Vietnam Share Purchase Agreement: 15 Clauses That Decide the Deal

Share Purchase Agreements in Vietnam: 15 Clauses That Decide the Deal

In an M&A transaction, the purchase price is only the starting point. What determines whether the buyer actually gets what it thought it was buying — and whether the seller truly walks away clean — lies in each clause of the Vietnam share purchase agreement. This guide analyses the 15 decisive clauses in an SPA for acquiring shares (in a joint stock company) or capital contributions (in a limited liability company) in Vietnam: for each clause, what it must contain, why it matters, and the legal basis behind it.

Table of contents

• 1. What is an SPA? When is it used?
• 2. Current legal framework
• 3. The 15 decisive clauses
• 4. Costs, timelines and key milestones
• 5. Common risks and mistakes
• 6. Quick checklist
• 7. Frequently asked questions
• 8. When to work with a lawyer

1. What is an SPA? When is it used?

A share purchase agreement (SPA) is the contract under which the seller transfers shares (in a joint stock company) or capital contributions (in a limited liability company) to the buyer, together with all rights and obligations attached to that stake. In substance, an SPA is a contract within the meaning of Article 385 of the 2015 Civil Code — an agreement between parties on the establishment, modification or termination of civil rights and obligations — so the Civil Code's general principles on contract formation, validity and breach apply, except where the Commercial Law provides separately for commercial contracts. In Vietnamese practice the term SPA is used for both types of transaction, whether the subject is "shares" or "capital contributions".

Three transactions are frequently confused and must be distinguished:

• Share deal: acquiring ownership in the target company — the target remains the holder of all of its assets, contracts and obligations (including contingent liabilities); the buyer bears only indirect economic risk, because the value of the investment depends on the target's condition. The greatest risk lies in what has not yet surfaced, which is why a share-deal SPA always needs a dense system of representations and indemnities.
• Asset deal: buying specific assets (factory, machinery, trademarks) without being tied to the seller's general obligations. The focus shifts to the legal standing of each asset.
• Subscription: the buyer injects additional capital into the company (charter capital increases) — the money goes to the company, not to the existing shareholders — unlike a secondary purchase where the money goes to the seller.

This guide focuses on the share deal — the most common form of M&A transaction in Vietnam. For the overall picture of SPAs in M&A, see our overview of share purchase agreements in Vietnam M&A transactions.

2. Current legal framework

• 2020 Enterprise Law (59/2020/QH14, amended by 76/2025/QH15): Article 52 (transfer of capital contributions in a multi-member LLC — the obligation to offer to the remaining members within 30 days); Article 127 (share transfers — free transferability as the principle, subject to the Article 120(3) restriction on founding shareholders during the first 03 years); Article 126 (sale of shares — distinguished from transfer); Article 132 (share repurchase at a shareholder's request).
• 2025 Investment Law (143/2025/QH15): registration procedures for capital contributions and share/capital-contribution acquisitions by foreign investors (Article 21 — the "over 50% of charter capital" threshold in paragraphs 2–4; note that Article 26 of this Law governs IRC issuance, not this procedure) in the cases prescribed by law.
• 2018 Competition Law (23/2018/QH14) and Decree 35/2020/ND-CP: economic-concentration notification obligations where transactions reach prescribed thresholds — note that Resolution 66.18/2026/NQ-CP (18/5/2026) has doubled the financial thresholds during its effective period (VND 6,000bn / 6,000bn / 2,000bn; 20% combined market share); applying the old Decree 35/2020 figures would be wrong. Scope carve-out: the new thresholds apply only where the enterprises are not credit institutions, insurance enterprises or securities companies — those three sectors remain subject to their separate thresholds under Article 13(2) of Decree 35/2020/ND-CP.
• 2015 Civil Code and 2005 Commercial Law: the general contract framework; contractual penalties (Commercial Law Article 301: the agreed penalty may not exceed 8% of the value of the breached obligation; Article 307: penalties and damages may apply concurrently where the contract contains a penalty agreement).

Before negotiating individual clauses, both sides must complete legal due diligence in M&A transactions — every representation in the SPA is written from the diligence findings.

3. The 15 decisive clauses

3.1. Subject matter — defining exactly "what is being bought", down to the unit

The first clause must answer precisely: how many shares/capital contributions the buyer is acquiring, of which class (ordinary or preference), in which company, and what the post-deal ownership ratio will be. It sounds obvious, but disputes erupt over details: dividend-preference shares carry different voting rights from ordinary shares; a not-fully-contributed stake differs from a fully-paid one (the buyer may inherit the obligation to contribute the balance).

Why it matters: every post-deal shareholder/member right (voting, dividends, pre-emption) is calculated on this subject matter. Get one word wrong here and the entire post-M&A power structure is wrong with it.

3.2. Purchase price and price-adjustment mechanics — don't let the price "die" on signing day

A professional SPA does not fix an immutable number; it sets the mechanism for determining the final price. The two common mechanisms:

• Locked-box: a fixed price based on financial statements at a locked-box date; from that date to closing, the seller undertakes not to extract value from the company (no dividends, no unusual transactions). Simple, with fewer post-closing disputes.
• Closing accounts: a provisional price at signing, adjusted for actual net working capital and net debt at closing. More accurate, but requires a post-closing accounts process and a dispute-resolution mechanism.

For growth companies, the parties may also agree an earn-out (additional consideration if the company hits post-M&A business targets). The price clause must define every financial metric used — an undefined "profit" is the source of half of all earn-out disputes.

3.3. Payment — how the money moves and how much is held back

Specify: lump sum or instalments, timing of each tranche, method (transfer to which account), payment currency and the applicable exchange rate. In cross-border transactions, foreign-exchange rules on direct-investment capital accounts must be observed.

The point most often overlooked: retaining part of the price (holdback/retention) or an escrow to secure the seller's post-closing indemnity obligations. Without a money-retention mechanism, even the best-drafted indemnity clause is hard to enforce once the seller has walked away with the cash.

3.4. Conditions precedent — what must happen before the deal "closes"

Conditions precedent (CPs) are the list of conditions that must be satisfied (or waived) before closing: for example — foreign-investor capital-contribution/share-acquisition registration approval (Article 21, 2025 Investment Law); completed economic-concentration notification; lender consent; no material dispute arising. Each CP should state who is responsible, by when, and what happens if it is not met (extension, renegotiation or termination).

Why it matters: CPs are the deal's on/off switch. Drafting CPs vaguely ("all necessary approvals obtained") without listing each specific approval is a reliable way to guarantee a last-minute fight.

3.5. Representations and warranties — the seller's "oath" on the target's condition

Representations & warranties are the seller's system of statements about the target: truthful financial statements, no off-book debt, lawful ownership of assets, legal compliance, no undisclosed material disputes, labour, tax, environmental matters… This is the longest clause in the SPA, tailored from the legal due-diligence findings — whatever diligence uncovers gets written into a corresponding representation.

The key negotiating technique: disclosure exceptions — the seller warrants only "except as set out in the disclosure schedule". The buyer must read that schedule as carefully as the contract itself, because everything in it escapes the indemnity. Under current rules, add a representation on the completeness and accuracy of beneficial-owner information declared under Article 17 of Decree 168/2025/ND-CP (as amended by Article 3 of Decree 296/2026/ND-CP) — the real ownership structure directly affects the deal's value and legal risk.

3.6. Indemnification — a representation without a remedy is just words

The indemnity sets out: when a representation proves false, what the seller compensates the buyer for, and within what limits. Points to lock down:

• De minimis/basket: claims below a threshold don't count — avoids trivial disputes;
• Cap: typically a percentage of the purchase price (with "fundamental" representations such as title and legal standing usually uncapped);
• Claim periods: tax representations usually carry longer periods (tied to tax-assessment limitation periods); general representations shorter.

A Vietnam-specific note: distinguish contractual penalties (Commercial Law Article 301 — an 8% cap where the SPA is a commercial contract) from damages — the two remedies may apply concurrently where the contract contains a penalty agreement (Article 307).

3.7. Interim-period covenants — the company must be kept "as is"

Between signing and closing (often months), the seller must operate the company in the ordinary course: no major asset sales, no unusual borrowing, no long-term contracts above thresholds, no key-personnel changes — except with the buyer's written consent. The more detailed the list of prohibited actions (negative covenants), the more confident the buyer can be that what it buys at closing is what it diligenced at signing.

3.8. Material adverse change (MAC) — the buyer's safety valve

A MAC clause lets the buyer refuse to close (or demand a price renegotiation) if, during the interim period, an event materially impairs the target's value: loss of a strategic customer/partner, revocation of a core licence, natural disaster, material adverse policy change… The MAC clause must define "material" (e.g., affecting more than X% of revenue/EBITDA) and list carve-outs (general economic fluctuations and industry-wide legal changes usually don't count as MAC) — otherwise it becomes the most disputed clause when triggered.

3.9. Non-compete and non-solicitation — protecting the value just bought

After selling the company, the seller (and key personnel) are barred for a defined period and territory from: (i) directly competing businesses (non-compete); (ii) poaching the company's staff and customers (non-solicitation). The clause must be reasonable in duration, scope and subjects — an overbroad prohibition may be treated as an unreasonable restraint and prove unenforceable. Attach specific remedies for breach.

3.10. Regulatory approvals — a "beautiful" deal without licences cannot close

The two most common legal hurdles:

• Foreign investors acquiring shares/capital contributions: must complete capital-contribution/share-acquisition registration under investment law (Article 21, 2025 Investment Law) in the cases prescribed by law — for example, where the acquisition increases foreign ownership in a sector subject to market-access conditions. The SPA must identify who obtains the approval, the timeline, and what happens on refusal (see investment project transfers in Vietnam).
• Economic-concentration notification: transactions reaching scale thresholds under the 2018 Competition Law and Decree 35/2020/ND-CP may require notification to the competition authority. The specific thresholds must be checked against the original text for large transactions — never assumed.

Why it matters: these are "hard" conditions precedent — without them the transaction cannot close lawfully, whatever the parties have signed.

3.11. Termination and termination fees — an orderly exit

Set out when each party may terminate unilaterally: CPs unmet after extension, unremedied material breach, MAC triggered… Together with:

• Obligations on termination: return of amounts paid, confidentiality of accessed information;
• Termination/break fees (and reverse break fees): sums payable by the party that collapses the deal (e.g., the seller "shopping" the deal to another buyer; the buyer failing to arrange financing). The fee must be reasonable and drafted as a pre-estimated compensation arrangement, to avoid being treated as a penalty exceeding the cap.

3.12. Confidentiality — obligations that survive even a collapsed deal

During diligence the buyer sees the target's "insides": finances, customers, technology, contracts. The confidentiality clause must cover: the scope of confidential information, duties not to disclose or use it beyond the transaction's purpose, duration (typically 2–5 years after termination), and carve-outs (public information, authority requests). The key point: confidentiality must survive independently even if the SPA is terminated — otherwise the buyer walks away with all the data after a free look, which is a real risk.

3.13. Governing law and dispute resolution — don't choose the "arena" only when the fight starts

• Governing law: for transactions performed in Vietnam the parties commonly choose Vietnamese law; note the limits Vietnamese law places on choosing foreign law.
• Dispute resolution: negotiation → mediation → arbitration or courts. In cross-border M&A, arbitration (domestic or international) is usually preferred for confidentiality and cross-border enforceability. The arbitration clause must specify: the arbitral institution, number of arbitrators, seat, language of proceedings — missing any one element is enough to spark a jurisdictional fight.

3.14. Survival of representations and limitation of liability — the deal's "warranty"

• Survival: how long do representations remain effective after closing? General representations typically 12–24 months; tax representations tied to tax-assessment limitation periods; "fundamental" representations (title, legal standing) may be longer or unlimited.
• Limitation of liability: caps, baskets, and exclusions of indirect damages where agreed. This "survival + limitation" pair determines how much the buyer can actually recover when problems surface post-M&A — and when the seller can finally sleep at night.

3.15. Boilerplate — the final lines that cannot be skipped

• Entire agreement: the SPA and its schedules constitute the whole agreement, superseding all prior negotiations — so neither side can invoke "but during negotiations you promised…";
• Assignment: whether a party may assign the SPA to a third party (usually requiring the other's written consent);
• Notices: form, addresses, deemed receipt;
• Language: in a bilingual SPA, which version prevails on conflict — one language version must be designated as prevailing;
• Severability: invalidity of one clause does not invalidate the whole contract.

4. Costs, timelines and key milestones

• State fees: registration/notification of post-transfer changes to enterprise registration in the cases prescribed by law (filing with the business registration authority) — at current fee schedules; foreign-investor cases may also incur investment-procedure fees.
• Tax: share/capital-contribution transfers trigger tax obligations (personal income tax for individual transferors; corporate income tax for organisations) — the SPA must allocate who bears the tax and any withholding mechanism.
• Change registration/notification deadline: after closing — an LLC must register the member change with the business registration authority within the statutory time limit, and delays may attract administrative penalties; for a joint stock company, an ordinary transfer of common shares is not registered with the business registration authority — the company only updates its shareholder register, with notification/registration only in cases prescribed by law (e.g. changes to founding-shareholder information or foreign investors).
• Deal timeline: an SPA transaction from term sheet to closing typically takes 3–9 months depending on scale and the number of approvals; never schedule closing "to the minute" against payment milestones.

5. Common risks and mistakes

Mistake 1 — Signing the SPA before diligence is complete. Representations written "blind" make clauses 3.5 and 3.6 decorative. The correct order: DD first, SPA after — every legal due-diligence finding must be "translated" into a representation or a price adjustment.

Mistake 2 — Ignoring the offer obligation in an LLC. The seller signs an SPA selling a capital contribution to an outsider without first offering it to the remaining members under Article 52 of the 2020 Enterprise Law — the transaction risks challenge by those members.

Mistake 3 — Buying a founding shareholder's shares within the first 03 years without GMS approval. A breach of Article 120(3) of the 2020 Enterprise Law — check the company's age and the shareholder's founding status before signing.

Mistake 4 — No money retained to back the indemnity. Clause 3.6 may be beautifully written, but without a holdback/escrow (clause 3.3) it is hard to enforce.

Mistake 5 — Forgetting foreign-investor approval and economic-concentration notification. The deal is signed but cannot close for want of approvals — turning the CPs (clause 3.4) into dead letters.

Mistake 6 — Minority shareholders squeezed without knowing their rights. The buyer takes majority control and forces through decisions adverse to minorities — see minority shareholder protection in M&A transactions.

6. Quick checklist

1. ☐ Identify the subject precisely: class of shares/capital contributions, ratio, contribution status.
2. ☐ Complete legal due diligence before finalising the SPA.
3. ☐ Check the charter: any transfer restrictions; any founding shareholder still within 03 years.
4. ☐ For LLCs: has the offer to remaining members (30 days) been made.
5. ☐ Lock the price mechanism: locked-box or closing accounts; define every financial metric.
6. ☐ Payment: tranches, accounts, FX; holdback/escrow backing the indemnity.
7. ☐ List all CPs: each specific approval, responsible party, deadline, consequences.
8. ☐ Representations + disclosure schedule + indemnity (thresholds, caps, claim periods) + survival.
9. ☐ MAC, non-compete, confidentiality (surviving termination), termination + fees.
10. ☐ Governing law, arbitration/courts, prevailing language, post-closing change registration/notification (LLC: member-change registration; JSC: shareholder-register update + statutory notifications).

7. Frequently asked questions

How does a share purchase agreement (SPA) differ from an asset purchase? Buying shares/capital contributions means acquiring ownership in the target company — the target remains the holder of all of its assets and obligations (including hidden liabilities); the buyer bears only indirect economic risk, because the value of the investment depends on the target's condition. Buying assets means acquiring specific assets without being tied to the seller's general obligations. An SPA therefore demands comprehensive legal due diligence and a tight system of representations and indemnities, while an asset deal focuses on the legal standing of each asset.

Must a transfer of capital contributions in an LLC be offered to the remaining members first? Yes. Under Article 52 of the 2020 Enterprise Law, a member of a multi-member LLC wishing to transfer to a non-member must first offer the stake to the remaining members in proportion to their capital contributions on the same terms; only if they do not purchase (in whole or in part) within 30 days of the offer may the transfer proceed to the outsider.

Are founding shareholders free to transfer their shares? Within 03 years from the date the company is issued its Enterprise Registration Certificate, a founding shareholder may freely transfer shares only to another founding shareholder; transferring ordinary shares to a non-founding shareholder requires General Meeting of Shareholders approval (Article 120(3), 2020 Enterprise Law). After 03 years, the Article 120(3) restriction ceases to apply (Article 120(4) already provides exceptions within the 03-year period); however, the company charter and share class must still be checked, as Article 127 permits valid transfer restrictions.

What does a MAC clause do in an SPA? A Material Adverse Change clause lets the buyer walk away (or renegotiate price) if, between signing and closing, the target suffers an event that materially impairs its value (e.g., loss of a major customer, revocation of a core licence). It is the buyer's safety valve in deals that take months to close.

Is there a cap on contractual penalties in an SPA? If the SPA qualifies as a commercial contract governed by the 2005 Commercial Law, the agreed penalty may not exceed 8% of the value of the breached contractual obligation (Article 301). Penalties and damages are distinct remedies and may apply concurrently where the contract contains a penalty agreement (Article 307).

What approvals does a foreign investor need when buying shares? A foreign investor contributing capital or acquiring shares/capital contributions must complete capital-contribution/share-acquisition registration under investment law (Article 21, 2025 Investment Law) in the cases prescribed by law (e.g., where the acquisition increases foreign ownership in a sector subject to market-access conditions). Transactions reaching prescribed scale thresholds may also require economic-concentration notification under the 2018 Competition Law (note that Resolution 66.18/2026/NQ-CP has adjusted the thresholds during its effective period — see Section 2).

8. When to work with a lawyer

An SPA is a bespoke contract — there is no one-size-fits-all template. Work with an M&A lawyer when: the deal value is significant; the target has a complex ownership structure or operates in a conditional business sector; foreign elements are involved (investment approvals, foreign exchange, choice of law, international arbitration); or the other side already has its own legal team — negotiating unrepresented against opposing counsel is the fastest way to lose on clauses 3.5, 3.6 and 3.14.

See our A–Z legal roadmap for investing in Vietnam or contact FLAT — hotline +84 988 424 851 — for advice on structuring and reviewing the SPA for your transaction.

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