A Guide to Capital Contribution and M&A Procedures for Foreign Investors in Vietnamese Companies: Registration Obligations, Documentation, and Practical Points of Caution

NEXORA LAWFIRM provides one-stop support — covering legal, tax, foreign ownership regulation, licensing review, and competition law matters — for M&A (acquisitions, capital tie-ups, and capital contributions) undertaken by foreign investors and foreign-invested companies in Vietnam. Our Vietnamese lawyers, well versed in practice, provide thorough support to prevent legal risk and optimize deal structuring. In this category, we present practical information and legal points of caution relevant to each stage of Vietnam M&A, including "the flow of Vietnam M&A procedures," "due diligence (DD)," "the Share Purchase Agreement (SPA)," "investor registration and changes in the ownership ratio," "the difference between an approval-based regime and a prior-notification regime," and "handling post-closing obligations."

01 - Registration Obligations for Foreign Investors Acquiring Capital Contributions, Shares, or Equity Interests — In Which Cases Is Registration Required?

1.1. Cases Requiring M&A Approval

Under Vietnam's Law on Investment (Article 26(2) of the 2020 Law on Investment), a foreign investor is required to undergo a registration procedure (the M&A approval procedure) when acquiring a capital contribution, shares, or an equity interest, if any of the following applies.

■ Acquisition of Shares in a Conditional Sector

Where the target company operates in a sector that is conditional (i.e., subject to restricted market access) for foreign investors, and the M&A will increase the foreign investor's ownership ratio, a registration procedure is required.

■ Where the Foreign Investor's Ownership Ratio Will Exceed 50%

Where the M&A will result in the ownership ratio of the foreign investor (or an economic organization deemed to be a foreign investor) exceeding 50%, registration is mandatory. Specifically, the following two cases are covered:

Where the ownership ratio increases from 50% or below to above 50%
Where a foreign investor already holding more than 50% further increases that ratio

■ Acquisition of a Company Holding Land Use Rights in a Specified Area

A registration procedure is also required where the target company holds a Land Use Right Certificate (the "red book") in one of the following specified areas:

An island area
A border area (islands, towns and communes bordering another country, etc.)
A coastal area
Any other specified area affecting national defense or security

1.2. Cases in Which M&A Approval Is Not Required

Under the law, where none of the above applies, a foreign investor may acquire shares or an equity interest directly, without going through a prior registration or approval procedure.

In practice, however, the procedure does not always proceed strictly according to the law. In the M&A context in particular, even where registration is not legally required, the local business registration authority may sometimes still require that the M&A approval procedure be carried out. This is thought to reflect differences in interpretation or practice among individual officials, or a cautious approach involving prior review.

For this reason, to move an M&A procedure forward smoothly, it is extremely important to confirm the matter in advance with the relevant business registration authority, or to consult a local legal professional (lawyer). This helps avoid the risk of the procedure being sent back or delayed after proceeding on the assumption that registration was unnecessary.

👉 For more detailed practical points and countermeasures, please also refer to the following guide article:
A Practical Guide to Vietnam M&A for Japanese-Affiliated Companies: The Law, Procedures, Risks, and Keys to Success Explained in Full

02 - Overview of the Registration Procedure (M&A Approval Procedure) for Foreign Investors Acquiring Capital Contributions, Shares, or Equity Interests

As noted above, where an M&A transaction falls within a case subject to a registration obligation (or where the authority requires it), the foreign investor must carry out the registration procedure for acquiring the capital contribution, shares, or equity interest — namely, the "M&A approval procedure." Below, we explain the outline of this procedure and points to note in practice.

2.1. Principal Documents Required for Submission

① Registration Application
An application must be prepared in the prescribed form, including the following information:

Business registration information of the economic organization in which the foreign investor plans to acquire a capital contribution, shares, or equity interest
The economic organization's business activities and sector
A list of owners, members, and founding shareholders, and details of any foreign investors among them
Changes in the ownership ratio (before and after the capital contribution)
The actual transaction price
Information on any investment projects held (where applicable)

② Legal Documents of the Parties Concerned

Where the foreign investor is an individual: a copy of a valid passport (Vietnamese translation and notarization of the translation required)
Where the foreign investor is a corporate entity: certificate of incorporation or company registration certificate, etc. (consular legalization plus notarization of the translation required)
The target company (Vietnamese company): copies of a valid IRC and ERC

③ Copy of the Land Use Right Certificate
Required only where the target company holds land in an area relating to national defense or security, such as an island, a border area, or a coastal area. This allows the authority to determine whether consultation with the Ministry of National Defense or the Ministry of Public Security is necessary.

④ Related Contractual Documents
A full set of contractual materials evidencing the transaction, such as the capital contribution resolution, the share transfer agreement, and the equity transfer agreement.

⑤ Supplementary Explanatory Documents
In many cases, the authority will request an explanation regarding the legality of the M&A transaction or the investor's eligibility (for example, proof of funds, or an explanation of compliance with conditions for a conditional sector).

⑥ Power of Attorney
Where the target company delegates the procedure to a representative, a formal power of attorney is required.

2.2. Competent Authority

The procedure is received and reviewed by the local Department of Planning and Investment (now transitioning to the Department of Finance, etc.) having jurisdiction over the location of the target company's head office.

2.3. Estimated Timeframe
Standard timeframe: where all documents are correctly submitted, approval is generally obtained in approximately 1.5 to 2 months.
Possibility of extension: in the following cases, consultation with a central ministry is required, which can take 3 to 4 months or longer.
Where the sector is conditional
Where the sector is not listed in Vietnam's WTO Schedule of Specific Commitments on Services
Where the land held is in an area relating to national defense or security

2.4. Fees

At present, no state fee is charged for this registration procedure. However, in practice, external costs will arise for matters such as legalization, translation, and preparation of the power of attorney.

03 - Practical Points of Caution and Advice for Foreign Investors: Keys to a Successful M&A Procedure

Below, we summarize the points that require attention at the preparatory stage, together with advice based on practical experience, to help foreign investors carry out M&A transactions in Vietnam smoothly.

3.1. Accurate Confirmation and Advance Coordination of the Target Company's Business and Sector

At the initial stage of the investment decision, it is essential to obtain the target company's list of registered business lines and cross-check it against the list of conditional sectors for foreign investors set out in the decree implementing the Law on Investment.

Where the sector is conditional, it is necessary to accurately understand the specific conditions involved and prepare accordingly, such as:

The cap on the ownership ratio
A requirement to form a joint venture with a Vietnamese company
Restrictions on the legal form of the entity
Minimum legal capital requirements
Whether a track record of business operation is required, etc.

For example, retail (establishment of a retail outlet) may require an Economic Needs Test (ENT), and advertising may require a joint venture with a Vietnamese partner. Building a structure that satisfies these conditions increases the likelihood of obtaining approval while also reducing the risk of post-investment legal violations.

3.2. Confirming the Foreign Ownership Ratio

Whether registration is required depends significantly on the change in the ownership ratio held by foreign investors. It is therefore important to accurately calculate the aggregate ownership ratio of all foreign shareholders both before and after the M&A transaction.

3.3. Prepare Documentation Early and in Proper Legal Form

Documents issued abroad in particular (certificates of incorporation, passports, etc.) require consular legalization and notarization of the translation, which can take longer than expected. It is therefore important to identify the required documents at an early stage, taking care to avoid using expired or outdated versions.

For translation, using a specialized translation firm is advisable to avoid mistranslation of legal terminology, which reduces the risk of requests for supplementary correction due to deficiencies in content.

3.4. Accuracy and Consistency of the Contents of the Application

The registration form (e.g., Form A.I.7) must accurately and completely state matters such as:

The target company's enterprise code and industry code
The ownership ratio (to two decimal places)
The transaction amount (typically denominated in VND or USD)
A clear indication of whether the sector is conditional

If the content stated in the application is inconsistent with the shareholders' agreement or the transfer agreement, there is a risk that the review will be delayed or the application rejected.

3.5. Opening an FDI Account and Managing Funds Carefully

Where the M&A results in an FDI enterprise with foreign ownership exceeding 50%, a dedicated FDI capital account (FDI account) must be opened before the capital contribution is made. After obtaining approval, it is important to promptly contact a commercial bank and present the relevant documents (the approval, the contract, the IRC/ERC, etc.) to open the account.

In addition, any remittance of funds from abroad must be carried out through this FDI account, and it will also serve as supporting documentation for future profit remittance and capital recovery. Even for companies that do not qualify as FDI, remittances must be made through official banking channels. Remittance in cash or through unofficial channels would constitute a violation of foreign exchange law and could develop into a serious problem in the future.

3.6. Making Use of Specialists and Designing Contingency Plans

Depending on the particular nature of the sector or location, approval may take time to obtain or may not be granted at all. It is therefore important to work with a lawyer or consultant well versed in Vietnamese law, and to build a framework that facilitates smooth prior confirmation and negotiation with the authorities.

It is also advisable to prepare a contingency plan in case approval is not granted. For example:

Lowering the acquisition ratio
Satisfying the relevant conditions through a joint venture with a Vietnamese partner
Reconsidering the target sector, or establishing a new legal entity, etc.

Having such a flexible approach makes it possible to press ahead with the investment, even if some adjustment to the plan becomes necessary, without abandoning it altogether.

M&A transactions by foreign investors in Vietnam tend to become complex due not only to conditions under the legal system, but also to variations in practical operation, regional differences, and sector-specific restrictions. In particular, the following points are important risk-management considerations for investors:

Accurately determining whether registration is required, and thoroughly confirming and understanding the regime in advance
Starting document preparation early and reliably satisfying legal requirements (translation, notarization, legalization)
Managing funds through official channels in accordance with the ownership ratio and the definition of FDI
Responding to regulations applicable to conditional sectors and specified areas
Designing a flexible contingency plan in case approval is not granted

Moreover, because the application is not merely a formality — consistency and reliability of its content are given significant weight — the involvement of a specialist well versed in local law is indispensable.