By Dr. Bui Duc Anh and Lawyer Nguyen Nhu Hai – UniLaw LLC

M&A LAW IN VIETNAM – UNILAW

Vietnam has emerged as one of the most dynamic markets for Mergers and Acquisitions (M&A) in Southeast Asia. As an international law firm in Vietnam, UNILAW has observed a significant shift in the legal landscape, providing more transparency and protection for foreign investors. Navigating M&A transactions requires a deep understanding of the Law on Investment, the Law on Enterprises, and international commitments such as the WTO and CPTPP. Whether you are seeking a law firm in hanoi or a law firm in ho chi minh city, our legal experts provide comprehensive analysis to ensure your investment is secure and compliant.

Real-World Case Study: The Perils of Procedural Non-Compliance in Project Transfers

To understand the complexities of M&A in Vietnam, let us examine a real dispute involving the transfer of an investment project. In Judgment No. 43/2023/KDTM-PT, the court dealt with a dispute over the transfer of a cashew oil factory project. The original investor, a Korean individual named Huh Moon S, and Ms. O, established a company to operate the factory. In 2018, they initiated procedures to transfer the project to a Korean entity, M Co., Ltd. Following this, M Co., Ltd. established a 100% foreign-invested enterprise in Vietnam, M Vietnam, to implement the project.

However, a subsequent transfer occurred where Huh Moon S, acting on behalf of M Co., Ltd. (the parent company), transferred the project to another entity, E1. The legal conflict arose when M Co., Ltd. claimed that Huh Moon S had no authority from the parent company to execute this second transfer and that he had improperly used the seal of M Vietnam instead of the parent company, M Co., Ltd., on the transfer documents.

The High People’s Court in Ho Chi Minh City analyzed the case based on the Law on Investment 2014 and Decree 118/2015. The court found that Huh Moon S was aware of leadership changes within M Co., Ltd. but continued to use old legal documents to perform the transfer without valid authorization from the owner. Furthermore, the use of the subsidiary’s seal (M Vietnam) for the parent company’s decision was a violation of formal requirements.

The Verdict: The court declared the Transfer Contract dated October 28, 2018, between M Co., Ltd. and E1 to be invalid. Consequently, the subsequent land use right transfer documents were also declared null and void, and the investment registration certificate issued to E1 was revoked. The parties were ordered to return what they had received, and since the fault was considered mutual due to procedural negligence, they shared the resulting damages. This case highlights that in M&A, even if a transaction seems commercially sound, a failure to strictly adhere to corporate authorization and stamping procedures can lead to a total loss of the project.

Foundational Forms of Investment and M&A in Vietnam

For any lawyer in hanoi or Ho Chi Minh City, the starting point for M&A advice is Article 21 of the Law on Investment. This article outlines how investors can enter or expand in the Vietnamese market. As an experienced law firm in vietnam, we emphasize that choosing the right form is critical for regulatory approval.

Điều 21. Hình thức đầu tư:

1. Đầu tư thành lập tổ chức kinh tế.

2. Đầu tư góp vốn, mua cổ phần, mua phần vốn góp.

3. Thực hiện dự án đầu tư.

4. Đầu tư theo hình thức hợp đồng BCC.

5. Các hình thức đầu tư, loại hình tổ chức kinh tế mới theo quy định của Chính phủ.

In plain terms, this law says you can start a business from scratch, buy into an existing company, or just run a specific project. You can also partner with locals through a contract without forming a new company, which is called a BCC.

Most M&A activities fall under the second point: purchasing shares or capital. This allows a law firm in ho chi minh city to help clients bypass the lengthy process of setting up a new legal entity, instead acquiring an existing license and infrastructure.

Legal Framework for Capital Contribution and Share Purchase

When a foreign investor decides to acquire a Vietnamese company, they must comply with specific conditions. The Law on Investment clarifies the rights and obligations for these transactions.

Điều 24. Đầu tư theo hình thức góp vốn, mua cổ phần, mua phần vốn góp:

1. Nhà đầu tư có quyền góp vốn, mua cổ phần, mua phần vốn góp của tổ chức kinh tế.

2. Việc nhà đầu tư nước ngoài góp vốn, mua cổ phần, mua phần vốn góp của tổ chức kinh tế phải đáp ứng các quy định, điều kiện sau đây:

a) Điều kiện tiếp cận thị trường đối với nhà đầu tư nước ngoài quy định tại Điều 9 của Luật này;

b) Bảo đảm quốc phòng, an ninh theo quy định của Luật này;

c) Quy định của pháp luật về đất đai về điều kiện nhận quyền sử dụng đất, điều kiện sử dụng đất tại đảo, xã, phường, thị trấn biên giới, xã, phường, thị trấn ven biển.

This means that while foreign investors are generally welcome to buy into Vietnamese businesses, they must check if the industry is open to foreigners and if the company owns land in sensitive areas like borders or coastlines, which might require extra security checks.

As a leading international law firm in Vietnam, UNILAW frequently assists clients in performing “Market Access” checks. Under Article 9, the government publishes a “Negative List” of sectors where foreign investment is restricted or prohibited. If a sector is not on this list, the foreign investor is treated like a domestic one.

The Statutory Procedure for Foreign Acquisitions

Procedural accuracy is what distinguishes a top-tier law firm in vietnam. Article 26 of the Law on Investment specifies when an investor must register their purchase before they can officially change the company’s registration.

Điều 26. Thủ tục đầu tư theo hình thức góp vốn, mua cổ phần, mua phần vốn góp:

…2. Nhà đầu tư nước ngoài thực hiện thủ tục đăng ký góp vốn, mua cổ phần, mua phần vốn góp của tổ chức kinh tế trước khi thay đổi thành viên, cổ đông nếu thuộc một trong các trường hợp sau đây:

a) Việc góp vốn, mua cổ phần, mua phần vốn góp làm tăng tỷ lệ sở hữu của các nhà đầu tư nước ngoài tại tổ chức kinh tế kinh doanh ngành, nghề tiếp cận thị trường có điều kiện đối với nhà đầu tư nước ngoài;

b) Việc góp vốn, mua cổ phần, mua phần vốn góp dẫn đến việc nhà đầu tư nước ngoài… nắm giữ trên 50% vốn điều lệ của tổ chức kinh tế…

c) Nhà đầu tư nước ngoài góp vốn, mua cổ phần, mua phần vốn góp của tổ chức kinh tế có Giấy chứng nhận quyền sử dụng đất tại đảo và xã, phường, thị trấn biên giới; xã, phường, thị trấn ven biển; khu vực khác có ảnh hưởng đến quốc phòng, an ninh.

Essentially, if you are buying into a sensitive industry, buying enough to control the company (more than 50%), or buying a company that has land near the coast or borders, you must get official permission from the investment authorities first.

UNILAW’s experience with clients like GRN Vietnam and Sakura Vending shows that these approvals often involve multiple ministries. For example, when acquiring a company in the vending and retail sector, a law firm in hanoi must coordinate with the Department of Industry and Trade to ensure the acquisition doesn’t violate retail distribution limits.

Understanding Company Mergers and Legal Succession

In addition to buying shares, M&A often involves the full merger of legal entities. The Law on Enterprises provides the mechanism for one or more “merged companies” to disappear into a “surviving company”.

Điều 201. Sáp nhập công ty:

1. Một hoặc một số công ty… có thể sáp nhập vào một công ty khác… bằng cách chuyển toàn bộ tài sản, quyền, nghĩa vụ và lợi ích hợp pháp sang công ty nhận sáp nhập, đồng thời chấm dứt sự tồn tại của công ty bị sáp nhập.

…Sau khi công ty nhận sáp nhập đăng ký doanh nghiệp, công ty bị sáp nhập chấm dứt tồn tại; công ty nhận sáp nhập được hưởng các quyền và lợi ích hợp pháp, chịu trách nhiệm về các nghĩa vụ, các khoản nợ chưa thanh toán, hợp đồng lao động và nghĩa vụ tài sản khác của công ty bị sáp nhập.

This article explains that when companies merge, the “survivor” takes everything—the assets, the debts, and even the employee contracts—of the company that disappears. The smaller company simply stops existing.

A law firm in ho chi minh city handling a merger must be careful about “Legal Succession.” For example, UNILAW assisted in the merger of EB Vinh Phuc into EB Thanh Hoa (Big C group). We had to ensure that the “surviving company” inherited all the investment incentives and land lease rights of the merged entities. Failure to properly update the Land Use Right Certificates after a merger can lead to significant administrative hurdles.

M&A and the Transfer of Investment Projects

Sometimes, an M&A deal is not about the company itself but about a specific asset, such as a real estate project or a factory. This is known as a “Project Transfer.” This is a high-stakes area where an international law firm in Vietnam adds immense value by ensuring land laws and investment laws align.

Điều 46. Chuyển nhượng dự án đầu tư:

1. Nhà đầu tư có quyền chuyển nhượng toàn bộ hoặc một phần dự án đầu tư cho nhà đầu tư khác khi đáp ứng các điều kiện sau đây:

a) Dự án đầu tư… không bị chấm dứt hoạt động…

b) Nhà đầu tư nước ngoài nhận chuyển nhượng… phải đáp ứng điều kiện quy định tại khoản 2 Điều 24 của Luật này;

c) Điều kiện theo quy định của pháp luật về đất đai trong trường hợp chuyển nhượng dự án đầu tư gắn với chuyển nhượng quyền sử dụng đất, tài sản gắn liền với đất;

d) Điều kiện theo quy định của pháp luật về nhà ở, pháp luật về kinh doanh bất động sản trong trường hợp chuyển nhượng dự án đầu tư xây dựng nhà ở, dự án bất động sản….

This law grants you the right to sell your project to someone else, but only if the project is still in good standing. If land or houses are involved, you must also follow the specific rules for land and real estate sales.

Our lawyer in hanoi notes that project transfers often face challenges if the land lease is paid annually rather than as a lump sum. Under the Land Law, companies paying annual rent cannot “sell” the land use right directly; they can only sell the assets attached to the land, and the buyer must then sign a new lease with the government. UNILAW has navigated this for clients like Thanh Binh – Cao Nguyen when transferring projects in industrial zones.

The Role of International Treaties: WTO and CPTPP

As an international law firm in Vietnam, UNILAW constantly references Vietnam’s international commitments. These treaties often override domestic laws if there is a conflict. The WTO Schedule of Specific Commitments is the bible for foreign M&A.

For instance, in the Legal Services sector, foreign firms can establish branches or subsidiaries, but foreign lawyers cannot represent clients in court or certify Vietnamese laws. In Audiovisual Services, for a long time, foreign investors were limited to 51% ownership in movie production.

In simple terms, international agreements between Vietnam and other countries set the ground rules for what foreigners can and cannot own. These rules often grant foreign investors better rights than they might have under local laws alone.

The CPTPP and EVFTA have further opened these doors, particularly in logistics and telecommunications. A law firm in vietnam must be adept at using these treaties to argue for market access in sectors that may still seem restricted under old decrees.

Mergers and Acquisitions of State-Owned Enterprises (SOEs)

Acquiring or merging with a State-Owned Enterprise (SOE) involves a much more regulated process, often requiring a public auction. This is an area where a law firm in hanoi—the political heart of Vietnam—is essential.

According to Decree 23/2022/ND-CP, the merger of 100% state-owned enterprises must be approved by the Prime Minister or the designated owner agency. When an SOE transfers its capital in a joint venture, it must generally follow a public auction process to ensure the state gets the highest price.

Điều 14. Điều kiện hợp nhất, sáp nhập… doanh nghiệp:

1. Việc sáp nhập… phải phù hợp với văn bản về sắp xếp, đổi mới doanh nghiệp đã được Thủ tướng Chính phủ phê duyệt…

3. Việc hợp nhất, sáp nhập doanh nghiệp phải đảm bảo tuân thủ quy định của Luật Cạnh tranh….

To merge companies owned by the government, the plan must fit the national strategy approved by the Prime Minister. Also, the merger cannot create a monopoly that breaks competition laws.

UNILAW has tracked these opportunities for diplomatic missions, such as the Malaysian Embassy, identifying SOEs in sectors like energy and pharmaceuticals that are slated for “equitization” (privatization).

Protecting Intellectual Property during M&A

An often overlooked but vital part of M&A is the transfer of intangible assets. When a company is acquired, its trademarks, patents, and “trade secrets” must be legally protected. As a law firm in vietnam with a strong IP practice, UNILAW emphasizes the importance of IP due diligence.

In client cases involving Biolab and Perfect Leap, we advised that ownership of trademarks must be clearly defined in the acquisition or joint venture agreement. We have seen cases where investors thought they “owned” a brand, only to find that the local partner had registered it in their own name, leading to costly litigation.

Simply put, when buying a business, you aren’t just buying machines and buildings; you are buying the brand name and the secret recipes. You must make sure these are legally signed over to you in writing.

M&A and Competition Law: Preventing Monopolies

Any large-scale M&A transaction must pass through the lens of the Law on Competition. If a merger results in a company having a market share between 30% and 50%, they must notify the competition authorities. Mergers that result in a market share of over 50% are generally prohibited unless specific exceptions apply.

Luật Cạnh tranh :

Các công ty thực hiện việc sáp nhập phải bảo đảm tuân thủ quy định của Luật Cạnh tranh về sáp nhập công ty .

This means that you cannot buy your competitors just to become the only provider in the market. The government monitors these deals to keep prices fair for consumers.

As a law firm in ho chi minh city, we advise clients to conduct a “Concentration Analysis” early in the deal. This is particularly important in retail and distribution, where market concentration is closely watched by the Ministry of Industry and Trade.

Dispute Resolution in M&A Transactions

Despite the best efforts of an international law firm in Vietnam, disputes can occur. Article 14 of the Law on Investment provides a clear path for resolving these conflicts.

Điều 14. Giải quyết tranh chấp trong hoạt động đầu tư kinh doanh:

1. Tranh chấp… được giải quyết thông qua thương lượng, hòa giải. Trường hợp không thương lượng, hòa giải được thì tranh chấp được giải quyết tại Trọng tài hoặc Tòa án…

3. Tranh chấp giữa các nhà đầu tư trong đó có ít nhất một bên là nhà đầu tư nước ngoài… được giải quyết thông qua một trong những cơ quan, tổ chức sau đây:

a) Tòa án Việt Nam;

b) Trọng tài Việt Nam;

c) Trọng tài nước ngoài;

d) Trọng tài quốc tế;

đ) Trọng tài do các bên tranh chấp thỏa thuận thành lập.

This law encourages companies to talk and settle their problems first. If that fails, they can go to a judge in Vietnam or use private “arbitrators”—which can be international experts—to decide the case.

UNILAW generally recommends that foreign investors choose arbitration (such as the VIAC in Vietnam or SIAC in Singapore) for M&A disputes. This is because arbitration is private, faster, and the results are easier to enforce internationally. However, we must caution that if the dispute involves real estate in Vietnam, the Vietnamese courts have exclusive jurisdiction, and an international arbitration award might be rejected if it tries to decide land ownership.

Critical Tax and Accounting Considerations

The “Merger” is not just a legal event; it is a tax event. According to Circular 28/2011/TT-BTC, companies must finalize their Corporate Income Tax (CIT) and Value Added Tax (VAT) within 45 days of the merger.

Furthermore, capital gains tax is a significant factor in share transfers. For foreign entities, the tax rate is generally 20% on the profit made from the sale of shares in a Vietnamese company. A law firm in vietnam will often suggest structuring the deal to reflect the initial capital contribution value to mitigate this tax burden, provided it reflects the true nature of the transaction.

Basically, when you sell your shares for a profit, the government wants a piece of that profit. You have a very short window to report this and pay your taxes after the deal closes.

Practical Challenges: The Importance of Due Diligence

Why do M&A deals fail? Statistics from our research show that only 35% of M&A deals in Vietnam are considered successful in the long term. The primary reasons include “Hidden Liabilities,” “Cultural Clashes,” and “Opaque Financials”.

A lawyer in hanoi should not just look at the contracts but also at the “off-book” realities. For instance, in our experience with Asiaciti Investment Ltd, we helped a client deal with a \$1,000,000 loss caused by an unauthorized manager who had been given broad power of attorney. This highlights why “Operational Due Diligence” is just as important as “Legal Due Diligence.”

Don’t just believe what is on the paper. You need to investigate the company’s real debts, how they treat their workers, and if their managers are actually following the rules. Many problems are hidden from the official records.

Key Takeaways for Investors

For those considering an acquisition in Vietnam, follow these principles from UNILAW:

• Authority is everything: As shown in the Cashew Factory case, always verify that the person signing the contract has a valid Power of Attorney or a Board Resolution from the parent company.
• Verify the Land: If the target company has land, check the rent payment method. Annual rent cannot be “sold” as a project asset directly.
• Check Market Access: Ensure the industry is open to foreigners under the WTO or CPTPP before signing a deposit.
• Seal the Deal: In Vietnam, the corporate seal still carries significant legal weight. Ensure the correct seal of the legal owner is used on all documents.

As a leading international law firm in Vietnam, UNILAW is dedicated to guiding you through these complexities. With offices serving as your law firm in hanoi and law firm in ho chi minh city, we provide the localized expertise and international perspective necessary for a successful M&A transaction.

Vietnam remains a land of opportunity, but it is also a land of intricate regulations. By partnering with the right law firms in vietnam, you can turn these regulatory hurdles into competitive advantages, ensuring your business growth is both rapid and legally resilient.