A Chinese investor preparing to acquire a Vietnamese enterprise often asks about a security review committee of the kind found in Western countries, where transactions in sensitive sectors must file for security approval against dedicated notification thresholds. The honest answer about Vietnamese law is that no such mechanism exists. Vietnam has no national security screening procedure dedicated to mergers and acquisitions with its own security notification thresholds; instead, transactions are controlled through three different mechanisms spread across investment law and competition law, and the effective investor is the one who self-screens through exactly those three mechanisms.
Mechanism one: market access conditions by business line
The broadest control layer is market access conditions for foreign investors under the Investment Law 143/2025/QH15 replacing the 2020 Investment Law from 1 March 2026. The target’s business lines are checked against the list of lines not yet committed for opening or subject to conditions: a foreign investor may acquire shares or capital contributions only within the ratios and conditions that list permits for that line, and certain sensitive lines carry specific conditions on partners, operating scope or security assurance embedded directly in the access conditions.
Mechanism two: target land in areas affecting defence and security
The second control layer attaches to the target’s land assets. Where the target economic organisation holds land use right certificates on islands, in border or coastal communes, wards or towns, or in other areas affecting national defence and security, approval for a foreign investor to contribute capital, buy shares or acquire capital contributions must go through a step in which the investment registration authority seeks the opinions of the defence authority and the security authority before approving. This mechanism was recorded in Article 26 of the 2020 Investment Law and continues within the 2025 investment law framework.
This is the closest point of contact between Vietnamese law and the idea of security screening in an acquisition, and it is triggered by land location, not by investor nationality or business line. An ordinary consumer goods plant sitting on coastal land within an area identified as affecting defence and security still passes through this opinion step, while an inner-city service company with no such land does not. Transaction timetables must allow for the opinion step, and the opinions received can become conditions for approval or the reason a transaction is not approved in its current structure.
Investors self-screen this point by requiring the target to produce all land use right certificates, checking each parcel’s location against coastal and border administrative boundaries and related planning information, and assessing options to carve sensitive land assets out of the transaction perimeter or convert them into a long-term lease structure if authority opinions become a bottleneck.
Mechanism three: merger notification is competition control, not security
The third layer, most often mistaken for security screening, is the economic concentration notification duty under the Competition Law 23/2018/QH14 and the notification thresholds in Decree 35/2020/ND-CP. An acquisition reaching the thresholds on total assets, total revenue, transaction value or combined market share in the relevant market must be notified to the national competition authority before implementation, and that authority runs a preliminary appraisal and decides whether an official appraisal is needed, based on competition-restricting effects.
The nature of this mechanism is purely competitive: the question is whether the transaction lessens competition in the relevant market, applied to domestic and foreign investors alike without distinction by nationality. Yet because it is a threshold-based notification procedure with power to request supplementary information and extend appraisal time, investors should place it on the transaction procedure map from the start, especially where the buyer already has a presence in the same Vietnamese market as the target.
Frequently Asked Questions
In which sectors do acquisitions of Vietnamese enterprises by Chinese investors fall under security screening?
Vietnamese law maintains no separate list of security-screened sectors for acquisitions. The correct question runs through market access conditions: to what extent do the target’s business lines fall within the uncommitted or conditional list, and how do those conditions limit a foreign investor’s ownership ratio or operating scope. Fields commonly carrying tight access conditions include sectors tied to critical infrastructure, services with security assurance requirements under specialised law, and lines not yet opened under commitments. In addition, land in a sensitive area can trigger the defence and security opinion step regardless of the target’s sector.
What notification thresholds and procedures apply to security screening of a sensitive M and A transaction?
Because no separate security screening procedure exists, there is no security notification threshold to check against. The thresholds and procedures that genuinely apply to a transaction are: the approval procedure for capital contribution, share purchase or capital contribution purchase at the investment registration authority where the transaction requires approval, with the defence and security opinion step if the target holds land in a sensitive area; and the economic concentration notification thresholds under Decree 35/2020/ND-CP on assets, revenue, transaction value and market share, with preliminary and possibly official appraisal by the competition authority. Investors should schedule procedures along these two axes instead of searching for a security procedure that does not exist.
How should an investor respond if a transaction is screened at length or refused?
The first step is identifying exactly which decision or opinion is blocking the transaction, because each mechanism has a different remedy path. For market access, options are usually adjusting the ownership ratio to the permitted level, carving the sensitive business line out of the target before closing, or switching to a commercial cooperation structure without capital transfer. For the land element, options can include excluding the sensitive parcel from the transfer perimeter or converting it into a post-closing lease. For economic concentration, the investor works with the competition authority through the notification file and, where needed, proposes remedies for competitive effects. Every option works better when prepared during diligence, with conditions precedent and time-risk sharing clauses in the purchase agreement.
By what criteria does an investor pre-screen the security control exposure of a deal?
The practical self-screening set has three groups. Sector group: do the target’s real revenue activities fall in the uncommitted or conditional list, would the intended ownership ratio exceed the limit for that line, and does the target hold sub-licences with security conditions. Land group: does any parcel of the target sit on an island, at the border, on the coast or in an area affecting defence and security. Competition and data group: does the transaction touch economic concentration notification thresholds, and do the target’s customers and data carry critical infrastructure elements that draw regulator attention at policy level even without a dedicated procedure. These three groups, answered with documents, are the entire practical security test of a transaction in Vietnam.
An invitation for investors appraising a target in Vietnam
If you are assessing an acquisition in Vietnam and need a straight answer on control exposure, FLAT Law Firm can run the three-layer self-screening on your specific target: checking real revenue activities against the market access list, examining the location of all target land against the sensitive-area criteria, and determining whether the transaction touches economic concentration notification thresholds. The first discussion gives you a procedure map with time allowances for each step, before you sign any binding document with the seller.
This article has been quality-reviewed by the FLAW AI Legal Council
