedures applicable to each specific industry. Proper preparation and compliance from the outset will help minimize legal risks and ensure a smooth investment process.

 

For legal consultation regarding foreign investment services in Vietnam, you may contact BKCLAW using the following information:

  • Phone: 0909 073 692
  • Email: info@bkclaw.vn

Venue 1: 9th Floor, Diamond Plaza Building, 34 Le Duan Street, Sai Gon Ward, Ho Chi Minh City

Venue 2: 41 Ten Lua Street, An Lac Ward, Ho Chi Minh City

 

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