PROCESS FOR FOREIGN INVESTORS ACQUIRING CAPITAL CONTRIBUTIONS IN VIETNAMESE COMPANIES (M&A)

Foreign investors may enter the Vietnamese market through two main methods: establishing a foreign-invested company or acquiring capital contributions in Vietnamese company. The suitable option depends on the business sector, investment objectives, development strategy, and market access conditions under Vietnamese law and international commitments. In practice, many foreign investors prefer the M&A method because it offers several advantages, such as: (i) saving market entry time; (ii) utilizing the existing resources of Vietnamese companies; and (iii) facilitating business expansion. The article below provides a detailed guide to the process for foreign investors acquiring capital contributions in Vietnamese companies (M&A).

Reviewing Legal Conditions of the Transaction

In foreign related M&A transactions, the first step is reviewing the legal conditions of the transaction. Foreign investors contributing capital, purchasing shares, or acquiring capital contributions in economic organizations must satisfy the following conditions:

• Market access conditions applicable to foreign investors;
• National defense and security requirements;
• Land law regulations regarding land use rights, especially in islands, border areas, coastal areas, and locations affecting national security.

In addition, investors should review the target company and foreign ownership limits under Vietnamese law and international commitments. This stage helps determine the appropriate transaction structure and supports the next steps in the process.

Legal Due Diligence on the Target Company

After determining the legal conditions, the next step is conducting Legal Due Diligence on the Target Company. This is an important process to comprehensively assess the legal status of the company before carrying out the acquisition or capital transfer transaction.

The due diligence process helps investors identify legal risks, evaluate compliance status, and verify the feasibility of the transaction. Key review areas include:

• Ownership structure, charter capital, and company charter;
• Commercial contracts, financial obligations, and liabilities;
• Tax, labor, and licensing compliance;
• Potential disputes and contingent liabilities.

The due diligence results provide an important basis for investment decisions, business valuation, contract negotiation, and post-M&A risk control mechanisms.

Structuring the Transaction and Negotiating Agreements

After obtaining the due diligence results, the consulting firm needs to determine the transaction structure and negotiate the agreement. The advisory team should recommend an appropriate transaction structure, including the following transaction types:

• Share purchase or capital contribution acquisition;
• Subscription to newly issued shares;
• Combination of both methods.

After selecting the transaction structure, the parties will draft and negotiate M&A transaction documents, including:

• Share Purchase Agreement (SPA);
• Shareholders Agreement (SHA);
• Payment terms and conditions precedent (CP);
• Representations, warranties, and indemnification mechanisms.

Carefully drafted legal documents help balance the parties’ interests, reduce disputes, and protect investor rights throughout the M&A transaction.

Carrying Out the Capital Contribution Registration Procedure

The next step in the M&A process is to carry out the procedures for registration of capital contribution acquisition in certain cases. Accordingly, the consulting firm will represent the investor in preparing and submitting the application dossier for registration of the acquisition of capital contributions or shares to the competent investment registration authority, such as the Department of Finance or the Management Board of Industrial Zones, in accordance with Clause 3, Article 21 of Law on Invesment 2025, if the transaction falls under one of the following cases:

(i) The capital contribution, share purchase, or acquisition of capital contributions increases the ownership ratio of foreign investors in an economic organization operating in sectors or trades subject to market access conditions applicable to foreign investors;

(ii) The capital contribution, share purchase, or acquisition of capital contributions results in a foreign investor or economic organization holding more than 50% of the charter capital of the economic organization in the following circumstances:

• Increasing the foreign investor’s ownership ratio from 50% or less to more than 50%;
• Increasing the foreign investor’s ownership ratio where the foreign investor already holds more than 50% of the charter capital in the economic organization;

(iii) A foreign investor contributes capital to, purchases shares in, or acquires capital contributions of an economic organization holding a land use rights certificate for land located on islands, in border communes/wards/special administrative zones, coastal communes/wards, or other areas affecting national defense and security.

During the implementation process, the consulting firm will work directly with the relevant state authorities, monitor the processing status of the application, provide explanations, and supplement documents as requested in order to complete the approval procedures before the parties proceed with the transfer and settlement of the transaction payment.

Completing the Transfer and Payment

The next step in the process is to complete the transfer and settle the transaction payment. After all legal conditions have been fulfilled and approval has been obtained from the competent authorities, the parties shall proceed with the execution of the official transfer agreement and the payment.

For foreign investment transactions, the payment must comply with Vietnam’s foreign exchange control regulations. Specifically, foreign investors are required to remit capital contributions or payments for the purchase of shares or capital contributions through a Direct Investment Capital Account (DICA) opened at a bank in Vietnam. This is a designated account used for capital contributions, capital transfers, profit remittances, and other cash flows related to foreign direct investment activities.

Post-Transaction Legal Updates

After completing the transfer procedures, the investor or consulting firm should carry out the necessary post-transaction legal updates to record the changes. These legal updates include amending the Enterprise Registration Certificate (ERC) to update the list of members or shareholders, information relating to foreign investors, the ownership structure, the legal representative, and other amended contents.

In addition, where the transaction results in changes to the fundamental contents of the investment project, procedures for amending the Investment Registration Certificate (IRC) must also be carried out in accordance with applicable laws. At the same time, other information may also need to be updated, including bank account details, tax-related information, and relevant sector-specific licenses, in order to ensure consistency and compliance with legal regulations.

Post-M&A Compliance and Corporate Governance

In the final stage, the company must continue implementing post-M&A compliance and corporate governance activities to stabilize its management structure and ensure full compliance with legal obligations arising after the investment. This stage typically includes restructuring corporate governance, adjusting voting rights, internal control mechanisms, profit distribution, and management rights among new shareholders or members.

At the same time, the enterprise must monitor and fulfill important legal obligations such as submitting periodic investment reports, contributing capital in accordance with the committed schedule, maintaining business conditions for conditional business lines, and updating relevant licenses. Effective post-M&A compliance control not only helps the enterprise operate stably but also minimizes legal risks and creates a solid foundation for future business expansion.

The above article has outlined the detailed steps involved in the process of a foreign investor acquiring capital contributions in a Vietnamese company. Proper implementation of the legal procedures will help minimize risks, ensure the legality of the transaction, and facilitate the enterprise’s stable operation after the investment.

To receive legal consultation Process for foreign investors acquiring capital contributions in Vietnamese companies, you may contact BKCLAW through the following information:

Phone: 0900 073 692

Email: info@bkclaw.vn

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

Binh Tan Office: 41 Ten Lua Street, An Lac Ward, Ho Chi Minh City