An investor wants to acquire a well-performing language centre in Vietnam — what exactly is being bought? Not a “license”, but the M&A of the enterprise owning/operating the centre (share deal), together with the duty to maintain all educational-operation conditions after the change of ownership. This article is a legal due-diligence checklist for buyers, under the framework in force as of 14 October 2026.
1. The two legal layers of a language centre
A foreign-language or informatics centre needs two legal layers under Decree 46/2017/ND-CP (investment and operation conditions in education):
- Layer 1 — establishment: the establishment decision issued or permitted by the Chair of the provincial People Committee (Article 47);
- Layer 2 — educational operation: the educational-operation permit issued by the Director of the Department of Education and Training (Article 49).
The operation conditions in Article 48 of Decree 46/2017 must be cited as amended by Clause 21, Article 1 of Decree 135/2018/ND-CP (streamlined): qualified managers, teachers, and staff; appropriate facilities, equipment, curricula, teaching materials, and funding. Do not cite the original 2017 text — it is outdated.
Centre organization and operation details are set out in Circular 21/2018/TT-BGDDT (issued 24 August 2018, still in force): standards for centre directors and teachers (qualifications, pedagogical certificates), facilities, curricula, and teaching materials.
2. Two models: domestic vs. foreign-invested
(a) Centres attached to domestic enterprises/organizations: licensed under Decree 46/2017 (as amended by Decree 135/2018) + Circular 21/2018 as above.
(b) Short-term training institutions with foreign investment: governed by Decree 86/2018/ND-CP (foreign cooperation and investment in education; effective 1 August 2018). The sequence is: Investment Registration Certificate (IRC) → establishment approval → educational-operation permit. IRC conditions in Article 33; investment rate for short-term training institutions: at least VND 20 million per student, excluding land-use costs (Article 35, as amended by Clause 18, Article 1 of Decree 124/2024/ND-CP, effective 20 November 2024); educational-operation licensing in Articles 47–48 — authority: Director of the Department of Education and Training, appraisal within 20 working days.
The buyer must correctly identify the target model before advising on procedures — applying the wrong instrument fails from the start.
3. Share deal vs. asset deal: different legal consequences
Share deal (buying the capital contribution/shares of the enterprise owning the centre) — the common route: (a) amend enterprise registration; declare the beneficial owner (Law on Enterprises 2020 as amended by Law 76/2025/QH15, effective 1 July 2025); (b) if the enterprise holds an IRC → amend the IRC upon investor change (Article 27 of the 2025 Law on Investment — the Department of Finance issues/amends IRCs for projects outside industrial parks); (c) if the ownership change alters licensed conditions (centre director, location, curricula…) → request amendment/supplementation of the operation permit at the Department of Education and Training; (d) for foreign investors: an additional capital contribution/share purchase registration layer, since education is a conditional market-access sector (Appendix I of Decree 96/2026/ND-CP, 2025 Law on Investment).
Asset deal (buying assets and the brand, then establishing a new centre): the entire licensing sequence must be redone from scratch — the former owner operation permit is not “inherited”.
4. Mandatory due diligence before buying
- The establishment decision and the educational-operation permit are still valid;
- Facilities and teaching staff in practice still meet Article 48 of Decree 46/2017 (as amended) / Circular 21/2018;
- Foreign teachers must hold work permits under Decree 219/2025/ND-CP (replacing Decree 152/2020/ND-CP from 7 August 2025) — unlicensed “backpacker teachers” are a major legal risk in diligence;
- Lawful, unexpired land-use rights for the centre premises;
- The curricula and teaching materials in use.
5. “Buying a centre = buying a license” — wrong
The educational-operation permit is attached to actual conditions (facilities, teaching staff, curricula). A change of owner without maintaining conditions can lead to suspension or revocation of the operation permit. A license is not an asset bought once and then neglected.
Note also the case where a conventional M&A is impossible: the centre is a public service unit or an attached unit of an organization (no independent legal personality, no capital contribution to transfer) → no equity purchase is possible; only asset/operation-right transfer under a separate mechanism, with fresh licensing required.
6. Tax on capital transfer
Capital-contribution transfers trigger personal income tax for the individual transferor: 20% on taxable income (transfer price minus purchase price and related reasonable expenses); for securities transfers: 0.1% on the transfer price per transaction (2007 Law on Personal Income Tax, Circular 111/2013/TT-BTC; the 2025 Law on Personal Income Tax keeps these rates, effective 1 July 2026). Buyers and sellers should price the tax duty into the deal structure.
Frequently asked questions
Does acquiring a language centre require fresh licensing?
Share deal: no new license, but enterprise registration must be amended, the IRC adjusted (if any), and the operation permit amended if licensed conditions change. Asset deal: the full licensing sequence must be redone.
Which text governs operation conditions?
Article 48 of Decree 46/2017 as amended by Decree 135/2018 (streamlined version) + Circular 21/2018/TT-BGDDT. Do not cite the original 2017 text, nor Decree 152/2020 on work permits (expired 7 August 2025).
What documents do foreign teachers need?
A work permit under Decree 219/2025/ND-CP — a mandatory diligence point.
What extra steps apply to foreign investors?
Capital contribution/share purchase registration (education: conditional market access); minimum investment of VND 20 million per student (excluding land-use costs); IRC amendment upon investor change.
Sources
- Decree 46/2017/ND-CP: Article 47 (establishment authority: Chair of the provincial People Committee); Article 48 (operation conditions — cite as amended by Clause 21, Article 1 of Decree 135/2018/ND-CP); Article 49 (educational-operation licensing authority: Director of the Department of Education and Training).
- Circular 21/2018/TT-BGDDT (24 August 2018, still in force) — organization and operation of foreign-language and informatics centres.
- Decree 86/2018/ND-CP (effective 1 August 2018): Article 33 (IRC conditions); Article 35 (minimum VND 20 million per student — amended by Clause 18, Article 1 of Decree 124/2024/ND-CP, effective 20 November 2024); Articles 47–48 (educational-operation licensing for foreign-invested institutions; 20-working-day appraisal).
- Law on Investment 2025 (143/2025/QH15) (effective 1 March 2026) — Article 27 (IRC amendment); Law on Enterprises 2020 (59/2020/QH14) as amended by Law 76/2025/QH15; Decree 219/2025/ND-CP (work permits, replacing Decree 152/2020 from 7 August 2025).
For reference only; not legal advice. This content was prepared by AI and will undergo quality review by the AI Legal Council of FLAT Law Firm before any publication consideration; it is not the legal opinion of a licensed human lawyer. Laws and regulations may change; verify the current legal texts before applying them.
Diligencing a training-centre acquisition? Contact FLAT Law Firm for advice.
