Author:

• Ha Minh Khang – Lawyer

• Tran Phuong Nam – Lawwyer

Pursuant to Law No. 68/2025/QH15 and Decree No. 366/2025/ND-CP, the restructuring of State capital commencing in 2026 marks a definitive transition from administrative management to investment capital flow management, characterized by three breakthrough changes:

Strong Decentralization and Autonomy: The Members’ Council or the enterprise Chairperson of the enterprise is empowered to decide on the transfer of capital and investment projects with a value of up to 50% of the owner’s equity (capped at VND 15,000 billion for Groups/General Corporations and VND 5,000 billion for other enterprises).

Diversified Restructuring Forms: Beyond merely equitization or divestment, restructuring activities now encompass mergers, demergers (division or separation), conversion of corporate forms, and the transfer of owner representation rights to professional organizations (such as SCIC) to separate management functions.

Operation under Market Principles: The State acts as an equal investor, conducting divestments based on appraised values and public auctions. In particular, the law allows flexibility regarding the overall portfolio efficiency, permitting divestment below par value in specific cases to optimize capital flows.

This new mechanism streamlines approval procedures, enhances transparency in valuation, and creates a level playing field for mergers and acquisitions between State-Owned Enterprises (SOEs) and the private sector.

1. Changes in Governance Principles and Nature of Capital Flows

Unlike the regulations set forth in the Law on Management and Use of State Capital Invested in Production and Business at Enterprises 2014 (“Law 2014”), Law 2025 defines State capital restructuring not merely as divestment or equitization, but as a process of rearranging the investment portfolio to direct capital flows toward key sectors such as high technology, infrastructure, and national defense and security. The State exercises its rights as the owner of investment capital based on investor principles, operating on an equal footing with other economic sectors and strictly adhering to market laws. This process is carried out in accordance with the following foundational principles:

• Separation of Property Ownership: State capital, once invested in an enterprise, is defined as the asset of the corporate legal entity. The State exercises ownership rights commensurate with its capital contribution or shareholding, abandoning the mindset of “State capital lying within the enterprise”.
• Market Principles and Transparency: All capital transfer and divestment activities must be conducted in a public and transparent manner. The value of transferred capital must be determined through market-based mechanisms, such as valuation and auction.
• Flexibility in Efficiency Determination: The law accepts that divestment may occur at a price lower than book value or par value in certain specific cases, provided it ensures the overall efficiency of the investment portfolio or achieves socio-economic objectives as decided by the competent authority.

2. Forms and Methods of State Capital Restructuring

Based on Law 2025 and its guiding documents, State capital restructuring activities are implemented through the following forms:

Corporate Reorganization: The process of converting the legal form and structure of the enterprise, including:

• Restructuring through merger, consolidation, division, or separation.
• Equitization: Converting a wholly State-owned enterprise into a joint-stock company. This remains the dominant form for mobilizing social resources.
• Conversion of Type: Converting into a Limited Liability Company (LLC) with two or more members in cases of selling a portion of State capital to strategic investors or contributing capital.

State Capital Transfer (Divestment): The activity of transferring capital in joint-stock companies or multi-member LLCs must comply with market principles.

• New regulation: Law 2025 and Decree 366/2025/ND-CP stipulate specific methods for determining the starting price to limit asset loss, while diversifying transfer methods (public auction, competitive offering, negotiated sale) depending on the enterprise type and market conditions.
• Objective: To prioritize overall investment efficiency rather than mechanical capital preservation.

Other Forms:

• Transfer of Owner Representation Rights: Transferring representation rights between agencies (e.g., transferring to SCIC) to professionalize management and separate the state management function of the governing Ministry.
• Transfer of investment projects, capital, and assets; transfer of rights to purchase shares, or priority rights to purchase shares/capital contributions.
• Dissolution or bankruptcy of the enterprise.

3. Legal Impact on Investment and M&A Activities

Law 2025 brings significant legal impacts on mergers and acquisitions (M&A) activities and the restructuring of SOEs, specifically:

Radical Decentralization and Delegation: To overcome the protracted approval processes of Law 2014, Law 2025 and Decree 366/2025/ND-CP have strongly decentralized decision-making authority. Accordingly, the Members’ Council or the Company Chairperson has full authority to decide on the transfer of capital or investment projects with a value not exceeding 50% of owner’s equity (as reflected in the latest quarterly or annual financial statements). The decision-making value cap is VND 15,000 billion for State groups and corporations, and VND 5,000 billion for other enterprises. The owner-representative agency only decides on transactions exceeding these decentralized limits. This regulation grants significant autonomy, allowing enterprises to proactively seize market opportunities. However, it is accompanied by legal risks and personal liability (including potential criminal liability) if violations occur in valuation causing asset loss.

Valuation Transparency and Capital Flow Flexibility: Law 2025 tightens regulations on valuation and enterprise value determination in divestment transactions, helping minimize legal risks for private investors participating in transactions.

Transitional Validity: Restructuring plans approved after 1 August 2025 must strictly follow the order and procedures of Law 2025. For plans approved before August 1, 2025, enterprises have the right to choose to continue implementing the old plan or adjust it to comply with the new regulations.

The Law on Management and Investment of State Capital in Enterprises 2025 has established a more equal “playing field” between the SOE sector and the private sector. The new mechanism grants strong autonomy paralleled by high accountability. Therefore, mastering legal regulations is a prerequisite for ensuring legal safety and economic efficiency in capital restructuring transactions.

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Time of writing: 09/02/2026

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

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