When a foreign investor exits, the joint venture does not have to die: the Vietnamese partner or another domestic investor can buy out the entire foreign stake and the business lives on as a wholly Vietnamese company. The process is a full transfer transaction plus the unwinding of the project’s FDI status, not a mere change of shareholder names.
The legal framework
The transaction step follows ordinary transfer rules: capital contributions in a limited liability company transfer under Articles 51 and 52 of Law on Enterprises 59/2020/QH14 with the remaining members’ pre-emptive right, and shares in a joint stock company transfer under Article 127; the transfer contract should carry the valuation mechanism, conditions precedent and treatment of the foreign side’s shareholder loans.
The unwinding step is the distinctive part: once the foreign investor has fully exited, the project no longer has a foreign investor and the company must work with the investment registration authority to adjust or terminate the investment registration certificate for the project, depending on project status and the guidance at the time under Investment Law 143/2025/QH15 and Decree No. 96/2026/ND-CP.
On money and tax: the transfer price is paid through the foreign seller’s investment capital account under Circular No. 38/2026/TT-NHNN before that account is closed as part of the exit; a foreign corporate seller bears corporate income tax of 20 percent on capital transfer gains under Law on Corporate Income Tax 67/2025/QH15, with declaration and payment handled through the Vietnamese enterprise where the seller has no presence.
Applied analysis and a practical example
A Vietnamese buyer of the foreign stake generally does not need the capital contribution approval or registration designed for foreign investors, because that regime exists to screen foreign capital entering conditional sectors; a domestic buyer simply follows sector conditions applicable to domestic investors and registers the member or shareholder change like an ordinary internal transaction.
The frequently forgotten item is the intangible package attached to the foreign investor: trademarks, technology, management software and exclusive distribution contracts usually belong to the foreign parent and are only licensed to the venture. When the foreign side exits, the Vietnamese company must negotiate to buy or continue licensing these rights, or it keeps the legal shell and loses the product it sells.
Capital transfer tax in principle falls on the seller, being a tax on the transferor’s income, but the contract may reallocate the economic burden — for example a net-of-tax price, or the buyer undertaking declaration, withholding and payment on the seller’s behalf; what matters is that the allocation is explicit, in case the tax authority later re-prices the transfer.
Practical example: A Malaysian investor exited a 49 percent stake in a Thanh Hoa building-materials venture, selling to the Vietnamese majority partner. The member change registered smoothly, yet closing took two extra months because the venture’s kiln technology licence terminated on the seller’s exit; the parties added a three-year paid licence extension so the now wholly Vietnamese company could keep producing while developing its own process.
Action checklist
- Check remaining members’ pre-emptive rights before signing
- Inventory intangibles and licences granted by the foreign side
- Agree valuation mechanics and conditions precedent
- Engage the investment authority early on project adjustment
- Route payment through the seller’s investment capital account
- State expressly who bears transfer tax and who files on behalf
Deeper notes
After conversion to a wholly Vietnamese company, the business leaves behind duties specific to foreign-invested enterprises such as capital-account discipline for capital transactions, but simultaneously loses direct access to foreign capital and any incentives tied to FDI project status; management should map the legal status before and after conversion so the first tax finalisation holds no surprises.
If the Vietnamese partner funds the buy-out with borrowed money, check the venture’s existing credit agreements for change-of-ownership clauses; some of the company’s own bank loans require notice or consent when the ownership structure changes fundamentally, even though the borrowing entity itself is unchanged.
Frequently Asked Questions
What is the procedure when the foreign investor exits and the joint venture becomes a 100% Vietnamese company?
The sequence is: agree and value the foreign stake; respect any remaining members’ pre-emptive right; sign the transfer contract and pay through the seller’s investment capital account; register the member or shareholder change with the enterprise registration authority; and work with the investment registration authority to adjust or close the FDI project status once no foreign investor remains. The enterprise and investment tracks must run in parallel so the company’s legal status stays consistent.
Does the Vietnamese buyer need any approval to buy back the capital?
No. A Vietnamese buyer does not need the approval or capital contribution registration imposed on foreign investors, because that mechanism screens foreign capital into conditional sectors. A domestic buyer completes the transfer and member-change registration as an internal transaction, while the company resolves the investment file because the project no longer has a foreign element; this is the single biggest procedural difference from the reverse direction of purchase.
Who bears the capital transfer tax?
In principle the tax on capital transfer income is borne by the seller — the exiting foreign investor: a foreign organisation pays corporate income tax of 20 percent on taxable transfer gains under Law on Corporate Income Tax 67/2025/QH15, and where the seller has no presence in Vietnam, declaration and payment on its behalf are made through the Vietnamese enterprise or the buyer under the current mechanism. The contract may reallocate who ultimately carries the economic cost, but the party performing the tax duty must be named expressly.
This article has been quality-reviewed by the FLAW AI Legal Council
