In a share purchase agreement (SPA), the signature on the last page is not the finish line — closing is when money and shares actually change hands. Bridging the two are the Conditions Precedent (CPs): events that must occur first, failing which the buyer has no duty to close. This article compiles 7 key groups of CPs in Vietnamese SPAs, clearly separating CPs required by law from CPs agreed by the parties — a distinction many generic articles blur.
1. Legal basis: conditional civil transactions
CPs rest on solid footing in Vietnamese law: Article 120 of the Civil Code 2015 recognises conditional civil transactions — parties may agree on events that give rise to or terminate rights and obligations. Combined with the principle of freedom of agreement (Articles 3 and 385 of the Civil Code), a CP clause is lawful provided it does not contravene the law or social ethics.
One core requirement as to the nature of a CP: it must be an objective event, not wholly dependent on the unilateral will of one party (the spirit of clause 2, Article 120). A clause reading “the buyer may close if the buyer wishes” is not a true CP — it turns an obligation into an option and risks being treated as void in its conditional nature.
2. CPs required by law (mandatory whether agreed or not)
(1) Foreign-investor approval. Where the buyer is a foreign investor, the registration of capital contribution, share or equity acquisition must be completed under Article 21 of Investment Law 143/2025/QH15 — registration before any change of members/shareholders, in the cases prescribed by law (increased ownership in conditionally-accessed sectors; exceeding 50%; holding land use rights in sensitive areas…). Without this step, the transfer cannot be formalised.
(2) Economic concentration notification. If the deal meets any threshold in Article 13 of Decree 35/2020/ND-CP — VND 3,000 billion in total assets, VND 3,000 billion in total revenue in the Vietnamese market, VND 1,000 billion in transaction value, or 20% market share — the parties must file an economic concentration notification with the National Competition Commission under Article 33 of Competition Law 2018, and must do so before implementing the transaction. This is a “hard” CP: breach can lead to penalties and the deal being revisited.
(3) Sector-specific approvals. Depending on the target’s industry: banking (approval of the State Bank of Vietnam), pharmaceuticals (Ministry of Health), securities/insurance (State Securities Commission/Ministry of Finance)… Each sector has its own procedures and timelines — screen them from the DD stage and build them into CPs with realistic deadlines.
3. CPs agreed by the parties (flexible per deal)
(4) Internal approvals. Resolutions of each party’s General Meeting of Shareholders/Members’ Council (or Board under delegation) approving the transaction — ensuring the SPA signatory has authority and avoiding later disputes over validity.
(5) No material adverse change (no MAC). Between signing and closing, no materially adverse event hits the target (loss of a major customer, licence revocation, major asset damage…). “Material” should be quantified or illustrated in the SPA to avoid argument.
(6) Bring-down of representations and warranties. The seller’s representations and warranties must still be true at closing as at signing — if a material inaccuracy surfaces during the interim period, the buyer may refuse to close.
(7) Other practical CPs: third-party consents (e.g. major lenders, counterparties to key contracts with change-of-control clauses); completion of legal due diligence with acceptable results; clarity on tax obligations arising from the transfer; and payment through capital accounts in compliance with foreign-exchange administration (for cross-border deals).
4. Consequences of CP failure: termination right + long-stop date
If CPs remain unsatisfied by the deadline (and the parties neither extend nor waive them), the party protected by the CP has the right to terminate — i.e. not to close — without being in breach. To avoid a deal hanging indefinitely, SPAs always set a long-stop date: past this date with CPs still outstanding, either party may walk away under the agreed mechanics.
Good practice: for each CP, state which party must drive it (e.g. the buyer handles foreign-investor procedures, both handle the competition filing), the deadline, and which CPs may be waived by the benefiting party.
5. An important note on this list
These 7 groups of CPs are a synthesis of deal practice and mandatory legal requirements — not a statutory checklist every SPA must copy verbatim. Each deal needs tailoring: a small domestic deal may need only 2–3 CPs; a deal with a foreign investor in banking may need a dozen detailed ones. Do not copy mechanically — let deal counsel design CPs around the transaction’s real risks.
Frequently asked questions
Must every SPA contain CPs?
No law mandates CPs in every SPA — but legally-required CPs (foreign investor, economic concentration, sector approvals) must be completed before closing where the deal falls in scope.
Can a CP depend on one party’s unilateral will?
It should not. A CP must be an objective event (spirit of clause 2, Article 120 of the Civil Code); a condition wholly dependent on unilateral will risks invalidity.
What is a long-stop date?
The final deadline by which CPs must be satisfied; past it with CPs outstanding, parties may terminate under the agreed mechanics instead of leaving the deal hanging.
Who is responsible for driving each CP?
The SPA should assign each CP (e.g. buyer handles foreign-investor procedures), with deadlines and rules on which party may waive a CP.
Sources
- Civil Code 2015: Article 120 (conditional civil transactions; conditions must not depend wholly on unilateral will — clause 2); Articles 3, 385 (freedom of agreement);
- Investment Law 143/2025/QH15 — Article 21 (foreign-investor registration of capital contribution/share/equity acquisition — before changing members/shareholders);
- Competition Law 2018 — Article 33 (economic concentration notification before implementation) + Article 13 of Decree 35/2020/ND-CP (thresholds: 3,000bn assets / 3,000bn revenue / 1,000bn transaction value / 20% market share).
Related articles
- Share Purchase Agreements in Vietnam: 15 Key Clauses
- Share Purchase Checklist for Vietnamese Companies
This article is for reference only and does not constitute legal advice. The content was drafted by AI and will undergo quality review by the AI Legal Council of FLAT Law Firm before any approval for publication; it is not the legal opinion of a licensed human lawyer. Laws and regulations may change; verify the current legal texts before applying them.
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