Cross-border mergers and acquisitions (M&A) have become an increasingly popular channel for foreign investors to enter Vietnam’s market, particularly in sectors where greenfield investment is slower or more capital-intensive. Vietnam’s legal framework has evolved to accommodate this trend, but procedural complexity and regulatory limits remain key considerations for dealmakers.
1. Legal Framework
Cross-border M&A transactions are governed mainly by:
- Law on Investment 2020 – sets rules for foreign ownership, market access, and procedures for capital contribution or share purchase.
- Law on Enterprises 2020 – regulates corporate structures, charter amendments, and shareholder rights.
- Law on Competition 2018 – addresses merger control thresholds and notification duties.
- Sector-specific laws (e.g., banking, insurance, real estate) may impose additional approvals.
- International commitments such as the CPTPP and EVFTA provide liberalized ownership caps in certain industries.
2. Forms of M&A
Foreign investors typically acquire:
- Equity stakes in existing companies (share purchase or capital contribution).
- Business divisions or assets through asset deals.
- Full mergers or consolidations, though less common due to procedural complexity.
Transactions may involve public or private companies. Listed share acquisitions also fall under the Securities Law 2019 and its tender offer rules.
3. Market Access and Ownership Caps
Investors must review whether the target operates in:
- Unrestricted sectors, where 100% foreign ownership is allowed.
- Conditional sectors, subject to equity limits, joint-venture requirements, or licensing (e.g., logistics, education, telecoms).
- Prohibited sectors, where foreign participation is banned.
Where Vietnam’s WTO or FTA commitments grant broader access than domestic law, investors can rely on treaty rights, provided they document eligibility.
4. Procedural Steps
- Pre-transaction due diligence on corporate records, compliance, land-use rights, labor, tax, and IP.
- M&A Approval: If the target operates in a conditional sector or the acquisition results in ≥50% foreign ownership, investors must obtain approval from the investment registration authority before closing.
- Merger control filing: Required if the transaction meets asset, turnover, or market-share thresholds under the Competition Law.
- Execution and registration: Sign the share purchase agreement, amend the charter, and update ownership in the National Enterprise Database.
Timelines vary: straightforward deals may take 4–6 weeks, while multi-license transactions can last several months.
5. Practical Issues
- Land-use rights: Targets holding land allocated by the State may face limits on transferring land-related rights to foreign investors.
- Labor & unions: Employee consultation is not mandatory, but social security and collective agreement obligations transfer to the buyer.
- Foreign exchange: Payment for offshore investors must go through a capital account at an authorized bank.
- Dispute resolution: Parties often choose arbitration (VIAC, SIAC, ICC) rather than courts.
6. Trends and Outlook
M&A activity remains strong in real estate, consumer goods, fintech, and renewable energy. Vietnam is streamlining approval procedures and aligning merger-control rules with international practice, yet foreign investors still seek clearer guidance on overlapping investment and competition filings.
Conclusion
Cross-border M&A in Vietnam offers efficient access to a dynamic economy, but success depends on careful navigation of market-access restrictions, approval procedures, and sectoral rules. Thorough due diligence, robust contractual protections, and early engagement with authorities are essential to unlock opportunities while mitigating regulatory risk.
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