A foreign investor wires the money to buy 60% of the shares in a Vietnamese company and signs the contract, yet months later still cannot be recorded as a shareholder because a mandatory registration step was skipped, while the money already paid did not pass through the correct capital account and later proves hard to document when repatriating profits. In the merger and acquisition of enterprises in Vietnam, a single step taken out of sequence is enough to stall the entire deal and trap the capital.
Does the sector you want to buy into allow foreign investors to own the stake you need, or is there an ownership cap? Must your deal obtain state approval before the transfer is recorded, or is it enough to sign the contract and then register the change of shareholders? And should the purchase price be paid straight to the seller, or must it move through a dedicated capital account? These three questions decide whether an M&A deal closes in a few weeks or stalls for months, especially now that the 2026 legal landscape has shifted with a new Law on Investment taking effect. This article walks through the current legal framework, the step-by-step procedure and the risks commonly encountered, so that you can see the safe path before you sign.
The legal framework governing foreign-investor M&A in 2026
A cross-border M&A deal in Vietnam is governed at once by several bodies of law, and 2026 is a pivotal year in which most of them have just been renewed. The main axis is investment law: the Law on Investment 2025 (Law No. 143/2025/QH15), effective from 1 March 2026, replaces the 2020 Law on Investment, together with Decree 96/2026/NĐ-CP guiding its implementation, effective from 31 March 2026. Alongside it sit enterprise law for the procedure to change shareholders and to merge or consolidate companies, competition law for the control of economic concentration, and foreign-exchange rules for the flow of payment.
The first point to grasp is the negative-list approach of investment law: foreign investors are treated the same as domestic investors, except in the business lines that fall within the restricted list.
For you this means: if the target sector is not on the List of business lines with restricted market access for foreign investors, issued with Appendix I of Decree 96/2026, you may buy up to the same level as a Vietnamese investor. That list has two groups: lines not yet open to market access, where foreign investment is not allowed; and lines open subject to conditions, where you must satisfy requirements such as an ownership cap, the form of investment or the scope of operation. There is therefore no blanket yes or no for every sector; you must check the specific business lines of the target company.
The major change in 2026, and the point that many older online articles have not updated, is that a foreign investor may now establish the enterprise first and only afterwards apply for or adjust the Investment Registration Certificate, instead of being required to obtain that certificate first as under the old process.
Another administrative change to note: authority to issue the Investment Registration Certificate for projects outside industrial parks now rests with the Department of Finance, while projects inside industrial parks and economic zones are handled by the relevant Management Board. Knowing the right receiving authority saves you from losing time at the wrong window.
Three forms of M&A and when prior approval is required
Merger and acquisition is an umbrella term, but in legal terms there are several distinct routes, each entailing different procedures.
The most common route for foreign investors is a capital contribution or the purchase of shares or of a capital contribution in an operating company. This gives immediate access to the target company's customer base, licenses and organization. A helpful feature is that the Law on Investment 2025 places this form among those that do not require an Investment Registration Certificate (Article 26), unlike setting up a new investment project.
Even so, not requiring an Investment Registration Certificate does not mean the transfer may proceed freely. In certain cases, a foreign investor must first carry out the procedure to register the capital contribution or share purchase and obtain approval from the investment registration authority before the shareholders can be changed.
In short, the three cases requiring prior approval are: buying into a company that operates a business line conditional for foreigners, where the deal raises the foreign ownership ratio; a transaction that pushes the foreign ownership ratio past the 50% mark; or a target company that holds land in an area sensitive to national defense and security. Outside these three groups, the deal only needs the procedure to register the change of members or shareholders at the business registration authority.
The second route is a merger or consolidation of companies under the Law on Enterprises, whereby one company transfers all of its assets, rights and obligations to the receiving company and then ceases to exist. A key feature of this route is that the receiving company inherits all obligations, including unpaid debts, and the transaction must comply with competition law.
The third route is an asset purchase or the assignment of an investment project, suitable where the buyer wants only part of the operation or wishes to avoid the hidden liabilities of the target legal entity. Each route has its own advantages and drawbacks in tax, succession of liability and procedure, so choosing the right structure at the outset weighs heavily on cost and risk later.
The step-by-step procedure for a share purchase by a foreign investor
For the most common form, the purchase of shares or of a capital contribution, a deal typically proceeds through the following steps:
- Review the business lines and market access conditions. Determine whether the target company's sector is on the restricted list and what the foreign ownership cap is under specialized law and international commitments such as the WTO and free trade agreements. This step decides whether the deal is feasible at the stake you want.
- Conduct legal due diligence on the target company. Examine the state of capital, sub-licenses, major contracts, tax obligations, labor, disputes, intellectual property and any change-of-control provisions in the target company's contracts.
- Determine whether the deal must first register the capital contribution or share purchase. Compare it against the three cases in Article 21 of the Law on Investment set out above.
- File the registration dossier for the capital contribution or share purchase, if applicable. Submit one set of documents to the investment registration authority where the target company is headquartered, comprising the registration document stating the ownership ratio before and after and the expected transaction value, together with the investor's legal-status documents and the in-principle agreement.
- Receive the written approval. The investment registration authority reviews within the statutory time limit and then notifies in writing.
- Make payment through the capital account. Transfer the purchase money through the correct investment capital account, direct or indirect, depending on the structure of the deal.
- Register the change of members or shareholders. This is done at the business registration authority; the rights and obligations of the foreign investor are established only upon completion of this step. At the same time, update the beneficial owner information as newly required.
- Notify economic concentration if the thresholds are exceeded, and comply after closing. File a notification with the National Competition Commission before implementation if the deal meets the thresholds, then complete the investment reporting obligations and transfer taxes.
As to the time limit for the approval step, the implementing decree is fairly specific:
The 10-working-day mark is the processing time once the dossier is valid; it does not count the time to prepare or supplement the dossier, or the step of seeking opinions when the target company holds land in a sensitive area. In practice you should budget a buffer for preparation and for clarifying the business lines.
Two types of account must be distinguished: if, after the deal, the foreign investor holds 51% or more of the charter capital, or the company has an Investment Registration Certificate, then the company falls within the group of enterprises with foreign direct investment capital and uses the direct investment capital account. If the investor buys only a minority below that level, or buys into a public company already listed, the investor uses the indirect investment capital account. Choosing the right type of account from the very moment of payment is the condition for money to flow in and out smoothly later.
Legal risks and mistakes commonly seen in practice
Most of the trouble in M&A comes not from major disputes but from procedural steps that are skipped or done out of order. Below are the situations most often encountered.
Failing to check the sector ownership cap before negotiating. Many deals settle the price and the stake, only to discover when the dossier is filed that the target sector limits foreign ownership below the agreed level. The consequence is renegotiation from the start, or even collapse, after cost and time have already been spent.
Skipping the step to register the capital contribution or share purchase. Where the deal falls within the cases requiring prior registration, namely a conditional sector, crossing the 50% mark or sensitive land, and the parties simply sign the contract and take the dossier to change the shareholders, the business registration authority will not be able to record it. The transfer is left in limbo while the money may already have been paid.
Paying through the wrong channel. Transferring the purchase money straight to the seller outside the capital account is an error that is hard to remedy later, creating obstacles to repatriating the proceeds of a sale or the profits, and it may be penalized as a foreign-exchange violation.
Overlooking the obligation to notify economic concentration. For a sufficiently large deal, competition law requires notification before implementation.
The notification threshold is determined by total assets, total revenue on the Vietnamese market, the value of the transaction or the combined market share, with the specific levels set by the Government. Skipping this step when it is required may lead to penalties and affect the implementation of the deal, so the threshold should be assessed as early as the valuation stage.
Cursory due diligence, then inheriting hidden debts. Buying shares means buying the company's entire history: tax arrears, obligations to employees, unfavorable contracts, unregistered intellectual property. In a merger, the receiving company automatically inherits the obligations and unpaid debts of the merged company, so a contract that lacks protective clauses can cost the buyer dearly.
Using a Vietnamese nominee to circumvent the conditions. When blocked by an ownership cap, some investors ask a Vietnamese individual or company to hold the stake on their behalf. This is a high-risk choice: the investor may lose control of the capital, find it hard to recover in a dispute, and the transaction risks being treated as a sham. The safer course is to restructure the deal within the permitted ratio, or to choose a suitable sector and model.
DEDICA's role in a foreign investor's M&A deal
DEDICA accompanies foreign investors through the entire life cycle of a deal: reviewing the business lines and the ownership cap to determine whether the deal is feasible and in what structure; conducting legal due diligence on the target company to uncover hidden debts and risks before money changes hands; drafting and negotiating the contract with clauses that protect the buyer; carrying out the procedure to register the capital contribution or share purchase and to change the business registration; advising on the payment channel through the capital account in compliance with foreign-exchange rules; and assessing and preparing the economic concentration notification dossier where needed. Our team combines legal staff with experienced lawyers and offers bilingual support in English and Chinese, so the final work product is always reviewed by a lawyer before delivery.
After the deal closes, the legal work does not stop. An enterprise with foreign capital must still update its beneficial owners, carry out periodic investment reporting, and handle labor and contract matters on takeover. Through its ongoing legal advisory service, DEDICA can continue to act as the enterprise's outsourced legal department, ensuring that post-closing compliance is not overlooked, at a more reasonable cost than building an in-house legal team.
Conclusion
A foreign investor's M&A deal in Vietnam in 2026, in the form of a share or capital-contribution purchase, typically follows this sequence: (1) review the business lines and the ownership cap; (2) conduct legal due diligence on the target company; (3) determine whether it must first register the capital contribution or share purchase; (4) file the registration dossier with the investment registration authority and await notification within the statutory time limit; (5) pay through the correct capital account; (6) register the change of members or shareholders at the business registration authority and update the beneficial owners; (7) notify economic concentration if the thresholds are exceeded and complete the reporting and tax obligations. The three mistakes that most often leave a deal stuck are failing to check the sector ownership cap before negotiating, skipping the approval step when it is mandatory, and transferring money outside the capital account. The surest approach is to fix the correct structure and procedural obligations before signing, rather than scrambling once the money has moved and the dossier has been filed at the wrong window.
Every M&A deal has its own particulars of business line, ownership ratio, transaction structure and the foreign buyer's profile. DEDICA Law Firm accompanies you from reviewing the sector and conducting due diligence on the target company, through negotiating the contract, to completing the transfer procedure and ensuring the capital flows in compliance with the rules. Contact DEDICA for a lawyer to advise on your specific deal before you sign.
This article is for reference based on the law in force at the time of writing. Each deal has its own facts; please consult a DEDICA lawyer for advice tailored to your situation.
