Quite a few Japanese investors entered Vietnam with a cautious initial ownership ratio, then after several good operating years want to raise it — buying more capital from the Vietnamese partner or another investor to take greater control and expand operations. Procedurally this “top-up purchase” is no different from an ordinary capital acquisition, but it has its own sensitive point: every additional percentage point of foreign ownership must pass through the sector’s market access condition filter. Written for Vietnamese enterprises and Japanese investors planning expansion, this article sets out the two top-up routes, the approval gate, and how to check the sector ownership cap.
1. The two top-up routes and their core difference
Route 1 — Buying from an existing member/shareholder: the Japanese investor buys part or all of a partner’s capital (usually the Vietnamese partner in a joint venture, or another withdrawing foreign investor). This is a pure capital transfer: passing the remaining members’ pre-emptive right (Article 52 of the Law on Enterprises 59/2020/QH14, if the seller is an LLC member), a transfer agreement, the seller’s capital transfer tax, and member/shareholder change registration. Total charter capital is unchanged — only the ownership structure changes. Route 2 — Receiving new capital via a charter capital increase: the company increases capital and the Japanese investor subscribes the additional portion, raising their ratio relatively. This route is not a “transfer” (no seller, no capital transfer tax) but a capital increase procedure tied to amending the investment certificate as to capital — yet it touches the same filter: the post-increase foreign ownership ratio must still sit within the sector cap, and the foreign investor’s new contribution still travels through the ICA channel. Distinguishing the two routes at the deal’s very first meeting is essential, because their files, taxes and timetables differ fundamentally, even though the result on the shareholder structure table may look identical.
2. The approval gate when foreign ownership increases
Under the Law on Investment 143/2025/QH15, a foreign investor acquiring capital contributions/shares in an economic organisation must register and obtain the investment registration authority’s approval before the enterprise changes members/shareholders, in the statutory cases — centrally where the acquisition increases the foreign investor’s ownership ratio in an enterprise operating in a market-access-conditioned line for foreign investors. For a Japanese investor raising its ratio in a conditioned-sector joint venture, this is the textbook approval scenario: the capital acquisition registration file comprises the registration document, transaction information, the Japanese investor’s status and financial capacity documents (Japanese documents consularly legalised/notarised-translated), and the target’s documents. Conversely, if the enterprise operates entirely outside market-access-conditioned lines, the Japanese investor’s ratio increase (even to 100%) follows the ordinary change registration procedure with no separate acquisition approval. Determining which category the target falls into is the first due diligence step — and it must be determined across the company’s entire actually-operating registered business lines, because a “dormant” conditioned line in the business registration can pull the whole deal into the conditioned category.
3. Sector ownership caps: check before fixing the target ratio
Vietnam has no single foreign ownership cap for all sectors; each conditioned sector has its own cap under international commitments and specialised law — for example distribution services, logistics services (with sub-sector caps such as transport, cargo handling), financial services, telecommunications, education, real estate under their own regimes. When a Japanese investor sets a target ratio (for example from 49% to 65% for an absolute majority, or to 100% for a wholly-owned subsidiary), the question to answer first in a legal writing is: does the company’s sector permit that ratio, and at that ratio must the enterprise meet any additional conditions (legal capital, sub-licences tied to ownership ratio, management personnel conditions)? If the sector cap sits below the target ratio, the deal must be restructured rather than forced: hold the ratio at the cap and achieve substantive control through lawful governance mechanisms (shareholders’ agreement, voting proxies, board structure under the charter), or spin the conditioned activity into a separate legal entity. A top-up deal breaching the sector cap will be stopped at the approval/registration gate — and money already paid inside a cap-breaching structure is the most expensive remediation situation of this deal type.
4. The file, the cash flow and realistic completion time
A typical top-up deal file comprises: the capital acquisition approval file (if in the category) with the Japanese investor’s legalised documents; the record of handling remaining members’ pre-emption (for an LLC); the transfer agreement with price and tax clauses (capital transfer tax belongs to the seller — foreign organizations bear CIT 20% on income, individuals the PIT regime — with corresponding withholding through the Vietnamese side); payment evidence through the Japanese investor’s ICA under Circular 38/2026/TT-NHNN; and the member/shareholder change registration file with the Investment Registration Certificate amendment. On time: a deal outside the approval category with Japanese documents prepared in advance usually completes within a few weeks; a deal in the approval category adds the investment registration authority’s appraisal round and depends heavily on the completeness of the financial capacity file and transaction explanation — overall typically a few weeks to a few months. The most common bottleneck in Japanese investors’ expansion deals is not the Vietnamese authority but the Japanese group’s internal approval chain and the document legalisation step if started late — both are solved by starting the Japanese-side paperwork at the letter-of-intent stage, in parallel with the Vietnamese due diligence.
A Japanese investor wants to buy more capital to expand in Vietnam — what is the procedure?
Two routes: buying capital from an existing member/shareholder (a capital transfer — through the Article 52 pre-emption of the Law on Enterprises 59/2020/QH14 for an LLC, a transfer agreement, the seller’s transfer tax, change registration) or subscribing additional capital when the company increases charter capital (not a transfer, no transfer tax). Both routes must check the sector ownership cap, pay/contribute via the ICA (Circular 38/2026/TT-NHNN), and the Japanese investor’s documents require consular legalisation and notarised translation.
When a Japanese investor increases its ownership ratio, is M&A approval required?
Yes, in the statutory cases: under the Law on Investment 143/2025/QH15, a foreign investor acquiring capital that increases its ownership ratio in an enterprise operating in a market-access-conditioned line for foreign investors must register and obtain the investment registration authority’s approval before the enterprise changes members/shareholders. If the enterprise is outside conditioned lines, the ratio increase follows the ordinary change registration procedure with no separate approval.
Does the company’s sector limit a Japanese investor’s ownership ratio?
It depends on the sector: Vietnam has no general foreign ownership cap; each conditioned sector (distribution, logistics by sub-sector, finance, telecommunications, education…) has its own cap and conditions under international commitments and specialised law. Before fixing the target ratio, verify in writing: does the sector permit that ratio, and are there additional conditions at that ratio? A cap-breaching deal is stopped at the approval/registration gate; it must then be restructured (hold the ratio at the cap and use lawful governance mechanisms, or spin the conditioned line into a separate entity).
How long does completing a top-up acquisition take?
There is no overall statutory period. A deal outside the approval category with Japanese documents prepared in advance usually completes within a few weeks; a deal in the capital acquisition approval category adds the investment authority’s appraisal round, overall typically a few weeks to a few months depending on file completeness. The most common bottleneck is the Japanese group’s internal approval chain and late-started document legalisation — so begin the Japanese-side paperwork at the letter of intent stage.
