Before entering an M&A transaction, the target company (the sell side) should do something many business owners overlook: internal legal housekeeping. This article does not walk through the M&A process (covered in our in-depth guide) — it stands on the sell side, before the deal: a 10-group readiness checklist, the five most common “deal-killers” among Vietnamese companies, and a recommended timeline — so you can increase deal value and avoid being squeezed on price during due diligence.
1. What readiness is — and why it determines your sale price
Readiness is the “ready to sell” legal state: corporate records, licenses, land, labor, tax and contracts all complete, consistent and up to date. When the buyer (especially a foreign investor) conducts due diligence, every defect found becomes a price deduction or an unfavorable warranty/indemnity term for the seller. Cleaning up 3–6 months in advance costs far less than a double-digit price cut once the deal is in motion.
2. New laws directly affecting readiness
- Beneficial owners (Law 76/2025/QH15, effective 1 July 2025, adding Clause 35 to Article 4 of the Enterprise Law 59/2020): companies must collect, update and retain beneficial-owner information and provide it to state authorities upon request. Buyers now always demand an ownership chart down to the ultimate beneficial owner — missing it is an instant red flag;
- Updating foreign-investor shareholder information within 3 working days of any change (Clause 1, Article 54 of Decree 168/2025/ND-CP) — non-listed joint-stock companies must file supplementary/update notices with the business registration authority;
- Clarified liability for false charter-capital declarations — “phantom” capital or unpaid contributions are among the first defects found in diligence.
- M&A for Chinese investors in Vietnam
3. The 10-group checklist (part 1): corporate, capital, licenses, land
- 1. Corporate & governance: Enterprise Registration Certificate + all amendments; Articles of Association — latest version, matching reality; member/shareholder registers; beneficial-owner list (new duty from 1 July 2025); legal-representative appointment decisions; Board/Members’ Council/General Meeting minutes. Common defects: outdated charter, missing minutes.
- 2. Capital & ownership structure: capital contribution commitments; preference shares; shareholders’ agreement (SHA); pre-emptive rights. Common defects: SHA disputes on change of control, ignored pre-emptive rights.
- 3. Licenses & business conditions: Investment Registration Certificate (IRC) + amendments (if any); sub-licenses for conditional business lines — check they remain valid (note Article 7 + Appendix IV of the Investment Law 143/2025 on sub-licenses, effective 1 July 2026). Common defects: expired licenses requiring re-issuance/adjustment upon change of ownership.
- 4. Land & assets: Land-use-right certificates; remaining land purpose and term (vs. the project term); land rents fully paid; whether the land is mortgaged/seized/disputed. Common defects: bank-mortgaged land, unfulfilled financial obligations, border/coastal/island restrictions for foreign investors (2024 Land Law; Clause 2, Article 21 of the 2025 Investment Law).
- M&A for Chinese investors in Vietnam
4. The 10-group checklist (part 2): labor, tax, contracts, data
- 5. Labor & social insurance: labor contracts for all employees (correct type — Article 20 of the Labor Code); registered internal labor rules; collective labor agreements; work permits for foreign employees (Decree 219/2025/ND-CP); SI contribution status (SI Law 41/2024 + Decree 158/2025); wage/severance arrears. Common defects: SI arrears, foreign employees without valid work permits.
- 6. Tax: annual tax finalizations; tax debts/penalties/late-payment interest; tax incentives enjoyed + conditions to maintain them post-M&A; transfer-pricing (related-party transaction) risks. Common defects: “inherited” tax debts in a share deal, loss of incentives after change of ownership (Tax Administration Law 108/2025/QH15, effective 1 July 2026).
- 7. Material contracts: review change-of-control clauses — allowing counterparties to terminate when the company changes hands; assignment prohibitions; acceleration covenants in credit agreements. Common defects: major counterparties terminating upon learning of the sale, banks demanding early repayment.
- 8. IP & data: trademark/patent/design registrations (the certificate holder must be the company — common defect: registered in the founder’s personal name); license/franchise agreements; compliance with the Personal Data Protection Law 91/2025/QH15 (effective 1 January 2026, replacing Decree 13/2023/ND-CP; guided by Decree 356/2025/ND-CP). Common defects: personally-held trademarks, non-compliant customer-data processing.
- M&A for Chinese investors in Vietnam
5. The 10-group checklist (part 3): disputes and economic concentration
- 9. Disputes & compliance: ongoing or threatened litigation/arbitration; unenforced administrative penalty decisions; employee complaints. Common defect: latent disputes erupting after acquisition.
- 10. Economic concentration: self-assess the notification thresholds under Article 13 of Decree 35/2020/ND-CP — total assets/revenue in Vietnam of VND 3,000 billion or more, transaction value of VND 1,000 billion or more, combined market share of 20% or more (meeting any one threshold triggers notification to the National Competition Commission before implementation). Note: separate thresholds apply to insurance, securities and credit institutions. Common defect: signing/closing before notifying → penalties and implementation restrictions. Put this milestone in the deal timeline from day one.
- M&A for Chinese investors in Vietnam
6. Five common “deal-killers” among Vietnamese companies
From practical diligence experience, these five defects most often kill deals or crush valuations: (1) falsely declared or unpaid charter capital; (2) bank-mortgaged land or unfulfilled land financial obligations; (3) trademarks registered in a founder’s personal name instead of the company; (4) prolonged SI arrears; (5) change-of-control clauses in contracts with major customers/lenders — counterparties terminate as soon as they learn of the sale.
7. Highlights for Chinese investors (buy side)
Where the buyer is a Chinese investor, a seller that has these ready will shorten diligence significantly: an ownership chart down to the ultimate beneficial owner (Vietnamese sellers now have a retention duty under Law 76/2025); checking the transaction’s own market-access conditions (Article 8 of the 2025 Investment Law + Appendix I of Decree 96/2026/ND-CP: 23 closed business lines, 48 conditional ones); and the capital-contribution/share-purchase registration (Article 21 of the 2025 Investment Law) to complete before signing. See also: M&A and Corporate Restructuring in Vietnam.
8. Recommended timeline: start 3–6 months before going to market
Start cleaning up 3–6 months before the sale process: months 1–2 review corporate records, capital, charter and beneficial owners; months 2–4 handle land, licenses, labor/SI and tax; months 3–5 review material contracts (change of control), IP and personal data; throughout: self-assess economic-concentration thresholds and put the notification milestone in the timeline. Note: a complete checklist reduces risk and strengthens negotiating position — no one can promise that “ticking every box guarantees the deal closes”.
Frequently asked questions
Does a small company need all 10 groups?
The checklist is a general framework — each transaction adjusts it to the industry and scale. But the five “deal-killers” in section 6 deserve a check at any company.
What if SI arrears surface mid-negotiation?
Prioritize full payment before signing; if time is short, build a price-adjustment and warranty mechanism into the contract — transparency from the start beats discovery later.
At what size must a deal notify economic concentration?
Meeting any one threshold suffices: total assets/revenue in Vietnam of VND 3,000 billion or more, transaction value of VND 1,000 billion or more, or combined market share of 20% or more — notify the National Competition Commission before implementation.
Is it a problem that our trademark is registered in the director’s name?
Yes — a classic deal-killer. IP assets must be held by the company; transfer them to the company before the sale.
Sources
- Enterprise Law 59/2020/QH14 (in force; amended by Law 76/2025/QH15, effective 1 July 2025): Clause 35, Article 4 (beneficial owners); legal-entity status, charter, member/shareholder registers, transaction-approval authority;
- Decree 168/2025/ND-CP on enterprise registration: Clause 1, Article 54 (updating foreign-investor shareholder information within 3 working days);
- Investment Law 143/2025/QH15 (effective 1 March 2026): Article 8, Clause 2 Article 21, Article 34; Decree 96/2026/ND-CP (31 March 2026);
- Competition Law 23/2018/QH14 (Article 33) + Decree 35/2020/ND-CP (Article 13 — economic-concentration notification thresholds);
- Land Law 31/2024/QH15 (1 August 2024); SI Law 41/2024/QH15 (1 July 2025); Labor Code 45/2019/QH14; Tax Administration Law 108/2025/QH15 (1 July 2026); Decree 219/2025/ND-CP (7 August 2025);
- Personal Data Protection Law 91/2025/QH15 (effective 1 January 2026, replacing Decree 13/2023/ND-CP) + Decree 356/2025/ND-CP.
- M&A for Chinese investors in Vietnam
See also: M&A and Corporate Restructuring in Vietnam.
For reference only; not legal advice. This content was drafted by AI and will be quality-checked by the AI Legal Council of FLAT Law Firm before publication review; it is not legal advice from a human lawyer. Regulations may change; please check the current legal texts before relying on this information.
Preparing to sell your company or raise capital via M&A? Contact FLAT Law Firm for pre-deal legal housekeeping advice.