Capital Contribution and Share Purchase by Foreign Investors

Capital contribution, share purchase (M&A): who is this service for?

• Foreign investors wanting to acquire all or part of an operating Vietnamese company to quickly gain premises, licenses, and markets.
• Investment funds and foreign parent companies buying newly issued or additional shares, or buying shares/capital portions from existing shareholders or members.
• Foreign investors who are already shareholders or members wanting to increase their ownership — e.g., from below 50% to above 50% of charter capital, or further increases when already in control.
• Sellers who are Vietnamese shareholders or members needing counsel to review conditions and procedures so the deal with foreign investors goes smoothly.
• Foreign-invested companies needing to restructure ownership among foreign investors.

Common legal issues clients face

The most common misunderstanding is that buying shares is “just a civil transaction between two parties” unrelated to investment procedures. In fact, investment law separately provides three cases where foreign investors must register capital contribution, share purchase, or capital portion purchase before changing members/shareholders (clause 3, Article 21 of the 2025 Investment Law). Skipping this step, the deal may not be recorded when carrying out enterprise registration change procedures — and the company must still go back to complete the missing procedure.

The second mistake is not checking the market access conditions of the business lines the target operates. A logistics, education, or distribution company may operate lawfully with 100% Vietnamese capital, but when a foreign investor buys in, the deal must meet conditions on ownership ratios, investment forms, or scope of operations applying specifically to foreign investors. Checking after signing a term sheet usually means renegotiating the entire deal structure.

For targets holding land use rights on islands, border, coastal areas, or areas affecting national defense and security, procedures add a step of consulting military and police authorities — many investors only discover this after filing. Legal due diligence on the target is therefore not just reading financial statements but must cover land, licenses, labor, tax, and potential disputes.

Two forms of foreign investor presence: greenfield or M&A?

Before deciding, investors should weigh both forms. No option is right for every case — the answer depends on the sector, desired timeline, and risk appetite.

The comparison table is general guidance. The right choice depends on the specific sector, applicable market access conditions, and the target’s due diligence results — please talk to a lawyer before deciding.

See FDI Company Formation in Vietnam and M&A and Corporate Restructuring.

Forms of capital contribution and share purchase under the regulations

Decree 96/2026/NĐ-CP (Article 74) lists the specific forms. Investors should identify the right form from the start because each carries different consequences for post-deal enterprise procedures.

• Contributing capital to an economic organization: buying first-issued or additionally issued shares of a JSC; contributing capital to LLCs or partnerships; or contributing capital to other economic organizations. This increases the company’s charter capital — money goes to the company, not to existing shareholders’ pockets.
• Buying shares or capital portions: buying JSC shares from the company itself or from shareholders; buying LLC members’ capital portions to become a member; buying general partners’ capital portions in partnerships; or buying members’ capital portions in other economic organizations. This is a transfer between parties — money goes to the seller’s pocket, and the company’s charter capital is unchanged (unless buying from the company itself).

Note: capital contribution, share purchase, or capital portion purchase on the securities market follows securities law, with separate rules on foreign investor ownership ratios.

Three cases requiring registration before changing members/shareholders

Under clause 3, Article 21 of the 2025 Investment Law, foreign investors must complete capital contribution/share purchase/capital portion purchase registration before changing members/shareholders in one of three cases:

• Case 1 — conditionally accessible sectors: the contribution/purchase increases foreign investors’ ownership ratio in an economic organization doing business in sectors conditionally accessible to foreign investors. Example: a company currently 20% foreign-owned, buying 10% more while the sector is in Section B of Appendix I, Decree 96/2026/NĐ-CP — must register first.
• Case 2 — crossing or increasing above the 50% threshold: the contribution/purchase results in foreign investors (or foreign-invested economic organizations in the regulated category) holding over 50% of charter capital, in situations: increasing ownership from at or below 50% to above 50%; or further increasing ownership when foreign investors already hold over 50% of charter capital.
• Case 3 — land in sensitive areas: foreign investors contribute capital, buy shares, or buy capital portions in an economic organization holding land use right certificates on islands; border-area communes, wards, or special zones; coastal communes or wards; or other areas affecting national defense and security.

The key point: not every M&A deal must be registered. If none of the three cases apply, foreign investors carry out the deal under the Enterprise Law without investment registration procedures. But this boundary must be determined firmly before signing the transfer contract — because once payment is made and registration gets stuck, the buyer bears the loss.

Conditions foreign investors must meet in M&A

Under clause 2, Article 21 of the 2025 Investment Law and Article 75 of Decree 96/2026/NĐ-CP, foreign investors contributing capital, buying shares, or buying capital portions in economic organizations established in Vietnam must meet three condition groups:

• Market access conditions: applied per the target’s business lines — 23 not-yet-accessible sectors, 62 conditionally accessible sectors (Appendix I of Decree 96/2026/NĐ-CP). This is the first item to review in every foreign-invested M&A deal. See detailed analysis at Market Access Conditions for Foreign Investors.
• National defense and security: applied when the target holds land use rights in sensitive areas (islands, border, coastal, areas affecting national defense and security). Dossiers must then include land use right information and documents for competent authorities to look up and cross-check.
• Land law: conditions for receiving land use rights and land use conditions in the above areas under land law.

Capital contribution/share purchase registration: step by step

Procedures follow Article 76 of Decree 96/2026/NĐ-CP, at the investment registration authority where the target economic organization is headquartered.

1. Preparing the registration dossier includes: (i) the capital contribution/share purchase/capital portion purchase registration document — stating the target’s enterprise registration information, business lines, lists of owners/members/shareholders (including foreign investors if any), foreign investors’ charter capital ownership ratios before and after the deal, expected deal value, and information on the organization’s investment projects (if any); (ii) documents proving the legal status of the foreign investor and the target; (iii) the term sheet on capital contribution/share purchase/capital portion purchase between the foreign investor and the target or its shareholders/members; (iv) land use right information and documents — where the target holds land in areas affecting national defense and security.
2. Filing the dossier at the investment registration authority where the economic organization the foreign investor plans to contribute capital to or buy shares in is headquartered. Filing at the wrong authority is a common mistake when the target’s head office and project are in different localities.
3. Review and notification: for cases under points a and b, clause 3, Article 21 of the 2025 Investment Law, within 10 working days from receipt of a complete, valid dossier, the investment registration authority reviews condition compliance and notifies the investor. The notification is sent simultaneously to the foreign investor and the target economic organization.
4. Special case — defense/security area land: within 02 working days from receipt of a complete, valid dossier, the investment registration authority consults the provincial Military Command and provincial Police; these two authorities reply within 05 working days. Total time is therefore longer than ordinary cases — factor it into the deal timeline from the start.
5. Completing the deal: after receiving the condition-compliance notification, the parties sign the formal transfer contract, pay, and carry out the post-deal obligations below.

Dossier components and forms follow current regulations at filing time. The above reflects the legal framework through September 2026 — for specific deals, cross-check the instruments in force at implementation time.

Obligations after completing the M&A deal

Receiving the condition-compliance notification and signing the transfer contract is not the end. The target company still has these obligations:

• Registering enterprise registration content changes: changing LLC members, JSC shareholders, and increasing charter capital (if additional capital was contributed) must be registered or notified with the Business Registration Authority within 10 days from the change date — see Enterprise Registration Changes.
• Adjusting the Investment Registration Certificate (if any): where the target is implementing an investment project with an IRC and the deal changes investors, capital scale, or items recorded on the IRC, IRC adjustment procedures under the 2025 Investment Law should be considered.
• Tax obligations of the transfer: capital/share transfers may trigger corporate income tax obligations for organizational sellers or personal income tax for individual sellers — factor this into the deal price structure. See Tax Advisory for FDI Companies.
• Internal updates: company charter, member/shareholder registers, legal representative (if changed), bank accounts, digital signatures, and sub-licenses in the former representative’s name.

Common risks in foreign-invested M&A deals

• Not registering when required: the deal was paid for but enterprise registration changes cannot be completed for lack of the investment registration authority’s condition-compliance notification. Post-facto remediation always costs more than doing it right from the start.
• Insufficient due diligence: arrears-collected taxes, unpaid social insurance, pending labor disputes, expired sub-licenses, or disputed land — all “follow” the company into the new owner’s hands. Comprehensive legal due diligence before signing is the cheapest investment of the whole deal.
• Valuation and payment: valuation gaps between parties, payment methods (lump sum or installments, conditional), escrow mechanisms securing seller commitments, and foreign exchange compliance when moving money in and out of Vietnam.
• Post-M&A disputes: sellers not honoring commitments on the company’s legal status (asset ownership, no hidden debts, valid licenses). Transfer contracts need tight warranty, indemnity, and dispute resolution clauses — don’t use generic templates for high-value deals.
• Key personnel leaving: after the change of control, management and key staff may leave, affecting business continuity — especially in sectors depending on personal practicing licenses or client relationships.

What does FLAT LAW FIRM do?

• Legal due diligence on the target: reviewing legal status, ownership structure, land, licenses, material contracts, tax and labor obligations, and disputes — risk reports with pre-signing remediation proposals.
• Assessing market access conditions and registration obligations: determining which group the target’s sectors fall in, whether the deal falls under the three pre-registration cases, and a suitable procedure roadmap.
• Deal structuring: choosing between share purchase, capital portion purchase, or additional capital contribution; designing payment methods, security mechanisms, and conditions precedent fitting Vietnamese law.
• Drafting and negotiating contracts: term sheets (MOU/LOI), share/capital portion purchase agreements (SPA), shareholder agreements — with tight warranty, indemnity, and dispute resolution clauses.
• Carrying out procedures: drafting and filing capital contribution/share purchase registration dossiers at the investment registration authority; post-deal enterprise registration changes; IRC adjustments when needed.
• Post-M&A support: governance restructuring, updating charters, licenses, and compliance obligations for the post-change company — see M&A and Corporate Restructuring.

Implementation process

1. Receiving the deal target: foreign investor information, target company, planned purchase ratio, and business lines — preliminary market access assessment.
2. Legal due diligence: comprehensive review of the target, risk reports and remediation proposals, price or deal structure adjustments.
3. Deal structuring and negotiation: agreeing the form (share/capital portion purchase or additional contribution), signing the term sheet, drafting the transfer contract.
4. Carrying out capital contribution/share purchase registration (if registrable): drafting dossiers, filing at the investment registration authority, tracking to the condition-compliance notification.
5. Signing the formal contract and payment: completing conditions precedent, signing the SPA, paying per agreed methods and foreign exchange rules.
6. Post-deal obligations: enterprise registration changes, IRC adjustment (if any), updating charters, licenses, and related tax obligations.

Documents clients should prepare

• Foreign investor legal documents: business registration certificate (for organizations) or passport (for individuals), consular legalization and notarized translation as required.
• The target’s enterprise registration certificate and charter.
• The target’s latest financial and audit reports (if any).
• The target’s land use right certificates and ownership of assets attached to land (if any).
• The target’s sub-licenses and material contracts.
• Draft term sheets between the parties (if any).
• Power of attorney for FLAT LAW FIRM to carry out procedures (we will draft the template).

Expected time and cost

The review period for capital contribution/share purchase registration dossiers is 10 working days from receipt of a complete, valid dossier (for ordinary cases). Where the target holds land use rights in areas affecting national defense and security, the time is longer due to consulting military and police authorities. However, total M&A deal time depends mainly on due diligence and negotiation — usually counted in weeks or months, not days.

On costs: beyond administrative fees (insignificant versus deal value), the big costs are legal due diligence, structuring advice, and contract drafting. FLAT LAW FIRM’s service fees are quoted specifically after scoping — please contact us for a quote.

Legal updates through September 2026

The 2025 Investment Law (No. 143/2025/QH15), effective 01/3/2026, replaces the 2020 Investment Law. Rules on capital contribution, share purchase, and capital portion purchase by foreign investors are in Article 21: three condition groups (market access; national defense and security; land) and three cases requiring registration before changing members/shareholders. A notable new point versus the 2020 Investment Law is the added case of economic organizations holding land use rights in areas affecting national defense and security.

Decree 96/2026/NĐ-CP guides the 2025 Investment Law, effective 31/3/2026, replacing Decree 31/2021/NĐ-CP. Capital contribution and share purchase forms are listed in Article 74; conditions and implementation principles in Article 75; registration dossiers, sequences, and procedures in Article 76 — including the process for consulting military and police authorities for sensitive land cases.

New establishment mechanism: under the 2025 Investment Law and Decree 96/2026/NĐ-CP, foreign investors may establish an economic organization before being granted the IRC, with a commitment to meet market access conditions, and must complete IRC procedures within 12 months from establishment. This is a key difference to weigh when choosing between greenfield and M&A.

Full texts of the above instruments can be found at the Government’s legal normative documents system. Page content should be cross-checked against the instruments in force at the time of the transaction.

Why choose FLAT LAW FIRM?

Foreign-invested M&A is a “two-speed” deal: commercial negotiation speed and legal procedure speed. Many deals collapse not over price, but because one party discovers too late that registration cannot pass, or the target carries risks the contract does not cover. FLAT LAW FIRM does both — foreign investment advisory and M&A deal work — so we see commercial and procedural risks simultaneously from the due diligence stage. Our team works in Vietnamese, Chinese, and English, suited to investors coordinating buyers, sellers, and Vietnamese state authorities. See Foreign Investment in Vietnam and Chinese Investors.

Frequently Asked Questions

Useful links

You should talk to a lawyer if:

• You are weighing greenfield establishment against acquiring an operating company — needing to compare costs, timelines, and risks of both options.
• The target does business in sectors that may be conditionally accessible to foreign investors.
• The deal is expected to change foreign ownership around the 50% charter capital threshold.
• The target holds land use rights on islands, in border or coastal areas, or areas affecting national defense and security.
• You need comprehensive legal due diligence on the target before signing — land, tax, labor, licenses, disputes.
• You signed a term sheet but are unclear whether the case requires pre-deal capital contribution/share purchase registration.