Corporate Legal Due Diligence

Corporate legal due diligence: who is this service for?

• Domestic and foreign investors preparing to buy shares, capital contributions, or assets of a Vietnamese business.
• Sellers wanting to proactively review and “clean up” legal dossiers before offering (vendor due diligence) to avoid being squeezed on price when the buyer finds risks.
• Foreign investors undertaking capital contribution or share purchase transactions subject to registration under the 2025 Investment Law.
• Businesses preparing fundraising, share issuance, or internal restructuring needing legal standing verified before investors conduct DD.
• Parties in transactions likely to exceed economic concentration notification thresholds under the 2018 Competition Law.
• Parties in transactions likely to exceed economic concentration notification thresholds under the 2018 Competition Law.

Quick summary: corporate legal due diligence

Common legal issues clients face

Many M&A deals derail not over price but because the buyer discovers legal risks at the last minute: the target’s land is mortgaged to a bank, its enterprise registration certificate was never updated after a capital increase, or an exclusive distribution contract is expiring with no renewal clause. All of these can be caught early with a proper DD round.

For foreign investors, the distinctive risk lies in market access conditions: buying shares in a conditional business line without registering the capital contribution can leave the deal legally unclosable. The 2025 Investment Law and Decree 96/2026/NĐ-CP specify the cases where foreign investors must register capital contributions, share purchases, or capital portion purchases before proceeding.

Sellers often undervalue self-DD: an honest vendor DD report helps the seller proactively fix weaknesses, price realistically, and shorten negotiations — instead of passively waiting for the buyer to “peel” each issue for leverage.

What FLAT LAW FIRM does

• Designing DD scope fit to deal size: full-scope DD or focused red-flag review when time is tight.
• Buy-side DD: independently reviewing the target company, classifying risks by severity and remediability.
• Vendor DD: internal review, compiling a fix list before the sale, and preparing the data room.
• Drafting legal DD reports in Vietnamese and English, structured by risk group with concrete handling recommendations per point.
• Converting DD findings into contract terms: conditions precedent, seller warranties, indemnities, price retention, and price adjustment mechanisms.
• Advising on economic concentration notification obligations and preparing filings to the National Competition Commission when the deal exceeds thresholds.
• Advising on capital contribution, share purchase, and capital portion purchase registration procedures for foreign investors under the 2025 Investment Law and Decree 96/2026/NĐ-CP.
• Coordinating with the client’s auditors and tax advisors so legal and financial–tax reports align.

DD scope

• Corporate legal: charter, enterprise registration certificate and change history, shareholder/member registers, meeting resolutions and minutes, authority of the legal representative, and beneficial owner information under the Enterprise Law (as amended by Law No. 76/2025/QH15).
• Investment and licenses: investment registration certificate (IRC), investment policy approval (if any), sub-licenses and conditional business line conditions, market access condition compliance for foreign investors.
• Land and assets: land use right certificates; mortgage, pledge, dispute, and zoning status; ownership of assets attached to land; land and factory lease contracts.
• Material contracts: contracts with major customers and suppliers, loans and guarantees, exclusive distribution/agency contracts, and change-of-control clauses that may trigger on transfer.
• Labor: labor contracts, internal regulations, collective labor agreements, social insurance contribution status, work permits for foreigners, and existing labor disputes.
• Tax and finance: filing and finalization status, tax inspection conclusions, tax arrears and back-tax risks; coordinating with tax advisors for deep assessment when needed.
• Intellectual property: registered trademarks, patents, copyrights; licensing and technology transfer contracts; IP disputes.
• Disputes and compliance: ongoing or threatened litigation and arbitration; administrative penalty decisions; disclosure obligations (for public companies).
• Competition: assessing whether the deal requires economic concentration notification under Article 33 of the 2018 Competition Law and Decree 35/2020/NĐ-CP.

How DD findings are used in negotiation

A legal DD report is not a file-and-forget document — it is a negotiation tool. Each identified risk converts into a specific contractual protection in the sale and purchase agreement:

• Price adjustment: quantifiable risks (potential tax debts, remediation costs) become grounds for price reduction or post-closing adjustment mechanisms.
• Conditions precedent: issues to be fixed before closing — e.g., updating enterprise registration, releasing asset mortgages, renewing material contracts.
• Seller warranties: the seller warrants the accuracy of DD’d content; post-closing discoveries breaching warranties trigger indemnities.
• Price retention (retention/escrow): a portion of the price is held for a defined period to secure the seller’s indemnity obligations.
• Post-closing covenants: seller or buyer commits to complete pending procedures — enterprise registration changes, economic concentration notifications, license transfers.

Implementation process

1. Receiving deal information: planned structure (share purchase, asset purchase, merger), scale, timeline, and the DD depth the client requests.
2. Agreeing on scope, the checklist of documents to provide, and confidentiality mechanisms between parties, including a non-disclosure agreement (NDA).
3. Collecting and reviewing documents via the data room; interviewing the target’s management and in-house counsel on points documents don’t show.
4. Independent verification: enterprise registration information, land status, court/arbitration cases (within searchable scope), and public penalty information.
5. Drafting a preliminary report and discussing with the client to clarify points lacking documents and agree on risk classification.
6. Finalizing the legal DD report with a severity-classified risk table and handling recommendations per point.
7. Negotiation support: converting DD findings into contract terms — conditions precedent, warranties, indemnities, price retention.
8. Post-closing follow-up: supporting remaining procedures such as enterprise registration changes, foreign investor capital contribution registration, and economic concentration notification.

Documents clients should prepare

• Enterprise registration certificate, charter, shareholder/member registers, and resolutions and meeting minutes related to the transaction.
• Investment registration certificate (IRC), investment policy approval, and industry licenses (if any).
• Financial statements for the last 02–03 years, tax filings and finalization decisions, tax inspection conclusions (if any).
• Land use right certificates, mortgage contracts, land/factory lease contracts.
• Material contracts: customers, suppliers, loans, guarantees, distribution, and key personnel employment.
• IP dossiers: protection certificates, licensing and technology transfer contracts.
• List of litigation, arbitration, and administrative penalties, ongoing or historical.
• Ownership chart and beneficial owner information of the deal parties.

Expected timeline

DD time depends on the target’s scale, document volume, and required depth. A focused red-flag review for small and mid-size deals can usually finish in about 1–2 weeks; full-scope DD for large deals with multiple subsidiaries or land assets may take longer depending on dossier complexity. Contact us for a DD plan suited to your deal timeline.

DD progress should be counted back from the expected signing date, leaving enough time for the negotiation round based on the report. The earlier the DD, the more options the buyer has for handling risks beyond price reduction.

Common legal risks

• Enterprise registration not updated after capital increases, transfers, or representative changes — system records don’t match internal books.
• Template charter from incorporation, not reflecting the company’s actual voting mechanisms and authority.
• Land mortgaged to banks or caught in zoning plans, unknown to the buyer until independent verification.
• Material contracts with change-of-control clauses: counterparties may terminate when the company changes hands.
• Foreign investors buying shares in cases requiring capital contribution registration but skipping the procedure under the 2025 Investment Law.
• Deals exceeding economic concentration notification thresholds but closing before notifying the National Competition Commission.
• Tax and social insurance arrears not fully shown on the seller-provided financial statements.
• Internal disputes among existing shareholders/members affecting transferability.

Legal updates through September 2026

The 2025 Investment Law (No. 143/2025/QH15), effective 01/3/2026, together with Decree 96/2026/NĐ-CP guiding its implementation (effective 31/3/2026), governs capital contributions, share purchases, and capital portion purchases by foreign investors. Under Article 76 of Decree 96/2026/NĐ-CP, economic organizations with foreign investor capital contributions, share purchases, or capital portion purchases falling under clause 3, Article 21 of the Investment Law — including conditional market access business lines, cases where foreign investors hold over 50% of charter capital, and cases where the organization holds land use rights in border, coastal, or national defense/security-affected areas — must file registration dossiers with the investment registration agency where the organization is headquartered.

Law No. 76/2025/QH15 amending the Enterprise Law, effective 01/7/2025, adds obligations to collect, retain, and update beneficial owner information. This is a new DD item to add to the corporate legal review checklist in every M&A deal.

On economic concentration: under Article 33 of the 2018 Competition Law and Article 13 of Decree 35/2020/NĐ-CP, businesses must notify the National Competition Commission before implementing an economic concentration meeting any threshold: total assets in the Vietnamese market of VND 3,000 billion or more; total sales revenue or purchase turnover in Vietnam of VND 3,000 billion or more; deal value of VND 1,000 billion or more; or combined market share of 20% or more in the relevant market (measured in the fiscal year immediately preceding the planned year). Within 30 days of receiving a complete, valid dossier, the National Competition Commission issues its preliminary review result notice.

Laws, state agency jurisdiction, and administrative procedures may change over time. Full texts of the above instruments can be found at the Government’s legal normative documents system. This page is directional and should be cross-checked against the instruments in force at the time of application to each specific file.

Why choose FLAT LAW FIRM?

FLAT LAW FIRM conducts legal DD in M&A deals with foreign elements, especially with Chinese investors — clients needing bilingual reports and an understanding of the differences between the two legal systems. We don’t stop at listing risks: each finding comes with a concrete handling plan for contract negotiation. Our team works in Vietnamese, Chinese, and English, coordinating directly with the client’s auditors and tax advisors for a full picture of the target.

Frequently Asked Questions

Useful links

You should talk to a lawyer if:

• You are about to buy shares, capital contributions, or assets of a business without a full picture of the target’s legal risks.
• The deal involves foreign investors and you need to determine whether capital contribution or share purchase registration under the 2025 Investment Law applies.
• The deal is large-scale and may exceed economic concentration notification thresholds.
• You are the seller and want to proactively review and fix legal weaknesses before putting the business on the market.
• The buyer has sent a due diligence report with a long risk list and you need independent counsel to reassess each point’s severity.
• The deal involves land, real estate projects, or conditional business lines.