The question in every M&A deal: what maximum percentage may foreign investors hold? The Foreign Ownership Limit (FOL) is not one number — each sector has its own cap, and since 2025 every public company must determine and disclose its own cap.
Common caps by sector
Public companies: default 49% of charter capital (Decree 155/2020/ND-CP) — unless specialized law provides otherwise. Commercial banks: aggregate foreign ownership capped at 30% of charter capital. Other sectors: caps follow international treaties and specialized laws — some allow 100% (ordinary manufacturing), some below 49% or 0% (sectors not yet market-accessible). The rule: check the cap against the target company’s registered business lines, not gut feeling.
New duty: self-determine and disclose FOL (Decree 245/2025)
Decree 245/2025/ND-CP (11/9/2025) requires public companies to determine and disclose their maximum foreign ownership ratio based on registered business lines. The landmark case: Vietnam Engine and Agricultural Machinery Corporation (VEAM) — the State Securities Commission confirmed its FOL cut from 49% to 0% because some registered lines (mining, metal ore wholesale, fuels…) are restricted for foreign investors. The lesson: the default 49% is no longer safe — every registered line must be cross-checked.
Strategy for M&A deals
(1) FOL due diligence before pricing: check the target’s disclosed FOL + cross-check registered lines — a lower-than-expected cap changes deal structure; (2) foreign room: for listed companies, verify remaining foreign room before buying — over-cap trades are not recorded; (3) indirect structures: in some cases, investing via a Vietnamese entity (not deemed a foreign investor) is a lawful route past direct caps — but must satisfy the “foreign-invested economic organization” test under the Investment Law.
Frequently asked questions
What is the default foreign ownership cap?
49% for public companies (Decree 155/2020); 30% for banks; other sectors per specialized law.
What does Decree 245/2025 require?
Public companies must self-determine and disclose their maximum foreign ownership ratio by registered business lines.
Why was VEAM’s FOL cut to 0%?
Some registered business lines are restricted for foreign market access.
What happens if I buy over the cap?
The excess portion is not recorded as ownership — the trade is ineffective accordingly.
FLAT Law Firm conducts FOL due diligence in M&A — from sector-cap lookup and foreign-room checks to lawful deal structuring.
