Not every M&A deal with a foreign element can be executed “freely”. Investment law requires foreign investors to register capital contributions, share purchases and capital contribution purchases with the investment registration authority before implementation in certain cases — typically when the purchase increases the foreign ownership ratio in a company using land, or when the target company operates in a conditional market access sector. Skipping this registration step and executing the deal is a violation that can result in the subsequent enterprise registration change not being recognized. In addition, transactions above thresholds must also notify economic concentration under competition law.
For FLAT LAW FIRM’s clients, a good legal analysis must answer three questions: whether the dossier has sufficient basis, which authority is competent at the time of implementation, and which option reduces risk while fitting the client’s commercial or family objectives.
This article is written practically, makes no commitment to outcomes, and does not replace individual advice. The analyses are built on current legal sources, using cautious authority naming following changes to state machinery, administrative boundaries and the court system.
Quick summary
| Topic | M&A approval for foreign investors |
|---|---|
| Suitable for | FDI companies, foreign investors and in-house legal teams. |
| Points to check | Party standing, supporting documents, competent authority, implementation timelines and risks arising at filing time. |
| Desired outcome | A clear action plan, standardized documents, quantified risks, and business/family decisions made on a cautious legal basis. |
Main legal issues: M&A approval for foreign investors
Not every M&A deal with a foreign element can be freely executed. Investment law requires foreign investors to register capital contributions, share purchases and capital contribution purchases with the investment registration authority before implementation in cases prescribed by law — typically when the purchase increases the foreign ownership ratio in an enterprise, or when the target company operates in a conditional market access sector for foreign investors. Skipping the registration and executing the deal means the company cannot complete the business registration change and the transaction lacks full effect.
The second legal layer is competition: an M&A transaction may constitute an economic concentration under the Law on Competition 2018 (No. 23/2018/QH14). When the transaction value or combined market share exceeds the thresholds (Article 13 of Decree 35/2020/ND-CP), the parties must notify the economic concentration to the National Competition Commission before implementation. Executing a notifiable transaction without notification may be sanctioned and subject to remedial measures.
The third layer is tax and foreign exchange: the transferor declares tax on the capital transfer; the foreign investor’s share purchase payment must be settled through the capital account per regulations. In addition, for public companies or special transactions, public tender offer and information disclosure obligations may arise under securities law — requiring separate review.
Details of each approval layer
Layer 1 — Registration of capital contribution, share purchase, capital contribution purchase. Under the Law on Investment 2025 (No. 143/2025/QH15, effective 01/3/2026, replacing the Law on Investment 2020), foreign investors must complete the registration procedure with the investment registration authority before executing the transaction in cases prescribed by law — typically: (i) the purchase increases the foreign investor’s ownership ratio in an economic organization using land on islands, border communes/wards, coastal areas or other areas affecting national defense and security; (ii) the target economic organization operates in a conditional market access sector for foreign investors. The dossier is filed with the competent investment registration authority (the Department of Finance or the Industrial Park/Economic Zone Management Authority depending on the project location). The approval instrument is a prerequisite for executing the transaction and completing the subsequent enterprise registration change — see details at Registering foreign investors’ capital contributions.
Layer 2 — Economic concentration notification. An M&A transaction may constitute an economic concentration under the Law on Competition 2018 (No. 23/2018/QH14). When exceeding the notification thresholds in Article 13 of Decree 35/2020/ND-CP (assessed by total assets, total revenue, transaction value or combined market share on the relevant market), the parties must notify in writing to the National Competition Commission and may only execute the transaction after receiving the authority’s opinion or the expiry of the statutory review period. Executing a notifiable transaction without notification may be administratively sanctioned and subject to remedial measures.
Layer 3 — Tax and foreign exchange. The capital transferor declares and pays corporate income tax on capital transfer income (20% rate on taxable income under current tax law). The foreign investor’s payment flows must go through the capital account under foreign exchange management rules — see Direct investment capital accounts for FDI companies.
Read together: Checklist for share purchases in Vietnamese companies (pre-deal legal due diligence framework) and Protecting minority shareholders in M&A transactions (protection mechanisms when the buyer holds only a minority stake).
Legal basis and verification sources
- Law on Investment 2025 (No. 143/2025/QH15)
- Law No. 76/2025/QH15 amending the Law on Enterprises 2020
- Decree 168/2025/ND-CP on enterprise registration
- Decree 29/2025/ND-CP on the functions and tasks of the Ministry of Finance
- Resolution on the 2025 provincial-level administrative unit rearrangement
- Resolution 203/2025/QH15 amending the Constitution on administrative units
Handling process or dossier checklist
Step 1 — Determine whether registration is required: match the transaction against the cases requiring registration of capital contribution, share purchase and capital contribution purchase under the Law on Investment (increased foreign ownership ratio, conditional sectors…).
Step 2 — Assess economic concentration: calculate the transaction value and combined market share; compare against the thresholds in Decree 35/2020/ND-CP; if exceeded, prepare the economic concentration notification dossier.
Step 3 — Legal due diligence on the target company: review legal standing, land, licenses, labor, tax and disputes — the basis for price negotiation and protective terms.
Step 4 — Complete approval procedures: file the capital contribution/share purchase registration with the investment registration authority (before executing the transaction); file the economic concentration notification (if required); await approval.
Step 5 — Sign, settle and close: sign the share purchase agreement (SPA); settle through the capital account; the transferor declares tax; update the shareholder register/enterprise registration change.
Common risks
Risk 1 — Skipping capital contribution/share purchase registration: executing a registrable transaction without registration; unable to complete the business registration change, the transaction lacks effect.
Risk 2 — Missing the economic concentration notification: an above-threshold transaction not notified; sanctioned and possibly ordered to restore the original state or subject to remedial measures.
Risk 3 — Wrong payment method: the foreign investor’s share purchase payment not going through the capital account; the transaction not validly recorded.
Risk 4 — No due diligence on the target: inheriting the target’s tax debts, disputes and license violations; the purchase price not reflecting true value.
Risk 5 — Missing securities obligations: the target is a public company without a public tender offer or information disclosure; securities sanctions.
Competent authority and filing agency
Registration of capital contributions, share purchases and capital contribution purchases by foreign investors is done at the investment registration authority (the Department of Finance) where the target company has its head office, before executing the transaction. The economic concentration notification is filed with the National Competition Commission when the transaction exceeds the thresholds under Decree 35/2020/ND-CP.
Post-deal member/shareholder changes are done at the business registration authority (the Department of Finance). Capital transfer tax declarations go to the directly managing tax authority; payments through the capital account at a permitted bank under foreign exchange rules.
When to contact a lawyer
A lawyer should be involved in every M&A deal with a foreign element — this is nearly mandatory given the multi-layered procedures. Three signs to engage a lawyer early: (1) as soon as there is a purchase intention, to determine whether the transaction is subject to capital contribution/share purchase registration and exceeds economic concentration thresholds; (2) before signing any memorandum, to design the deal structure, conditions precedent and protection mechanisms; (3) when the target operates in a conditional sector or is a public company — additional specialized obligations need review.
What FLAT LAW FIRM supports
FLAT LAW FIRM supports document review, legal issue identification, source-of-law verification, evidence assessment and building handling roadmaps in Vietnamese, Chinese and English.
For foreign clients or Chinese-speaking investors, we help translate business or family requirements into specific legal checklists, avoiding crude machine translation and ensuring key terms are understood consistently among the parties.
The support scope may include initial advice, document drafting, contract review, dossier standardization, working with related parties, preparing dispute materials and coordinating with lead counsel when representation in formal procedures is needed.
See also related pages: Foreign investment in Vietnam | Ongoing legal advisory | Contact | Legal insights
FAQ
In which cases must a foreign investor register capital contribution or share purchase?
When the capital contribution/share purchase increases the foreign investor’s ownership ratio in an economic organization using land on islands, border communes/wards, coastal areas or other areas affecting national defense and security; or when the target company operates in a conditional market access sector.
Where to register, and before or after signing the contract?
Register with the investment registration authority before executing the capital contribution or share purchase; the approval instrument is a condition for proceeding with the deal.
What if the deal is not subject to registration?
Execute the transaction per the contract and complete the enterprise registration change; other obligations must still be reviewed (tax, economic concentration if above thresholds).
Must an M&A deal notify economic concentration?
If it exceeds the notification thresholds in Article 13 of Decree 35/2020/ND-CP, it must be notified to the National Competition Commission before implementation.
How is the share purchase paid?
Through the capital account under foreign exchange management rules for transactions with a foreign element.
When is a lawyer needed?
Before signing any binding document — to determine whether registration applies, as this is the easiest point to get wrong.
