A foreign group set out to restructure its Vietnamese operations by merging two subsidiaries, yet three months later it still could not repatriate its profits: the Investment Registration Certificate had not been amended, and a tax obligation of the absorbed company remained unsettled. For an FDI company, restructuring is not simply a matter of filing paperwork with the business registration authority. It is a two-layer exercise, the enterprise layer and the investment layer, coupled with competition and foreign-exchange obligations.
When a foreign parent wants to combine two Vietnamese legal entities into one, where are the filings made and which licenses must be amended? Does a merger or a consolidation require notification to the competition authority, and if so, when? And if the goal is simply to close down an FDI company, why do so many businesses spend the better part of a year without completing the dissolution? Behind every restructuring option lies a chain of procedures across different layers, where missing a single step can freeze the entire process. This article examines the legal framework applicable from 2026, the specific sequence for each option (merger, division, and dissolution), and the risks that FDI companies frequently encounter in practice.
FDI restructuring operates on two legal layers
What makes restructuring a foreign-invested company more complex than a domestic one is that it always touches two sets of rules at once. The first is the enterprise layer: the nature and procedures of division, separation, consolidation, merger, and dissolution are governed by the Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective 1 July 2025). This layer applies to every business, FDI companies included.
The second is the investment layer. Because most FDI companies are tied to an investment project holding an Investment Registration Certificate (IRC), any change arising from restructuring must also be reflected at this layer under the Law on Investment 2025 (Law No. 143/2025/QH15). This is the key development of 2026: the Law on Investment 2025 replaces the Law on Investment 2020 and takes effect from 1 March 2026, so most older guides online no longer reflect the correct process. The new law allows a foreign investor to establish an economic organization before carrying out the procedure to issue or amend the IRC, and it expressly treats the division, separation, consolidation, or merger of an economic organization as a form of investment-project adjustment.
For some options a third, situational layer appears: competition law. When a merger or consolidation reaches a certain threshold, the business must file an economic-concentration notification before proceeding. What does this mean for you? It means each restructuring option must be planned in sync across all the layers involved. Completing the enterprise layer while forgetting the investment layer leaves the project's legal records inconsistent across authorities, which in turn creates obstacles for tax declarations, profit repatriation, and work permits for foreign personnel.
Merging and consolidating an FDI company: procedure and competition obligations
Merger and consolidation are often used interchangeably, but their legal consequences differ. A merger transfers all of the assets, rights, and obligations of the acquired company into an existing company and then terminates the acquired company. A consolidation creates an entirely new legal entity and terminates all of the former companies. For a group that wants to keep an existing entity (often because that entity holds licenses, contracts, or a brand), a merger is the more common choice.
At the enterprise layer, the merger sequence comprises the main steps: the companies involved prepare a merger contract and a draft charter for the acquiring company; the members' councils or general meetings of shareholders of the companies approve it; the merger contract is sent to all creditors and notified to employees within 15 days of approval; the acquiring company then registers the change in its enterprise registration contents, the acquired company ceases to exist, and the acquiring company inherits all rights and obligations, including outstanding debts and labor contracts. For an FDI company, the investment layer follows immediately: if the merger changes the main contents of the project, the IRC must be amended; if the foreign investor's ownership structure changes to a statutory threshold, the capital contribution or the purchase of shares or stakes must be registered before the members or shareholders are changed. In parallel, the acquired company's tax must be finalized.
The obligation most often overlooked in this group is the competition obligation. The Law on Enterprises itself refers to the Law on Competition for both options: "Companies carrying out a merger must ensure compliance with the provisions of the Law on Competition on company mergers" (Clause 3 Article 201), with a similar provision in Clause 3 Article 200 for consolidation. When the participating parties reach the notification threshold, they must file an economic-concentration notification with the National Competition Commission and wait for it to be processed before proceeding.
Dividing and separating an FDI company: when one entity splits into many
In the opposite direction from a merger, a business sometimes needs to carve a line of activity out into its own entity, whether to raise additional capital for it, to ring-fence risk, or to prepare for a divestment. The Law on Enterprises 2020 distinguishes two forms. A division splits the entire existing company into two or more new companies, and the divided company ceases to exist. A separation transfers part of the assets, rights, and obligations to establish one or more new companies while the separated company continues to operate.
| Form | Original entity | New entity | Inheritance of rights and obligations |
|---|---|---|---|
| Division | Ceases to exist | Two or more new companies | The new companies are jointly liable for the obligations of the divided company |
| Separation | Continues to exist, with capital reduced accordingly | One or more separated companies | The separated company and the newly separated companies are jointly liable (unless otherwise agreed) |
| Consolidation | The former companies cease to exist | One new consolidated company | The consolidated company inherits everything |
| Merger | The acquired company ceases to exist | None (absorbed into the acquiring company) | The acquiring company inherits everything |
At the enterprise layer, the procedures for division and separation are broadly similar: the members' council or general meeting of shareholders approves a resolution on the division or separation, setting out the plan for dividing assets, the plan for employees, and the method for converting capital contributions and shares; the resolution is sent to creditors and notified to employees within 15 days; the new companies are then registered. For a separation specifically, the separated company must also register the change in its charter capital and the number of members or shareholders corresponding to the portion transferred. One point to note is joint liability: after a division or separation, the new companies and the separated companies remain jointly liable for the outstanding debts of the original entity, unless otherwise agreed with creditors.
For an FDI company, the investment layer follows in step. When a project is divided or separated into multiple projects, or when an economic organization is divided or separated, the investor must carry out the procedure to amend or newly issue the Investment Registration Certificate for each corresponding portion of the project. In other words, each new FDI entity arising from a division or separation needs an investment foundation appropriate to its actual operations, rather than merely holding a new enterprise code.
Dissolving an FDI company: conditions, procedure, and bottlenecks
Dissolution is the option whose complexity is most often underestimated. On paper, it is the lawful termination of the company's existence; in practice, it is usually the most drawn-out process for an FDI company. First, the business must fall within one of the cases for dissolution under Article 207 of the Law on Enterprises 2020: the expiry of the operating term stated in the charter without an extension; a decision of the owner or the general meeting of shareholders; failing to maintain the minimum number of members or shareholders for six consecutive months without converting the enterprise type; or having the Enterprise Registration Certificate revoked. The third condition was just broadened by Law No. 76/2025/QH15 to add shareholders.
But the most decisive condition, and the point where every dissolution file comes to a halt, lies in Clause 2 of Article 207.
As for the procedure, Article 208 provides that the enterprise passes a resolution on dissolution, then within seven working days must send the resolution to the business registration authority, the tax authority, and employees, and simultaneously publish it on the National Business Registration Portal and post it at its head office. The enterprise organizes the liquidation of assets and settles its debts in order of priority: first, wage arrears, severance allowances, social insurance, and other employee entitlements; next, tax debts; and finally, other debts. After all debts are paid, the legal representative submits the dissolution dossier within five working days, and the business registration authority updates the legal status after the statutory period.
For an FDI company, that chain is only half the story. In parallel, the business must terminate the operation of the investment project and return the IRC, complete tax finalization (usually the most time-consuming step, as the tax authority reviews all obligations before allowing the tax code to be closed), close the direct investment capital account at the bank, and transfer the investor's remaining capital abroad in accordance with foreign-exchange management rules. It is precisely this interweaving of the enterprise layer, the investment layer, tax, and foreign exchange that makes the dissolution of an FDI company rarely as quick as businesses imagine.
Legal risks and common mistakes in practice
The most common mistake is handling only the enterprise layer and forgetting the investment layer. A company completes the merger registration or the change of business registration, then treats the matter as done, while the Investment Registration Certificate still carries the old information. The result is that the project's legal records are inconsistent across state authorities, creating obstacles when declaring tax, repatriating profits, or applying for and renewing work permits for foreign staff. Such a "suspended" state can quietly persist until the next reporting period or inspection brings it to light.
The second is overlooking the economic-concentration notification obligation when the threshold is met. Many parties assume that an internal arrangement between a parent and its subsidiaries needs no one's "permission," but the economic-concentration threshold is determined by total assets, revenue, transaction value, and market share, not by the ownership relationship. Proceeding with a merger or consolidation before completing the notification obligation is a well-founded legal risk, not an idle worry.
The third, in the dissolution group, is starting the procedure before the obligations have been cleared. A company files for dissolution while its tax is not yet finalized, its investment project has not been terminated, or its capital account has not been closed. Because the law permits dissolution only when all debts and property obligations have been paid, the file will stall until these items are complete. Alongside comes the foreign-exchange bottleneck: if not handled through the proper channel, the remaining capital after liquidation may be stuck and cannot be transferred back to the investor abroad.
The fourth concerns problems with foreign-sourced documents and with successor liability. Documents issued by the foreign parent, such as the owner's decision, the business registration certificate, or financial statements, will be rejected if submitted with an adjustment or dissolution file without consular legalization and a notarized translation. And after a division or separation, quite a few businesses forget that joint liability for old debts follows the new entities, so a creditor of the original company can still pursue the separated company. Taken as a whole, the notion that "combining or closing a company is just a quick administrative formality" is the most costly misconception: it is in fact a chain of steps across multiple layers, and getting the order between layers wrong usually means starting over.
How DEDICA supports FDI companies through restructuring
Most FDI companies that get stuck in restructuring are not there because they did something wrong, but because no one mapped out a route covering both layers from the start. This is precisely where an outsourced legal department proves its worth. Through its ongoing legal advisory service, DEDICA accompanies the business across the entire process: identifying the appropriate option (merger, consolidation, division, separation, or dissolution), reviewing the economic-concentration threshold and preparing the notification file where needed, drafting the merger contract, the division or separation resolution, or the dissolution dossier, and then working on the client's behalf with the business registration authority and the investment registration authority to keep the Enterprise Registration Certificate (ERC) and the IRC in sync. The team also coordinates tax finalization, the closing of the capital account, the transfer of capital abroad, and the consular legalization of the parent company's documents, with bilingual support in English and Chinese for foreign teams.
The difference is that every deliverable, from the option memo to the dossier, is reviewed by an experienced lawyer before handover, rather than left to a single junior legal staff member. Set against the cost of a project suspended for months, profits that cannot be repatriated, or a competition penalty, the cost of disciplined legal support is usually far smaller. DEDICA does not promise "you will certainly never be penalized"; it helps the business proceed in the right order across both layers so that nothing has to be redone.
Conclusion
Restructuring an FDI company in Vietnam in 2026 always operates on two layers: the enterprise layer under the Law on Enterprises 2020 (as amended by Law 76/2025) and the investment layer under the Law on Investment 2025, effective 1 March 2026. For a merger or consolidation, the sequence involves preparing the contract and resolution, sending it to creditors and notifying employees within 15 days, re-registering at the enterprise layer, amending the IRC at the investment layer, and, if the threshold is met, filing an economic-concentration notification before proceeding. For a division or separation, add the registration of the new entities, the adjustment of the separated company's capital, and the allocation of the investment project, while keeping joint liability for old debts in mind. For a dissolution, a company may close only after all debts are paid and no dispute remains, and it must complete, in parallel, the termination of the project, tax finalization, the closing of the capital account, and the transfer of capital abroad. The three errors that most prolong the process are: forgetting to amend the IRC at the investment layer, overlooking the economic-concentration notification obligation, and starting a dissolution before tax and the project have been cleared. The safest approach is to map out both layers in full before starting, or to hand the coordination to a lawyer from the very first step.
Each restructuring option carries its own specifics regarding business lines, foreign ownership structure, and outstanding financial obligations. DEDICA Law Firm accompanies FDI companies from choosing the option, mapping the two-layer route, and preparing the dossiers, through to synchronizing the ERC and the IRC and handling the capital in accordance with the rules. Contact DEDICA for a lawyer's advice on your company's specific situation before starting any procedure.
This article is for reference only, based on the legal provisions in effect at the time of writing. Each business has its own legal and financial circumstances; please consult a DEDICA lawyer for accurate advice on your particular case.
