Foreign Investors Acquiring Controlling Stakes in Vietnamese Enterprises — Approval Procedures

In Vietnamese M&A deals, the concept of acquiring a “controlling stake” is the key test for whether a transaction requires prior approval. Many foreign investors mistakenly believe every share purchase must be registered — or, conversely, sign the transfer contract first and handle procedures later. Both misunderstandings can lead to violations.

1. What counts as a “controlling stake”?

Under point b, clause 3, Article 21 of the Law on Investment 2025 (143/2025/QH15, effective from 1 March 2026), a capital contribution, share or stake purchase that results in a foreign investor holding more than 50% of the charter capital of an economic organization requires registration, in two cases:

• Increasing the foreign investor ownership ratio from 50% or below to more than 50%;
• Increasing the ownership ratio when the foreign investor already holds more than 50%.

In other words, the above-50% threshold is the red line: crossing it (or increasing further once crossed) triggers mandatory prior registration with the investment registration authority.

2. Cases requiring prior registration

Clause 3, Article 21 of the Law on Investment 2025 sets out two cases requiring registration of capital contribution, share or stake purchase:

1. Case (a): the foreign investor contributes capital or purchases shares/stakes in an economic organization operating in sectors subject to market access conditions for foreign investors;
2. Case (b): the transaction results in holding more than 50% of charter capital as analyzed above.

Falling into either case triggers registration. Example: acquiring 60% of shares in an ordinary manufacturing company (not a conditional sector) still requires registration because the above-50% threshold is crossed.

3. Registration dossier (Article 75, Decree 96/2026/ND-CP)

Decree 96/2026/ND-CP (effective from 31 March 2026) requires:

• Registration document stating: the economic organization business registration information; business lines; list of owners, members, shareholders; the foreign investor charter capital ownership ratio before and after the transaction; the expected transaction value; information on the organization investment project (if any);
• Legal status documents of the foreign investor and the economic organization;
• Principle agreement on the capital contribution, share or stake purchase between the parties;
• Information on land-use right documents for state authority lookup (or a copy of the land-use right certificate) — where the economic organization holds land in areas affecting national defense and security.

4. Processing timeline and defense-security screening

Within 10 working days of receiving a valid dossier, the investment registration authority reviews compliance with the contribution conditions and notifies the investor.

A notable new feature of Decree 96/2026: where the economic organization holds land-use rights in areas affecting national defense and security (islands, border communes/wards, coastal areas), the investment registration authority consults the provincial Military Command and provincial Police:

• Within 02 working days of receiving a valid dossier, the authority sends the consultation request;
• Within 05 working days, the consulted agencies must respond; silence is deemed consent.

This is a point often missed in M&A deals: a transaction seemingly about shares alone can trigger land, defense and security screening.

5. After approval

1. The economic organization completes the member/shareholder change procedure with the business registration authority under enterprise law (Decree 168/2025/ND-CP);
2. The foreign investor rights and obligations as member/shareholder are established upon completion of the change;
3. Transfer value is paid via the direct investment capital account (Circular 06/2019/TT-NHNN);
4. The transferor declares personal/corporate income tax as required.

Update note: Decree 296/2026/ND-CP (effective 23 July 2026) has amended Decree 168/2025/ND-CP on enterprise registration. Notable new points: prohibition of nominee shareholding for enterprise establishment; electronic authentication in enterprise registration; beneficial owner identification (25% threshold).

6. Cases not requiring registration

Under Article 76 of Decree 96/2026/ND-CP, transactions not falling into the two cases under clause 3, Article 21 proceed directly: the parties execute the deal and register the member/shareholder change with the business registration authority — without going through the investment registration authority.

7. Common pitfalls

• Signing the transfer contract and paying before approval;
• Failing to check the target company conditional market-access sectors;
• Overlooking land in defense-security-sensitive areas;
• Paying outside the direct investment capital account;
• Confusing “registration of capital contribution/share purchase” with “registration of member/shareholder change” — two distinct procedures.

Prepared by the FLAW AI Legal Council. This content is pending QA Council review before submission for approval.