Author:

Tran Phuong Nam – Lawyer

Ho Thanh  – Paralegal

In the context of Vietnam’s mergers and acquisitions (M&A) market continuing to experience strong growth in 2026, particularly driven by foreign direct investment (FDI) inflows, the accurate identification of pre-transaction legal obligations plays a decisive role in determining the timing and overall efficiency of a transaction. 

In practice, one of the legal obstacles that often prolongs transaction timelines (especially in specialized sectors such as real estate, energy, and healthcare) is the procedure for the “Registration of Capital Contribution, Share Acquisition, and Capital Contribution Acquisition” by foreign investors (“FIs”) with the investment registration authority (commonly referred to as the “M&A Approval”). Proper identification of exemption scenarios not only enables investors to optimize transaction completion timelines but also significantly reduces compliance costs. This article focuses on analyzing the cases exempt from this procedure under the Law on Investment 2025. 

1. Cases Requiring M&A Approval

Pursuant to Article 21 of the Law on Investment 2025, FIs are required to complete the M&A approval procedure prior to carrying out a transaction if the transaction falls within one of the following categories: 

• The transaction increases the foreign ownership ratio in an economic organization conducting business activities subject to market access conditions applicable to FIs. 

• The transaction results in FIs holding more than 50% of the charter capital of the economic organization (applicable in both cases where the ownership ratio increases from 50% or less to above 50%, or where foreign investors already hold more than 50% and continue to increase their ownership). 

• The target economic organization holds a Land Use Rights Certificate for land located in areas of significance to national defense and security (including islands, border communes/wards/townships, coastal areas, or other locations affecting national defense and security). 

2. Cases Exempt from M&A Approval

Based on the above regulations, investors structuring transactions may consider the following cases to be exempt from the appraisal process conducted by the investment registration authority: 

Case 1: Foreign Ownership remains at or below 50%, and the Economic Organization Does Not Conduct Business in Market Access Restricted Sectors for FIs.  

This structure offers the highest level of legal certainty. If the target company operates exclusively in sectors that are not subject to market access restrictions (where FIs are accorded national treatment equivalent to domestic investors), and following the transaction, the aggregate ownership ratio of all foreign investors in the target company does not exceed 50%, the transaction is exempt from the M&A approval procedure. 

Case 2: The Economic Organization Operates in a Market Access Restricted Sector, but the Transaction Does Not Increase Foreign Ownership.  

Many enterprises mistakenly assume that any change involving foreign shareholders or members in a company operating in a market access restricted sector automatically triggers the M&A approval requirement. In fact, the Law on Investment 2025 stipulates that the procedure is only required if the transaction increases the ownership ratio of FIs. 

Accordingly, share transfers between FIs within the same company (for example, FI A transfers its entire 30% shareholding to FI B), or acquisitions by one foreign investor from another FI that do not change the aggregate foreign ownership ratio in the target company, are not subject to the M&A approval. 

Case 3: Transactions Conducted Exclusively Among Domestic Investors.  

M&A transactions conducted entirely between Vietnamese investors, without the participation of foreign capital and without altering the foreign-invested status of the economic organization (as provided under Article 20 of the Law on Investment 2025), are not governed by this procedure. The parties are only required to comply with the share transfer or capital transfer procedures prescribed by the Law on Enterprises. 

Note on Sensitive Area Risks: Even where a transaction satisfies the exemption conditions under Case 1 or Case 2, if legal due diligence reveals that the target company holds land use rights in border, coastal, or island areas, the transaction will still be subject to the mandatory M&A approval procedure. This is intended to enable the investment registration authority to obtain appraisal opinions from the Ministry of National Defence and the Ministry of Public Security. 

3. Recommendations

Utilizing exemptions from the M&A approval procedure can provide a significant competitive advantage in terms of transaction timing. However, the legal distinction between transactions that are “exempt” and those that “require registration” remains relatively nuanced due to Vietnam’s business line registration framework. Prior to signing a Share Purchase Agreement (SPA) or Capital Transfer Agreement, investors should strictly undertake the following three steps: 

• Review the business lines of the target company: In practice, many target companies register business lines that are subject to market access restrictions for FIs but do not actually engage in such activities. Nevertheless, authorities generally rely on the Enterprise Registration Certificate when determining the applicability of the M&A approval procedure. Accordingly, the parties should consider removing such business lines before proceeding with the transaction to ensure the validity of the exemption. 

• Conduct a comprehensive review of real estate assets: National defense and security risks may arise not only from owned land but also from leased land and leased factories located in sensitive areas. All real estate assets should be carefully reviewed against administrative boundary maps to eliminate potential risks. 

• Manage multi-layer regulatory compliance risks: Even if exempt from the M&A approval under the Law on Investment, the transaction may still be required to undergo an Economic Concentration Notification procedure with the National Competition Commission if it satisfies the statutory thresholds relating to total assets, revenue, transaction value, or market share as prescribed under competition law. 

Time of writing: May 25, 2026

The article contains general information which is of reference value. In case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer  at  info@cdlaf.vn

You can refer for more information:

• Cross-border E-commerce and Compliance Requirements for International Brands
• Legal Framework on Support for Innovative Startup Enterprises
• Digital signatures, timestamps, and ID codes in electronic labor contracts
• Guidance on Issuing Identification Codes for Electronic Labor Contracts under Circular 08/2026/TT-BNV
• Reduction of Conditional Business Lines Effective From July 1, 2026
• Outbound Investment by FDI Enterprises: Procedures under Decree 103/2026/ND-CP
• Foreign Ownership of Real Estate in Vietnam