Once an investor accumulates shares of a public company up to a certain threshold, Vietnamese law no longer allows quiet buying. The public tender offer mechanism forces the buyer to disclose its intention and offer price, and to treat every remaining shareholder equally. For a foreign investor, a tender offer adds a second control layer, the foreign ownership limit, so a deal structured around the wrong threshold can both breach the tender duty and fail to take delivery of shares because the room is full.
The Legal Framework You Need
The Law on Securities 54/2019/QH14 imposes a mandatory tender offer duty when an organisation, individual and their related persons buy shares to reach or exceed prescribed voting share ownership thresholds in a public company, starting at the 25 percent mark and continuing at further incremental levels, subject to exemptions such as purchases under an issuance plan already approved by the General Meeting of Shareholders. Alongside mandatory offers, the law also permits voluntary tender offers where an investor openly seeks to raise its stake. Every offer must be registered with the State Securities Commission and may proceed only after approval.
Decree No. 155/2020/ND-CP details the tender offer registration dossier, including the registration form, proof of financial capacity and performance commitments, and the role of a securities company acting as tender agent. The offeror must disclose information in the prescribed form, apply one uniform offer price to all shareholders, and refrain from trading outside the offer while it is running. After completion, the offeror reports results and settles share transfers and payment through the agent. If remaining public float falls too low afterwards, maintaining public company status itself becomes an issue to plan for.
Applying the Rules to a Real Deal
For a foreign investor, the tender offer equation has an extra variable, the foreign ownership room: even with the State Securities Commission approval, shares actually received remain capped by the target maximum foreign ownership ratio. Before announcing an offer, the investor should therefore model the room scenario: tendering for all domestically held shares is meaningless if only a few percent of room remains. Some deals are restructured into a negotiated purchase from a major shareholder combined with room commitments, instead of a market-wide tender offer.
On timing, a tender offer typically runs from several weeks to a few months, from dossier preparation and registration with the State Securities Commission, through disclosure and the window for shareholders to register sales, to settlement and result reporting. Target shareholders are free to accept or decline, and the offeror cannot freely withdraw a published offer except in statutory cases. Because the process is hard to reverse, target due diligence and funding must be fully locked before filing, not arranged while the offer is live.
Illustrative example: A European industrial group planned to lift its stake in a listed building materials company from just under 20 percent to control. Counsel pointed out that open market accumulation would cross a mandatory tender threshold, while the stock foreign room stood almost full. The group instead registered a voluntary tender offer sized to the available room, paired with a shareholder meeting proposal to raise the room for the following year, sequencing control ambitions across two steps rather than breaching the tender rules in one move.
Procedure and Documents to Prepare
First: map the current holdings of the investor and related persons to identify the mandatory tender threshold about to be crossed. Next: check the target remaining foreign room and the feasibility of raising it by sector and charter. After that: prepare the tender offer registration dossier and appoint a securities company as tender agent. Then: file with the State Securities Commission, disclose the offer and open the shareholder sale registration window. Finally: settle payment and share transfers through the agent, report the offer result and handle post-deal disclosure duties.
- map the current holdings of the investor and related persons to identify the mandatory tender threshold about to be crossed.
- check the target remaining foreign room and the feasibility of raising it by sector and charter.
- prepare the tender offer registration dossier and appoint a securities company as tender agent.
- file with the State Securities Commission, disclose the offer and open the shareholder sale registration window.
- settle payment and share transfers through the agent, report the offer result and handle post-deal disclosure duties.
Common Risks and How to Prevent Them
The first risk is accumulating past a threshold without launching a mandatory tender offer, leading to sanctions and a possible forced resale of the offending shares. The second risk is announcing an offer the foreign room cannot support, so the offer cannot take up shares as the market was told. The third risk is trading outside the offer while it is running, a prohibited act that can suspend the offer itself. The safeguard is to map ownership thresholds and room from day one and to lock funding before the registration dossier is filed.
A tender offer is a process in which price, foreign room and funding must all be locked before the filing goes in; tackling any of the three after the offer period opens is too late. Map the ownership thresholds from day one, confirm the funding before the announcement date, and keep the full offer file for later accountability.
Frequently Asked Questions
What should foreign investors know about public tender offers in Vietnam?
Foreign investors should grasp four points. First, the tender offer duty arises at voting share ownership thresholds under the Law on Securities 54/2019/QH14, aggregated with related persons. Second, every offer must be registered with the State Securities Commission and run through a securities company as agent. Third, the offer price and conditions must apply equally to all shareholders. Fourth, foreign investors are additionally capped by the target foreign ownership room, so shares actually obtained may be far fewer than the number registered in the offer.
At what ownership threshold does a public tender offer become mandatory?
The most common starting threshold is 25 percent of the total outstanding voting shares of the public company: when an investor and related persons buy to reach or exceed this mark, the mandatory tender offer duty arises, and further ownership increase thresholds prescribed by the Law on Securities 54/2019/QH14 keep triggering the same duty. Some cases are exempt, such as buying newly issued shares under a plan approved by the General Meeting of Shareholders. Because holdings of related persons are aggregated, investors must add linked parties stakes before concluding they are below the threshold.
How long does a public tender offer procedure take?
A well-run tender offer usually takes a few months from preparation to result reporting. The timeline covers dossier drafting and diligence, the State Securities Commission review of the registration, the disclosure and shareholder sale registration window under Decree No. 155/2020/ND-CP, then payment and share transfer through the agent securities company. Foreign investors should add time for internal group approvals and room verification. Working backwards from the desired completion date is the safest way to avoid being squeezed by the calendar.
