In M&A transactions, land is often the target company’s most valuable — and most risk-prone — asset, especially when the company leases land from the State with annual rental payments. The buyer’s key question is always: after acquiring the company, can I continue leasing that land, or must I restart land procedures from scratch? The answer depends entirely on the deal structure: share deal or asset deal.
Share deal: the lease continues, with no new land procedures
In a share deal (acquiring shares or capital contributions), the legal entity of the target company does not change — only its owners change. The lessee named in the land lease contract and the land lease decision remains the same target company. Therefore, the buyer may continue the land lease without completing any new land procedures with the competent state authority.
This is considered one of the greatest advantages of a share deal over an asset deal where the target leases land with annual payments: the land-use right — an asset of enormous economic value — is preserved intact, without interruption and without the burden of re-applying for a land lease.
The legal basis lies in the provisions on the rights of land users leasing land with annual payments under Land Law 31/2024/QH15 (Articles 34 and 41), effective from 01/8/2024: these rights attach to the land user, the target company as a legal entity, which continues to exist uninterrupted after the transaction.
Asset deal: an annual-payment lessee may not transfer the land-use right
In an asset deal (acquiring assets), the buyer does not acquire the company but purchases the target’s assets directly. For annually-paid leased land, the law imposes strict limits: a lessee paying annual land rent may not transfer the land-use right.
Under Article 46 of Land Law 31/2024/QH15, such a lessee may only transfer assets owned by it attached to the land and the lease right under the land lease contract if all conditions prescribed in that article are satisfied. The transferee is then continued to be leased the land by the State for the determined purpose and within the remaining land-use term — meaning no extension of the term and no change of the approved land-use purpose.
In practice, this means that in an asset deal the buyer must carefully verify: how much of the lease term remains, whether the land-use purpose matches its own business plans, and whether the target satisfies all transfer conditions under Article 46. Failure to satisfy them may render the land-related part of the transaction invalid.
Foreign investors: check market-access conditions
A special situation to note: if, after the M&A, the target company becomes a foreign-invested economic organization continuing to lease land with annual payments, the case falls under Clause 4, Article 41 of Land Law 31/2024/QH15.
In that event, the foreign buyer must check two layers of conditions:
- Market-access conditions applicable to foreign investors in the sector where the target operates;
- Capital contribution / share acquisition registration under Article 21 of Investment Law 143/2025/QH15 (effective from 01/3/2026), where registration is required.
In other words, for foreign investors the principle that the lease continues in a share deal still holds as a matter of land law, but the share acquisition itself may be subject to a separate investment procedure. Overlooking this layer is a common mistake that stalls transactions at the enterprise registration stage.
What should the buyer check in land due diligence?
Based on the principles above, when diligencing a target that leases land with annual payments, the buyer should focus on:
- Lease form: annual payments vs one-off payment for the entire term — the land user’s rights differ fundamentally between the two;
- The remaining term of the land lease contract and the possibility of extension upon expiry;
- The land-use purpose stated in the lease decision and the certificate — does it match the actual business and post-M&A plans;
- Financial obligations: whether land rent has been paid in full and on time, and whether any rental arrears exist;
- Document validity: the land lease contract, lease decision, and land-use right certificate remain valid with consistent information.
Key takeaways for buyers
- Share deal: the target’s legal entity is unchanged, so the annual land lease continues with no new land procedures — a major advantage of share deals.
- Asset deal: an annual-payment lessee may not transfer the land-use right; only assets attached to the land and the lease right may be transferred, subject to all conditions in Article 46 of Land Law 2024.
- The transferee continues the lease for the determined purpose and within the remaining land-use term only.
- Foreign investors: if the post-deal company becomes foreign-invested, Clause 4, Article 41 of Land Law 2024 applies — check market-access conditions and capital contribution registration under Article 21 of Investment Law 2025.
Frequently asked questions
Does a share deal require land-change registration?
No. Because the land user as a legal entity does not change, no registrable change of land user arises. This is precisely the major advantage of a share deal in this scenario.
Can an asset deal work around this by transferring the land-use right?
No. An annual-payment lessee has no right to transfer the land-use right; it may only transfer assets attached to the land and the lease right under the contract, subject to Article 46 of Land Law 2024.
How long may the transferee in an asset deal lease the land?
For the determined purpose and within the remaining term of the old lease — no fresh term is granted.
Applicable legal sources
- Land Law No. 31/2024/QH15 — Articles 34, 41, 46 (effective from 01/8/2024).
- Investment Law No. 143/2025/QH15 — Article 21 on registration of capital contribution and share acquisition (effective from 01/3/2026).
Is land the decisive link in your M&A deal’s value? Contact FLAT Law Firm for advice on the right transaction structure.
The legal content of this article was reviewed by FLAT’s AI Legal Council and submitted to the owner for approval; it is not the opinion of a human lawyer and does not replace legal advice for specific cases.
For reference only; not legal advice.