Checklist: Internal Share Transfers Between Foreign Investors
In companies with multiple foreign investors, transfers from one foreign investor to another (existing or new) are routine: intra-group ownership restructuring, one party exiting, another increasing its stake. Because it is "internal", many assume the procedure is simple — in reality, foreign-to-foreign transfers still touch four areas: investment approval, transfer restrictions, tax, and legal-record updates.
This 12-item checklist makes sure no link is missed.
1. Who this checklist is for
For share transfers in joint-stock companies (or capital-contribution transfers in LLCs) where both transferor and transferee are foreign investors — including transfers among existing investors and transfers to a new foreign investor joining the company.
Distinction from T-031 (FAQ): this topic is a step-by-step practical checklist; T-031 is Q&A on principles. The two complement each other without overlapping.
Tick each item in execution order.
2. The detailed checklist
Item 1: Determine whether M&A registration is required ☐
This is the first and most important question. Under Investment Law 143/2025, a foreign investor buying shares/stakes must register the acquisition ("M&A approval") in certain cases. Internal transfers among existing foreign investors normally don't increase total foreign ownership — but if the buyer is a new foreign investor entering a conditional market-access sector, the registration obligation may still arise. Getting this wrong taints the whole transaction.
Item 2: Review transfer restrictions in the charter and shareholder agreement ☐
Free transferability is the principle, but check three layers of restrictions: (1) statutory — within 3 years of ERC issuance, a founding shareholder may transfer ordinary shares to outsiders only with GMS approval; (2) charter restrictions; (3) shareholder-agreement restrictions such as pre-emption rights, drag-along/tag-along, or transfers to competitors. Missing any layer can expose the deal to challenges or partial invalidity.
Item 3: Agree on the share valuation method ☐
The transfer price drives tax and is the most dispute-prone point. Agree on a method (book value, discounted cash flow, independent appraisal) and record it in the contract. Note: an abnormally low price versus market value may be reassessed by the tax authority — an "internal friendly price" doesn't mean tax is computed on it.
Item 4: Draft the share purchase agreement ☐
Even internal transfers need a written agreement with minimum terms: subject (number and class of shares), price and payment method, timing of ownership transfer, transferor warranties (shares unencumbered, dispute-free), conditions precedent (e.g., M&A approval from Item 1), and dispute resolution. For cross-border deals, consider a bilingual contract and an arbitration clause.
Item 5: Determine and prepare the transferor's tax obligations ☐
Foreign organization transferor: CIT on capital-transfer income under the foreign contractor tax mechanism — from the 2025 CIT tax year, a 2% rate on the total transfer value under the 2025 CIT Law (67/2025/QH15), Article 12(3) of Decree 320/2025/ND-CP and Article 7 of Circular 20/2026/TT-BTC (replacing the 20% on taxable income under Circular 103/2014/TT-BTC, repealed from 1/7/2026). Individual transferor (including foreigners): PIT — 0.1% on the transfer price per transfer, or 20% on income (sale price minus purchase price and reasonable costs) if registered with the tax authority. Identify the transferor's status upfront to compute correctly and prepare filings.
Item 6: Pay through a bank ☐
The full price must be paid through a licensed bank in Vietnam. For FDI companies, capital-related flows go through the direct investment capital account under foreign exchange regulations. Cash or informal channels not only breach payment rules but leave the buyer unable to prove lawful fund sources at tax audit.
Item 7: Update the shareholder register ☐
After completion, update the register: record the transferee as a shareholder (or increased holding) and update the transferor's holding. The register is the legal evidence of shareholder status — late updates can trigger voting-right disputes at the next GMS.
Item 8: Register ERC changes (if any) ☐
If the transfer changes founding-shareholder information or other registered particulars, register the change with the business registration authority under Decree 168/2025/ND-CP. Check carefully: not every share transfer requires ERC amendment — only when registered information changes.
Item 9: Amend the Investment Registration Certificate (if the investor changes) ☐
For FDI companies, if the deal changes the project investor (e.g., a new foreign investor fully replaces the old one), amend the project and reissue the IRC under Investment Law 143/2025 and Decree 96/2026/ND-CP. Transfers among existing investors that don't change the IRC's investor list normally don't trigger this — but compare against the current IRC.
Item 10: Re-file beneficial-owner information (if changed) ☐
Share transfers can alter actual ownership — time to review beneficial-owner disclosure under Law 76/2025 and Decree 168/2025 (Article 17 criteria, amended by Decree 296/2026/ND-CP effective 23/7/2026). Pay special attention when the buyer is a foreign organization with a multi-layer structure.
Item 11: Handle rights attached to the shares ☐
Review attached rights: undistributed dividends, voting rights, SHA commitments (e.g., board nomination rights). Agree in the contract who enjoys benefits accruing up to the transfer moment. Missing this is a classic source of post-closing disputes.
Item 12: Keep a complete transaction file ☐
Minimum file: the transfer agreement, bank payment records, tax filings and payment receipts, the updated shareholder register, M&A approval (if any), amended IRC (if any), internal approval resolutions. Keep at least 10 years for tax audits and later disputes.
3. Common DIY mistakes
Mistake 1 — Skipping M&A approval. Assuming "internal" means no approval — while the buyer is a new investor in a conditional sector.
Mistake 2 — Not reading the shareholder agreement. Breaching existing shareholders' pre-emption rights, inviting rescission claims.
Mistake 3 — Artificially low "internal" pricing. Tax authority reassessment, back tax and penalties.
Mistake 4 — Non-bank payment. Unprovable cash flow, problems at tax settlement and future profit repatriation.
Mistake 5 — Forgetting register and IRC updates. Commercially done but legally "hanging" — the new shareholder can't exercise rights.
4. After the checklist
The deal is legally complete when: money received, tax filed/paid, register updated, and any change registrations done. Next: update internal governance (board nomination rights, GMS voting ratios) and notify the bank and auditors of the ownership change.
5. FAQ
Q: Does a foreign-to-foreign share transfer need approval?
A: It depends. Transfers among existing investors normally don't increase total foreign ownership, but a new foreign buyer entering a conditional market-access sector may trigger M&A registration under Investment Law 143/2025.
Q: Can founding shareholders freely transfer shares?
A: Within 3 years, transfers of ordinary shares to outsiders need GMS approval (except to another founding shareholder). After 3 years, free transfer subject to charter/SHA restrictions.
Q: What tax applies to foreign-to-foreign share transfers?
A: Foreign organizations: 2% CIT on the total capital-transfer value (foreign contractor tax mechanism; from the 2025 tax year under the 2025 CIT Law, Decree 320/2025, Circular 20/2026). Individuals: 0.1% PIT on transfer price or 20% on income.
Q: Must payment go through a bank?
A: Yes — mandatory through a licensed Vietnamese bank; FDI capital flows via the direct investment capital account.
Q: Is state registration required after transfer?
A: Shareholder-register update is mandatory. ERC change only if registered info changes; IRC amendment when the project investor changes; review beneficial-owner disclosure.
References
- Enterprise Law 59/2020/QH14; Law 76/2025/QH15 (effective 1/7/2025).
- Investment Law 143/2025/QH15 (effective 1/3/2026); Decree 96/2026/ND-CP (effective 31/3/2026).
- 2025 CIT Law (67/2025/QH15); Decree 320/2025/ND-CP (Article 12(3)); Circular 20/2026/TT-BTC (Article 7); Circular 89/2026/TT-BTC (Article 99 repealing Circular 103/2014/TT-BTC from 1/7/2026); Circular 111/2013/TT-BTC (PIT).
- Cross-checked via thuvienphapluat.vn at drafting (28/9/2026).
—
