By Lawyer Luu Thi Hue – UniLaw LLC

CAPITAL MARKETS ATTORNEY IN VIETNAM – UNILAW

The Vietnamese capital market has undergone a significant transformation, evolving from a nascent exchange into a dynamic ecosystem attracting global institutional investors. Navigating this landscape requires a deep understanding of the interplay between the Law on Securities, the Law on Investment, and the Law on Enterprises. As a premier international law firm in Vietnam, UNILAW provides sophisticated legal advice to issuers, underwriters, and investors seeking to capitalize on Vietnam’s economic growth. Whether you are a lawyer in Hanoi handling private placements or a law firm in Ho Chi Minh City structuring a complex M&A transaction, the legal hurdles are numerous and often require the precision of a capital markets attorney in Vietnam. In this comprehensive analysis, we explore the regulatory framework, the rights of investors, and the critical lessons learned from recent judicial precedents.

High-Stakes Disputes in Share Transfer Agreements: The Hung T Case

Capital market transactions often involve the transfer of shares at values significantly higher than their par value, driven by the underlying assets or the potential of specific investment projects. A landmark case handled by the Supreme People’s Court involving Hung T Company and Ms. N provides a profound look into the risks of such transactions. In this case, Hung T Company entered into an agreement to purchase shares from Ms. N in the Hoa Binh Ham N Company. The agreed price was 40,000 VND per share, which was four times the par value of 10,000 VND. The primary motivation for this premium was the target company’s involvement in the Phu Quoc Harbour City Project, which had received investment policy approval and was expected to manage and exploit the Bai V Port.

However, during the payment phase, competent authorities decided to stop the handover of the Bai V Port management to the target company, significantly diminishing the project’s scale and future profitability. Hung T Company requested a reduction in price or termination of the contract based on the fundamental change of circumstances. The lower courts initially ruled that the contract was for the sale of shares, not the project itself, and ignored the “circumstances” argument. However, the Supreme People’s Court in Decision No. 12/2024/KDTM-GDT overturned these rulings. The Court held that the parties clearly intended the share price to reflect the project’s value. The suspension of the port management rights constituted a potential “fundamental change of circumstances” under Article 420 of the Civil Code 2015. The case was remanded for retrial to determine the exact impact of this change on the contract’s fulfillment. This ruling underscores that a capital markets attorney in Vietnam must not only draft the transfer agreement but also anticipate how external administrative decisions affecting underlying projects can impact the validity of share pricing.

The Regulatory Framework for Corporate Bonds and Private Placements

The issuance of corporate bonds is a vital pillar of the capital markets, providing businesses with a flexible alternative to bank loans. In Vietnam, this activity is strictly governed by Decree No. 153/2020/NĐ-CP and its subsequent amendments, notably Decree No. 08/2023/NĐ-CP. These regulations aim to enhance transparency and protect bondholders, particularly in private placements. Organizations must clearly define the purpose of their issuance, which is restricted to specific activities.

Clause 2, Article 5 of Decree 153/2020/NĐ-CP (as amended by Decree 65/2022/NĐ-CP) states: “The purpose of bond issuance is to implement investment programs and projects, restructure the issuer’s own debt, or for purposes prescribed by specialized laws. The enterprise must specify the purpose of issuance in the issuance plan and disclose this information to investors.”

This law requires companies to tell investors exactly what they will use the borrowed money for, such as building a new factory or paying off old debts, so that investors can make an informed choice. It prevents companies from raising money for one thing and spending it on something completely different without warning.

Furthermore, the law provides a mechanism for issuers who face financial distress to renegotiate terms with bondholders. Article 1 of Decree 08/2023/NĐ-CP, amending Article 34 of Decree 153/2020/NĐ-CP, provides: “For bonds offered in the domestic market, if the issuing enterprise cannot pay the full principal and interest in Vietnamese Dong… it may negotiate with the bondholders to pay the due principal and interest with other assets.”

This provision acts as a safety valve, allowing a company that has run out of cash to offer assets like real estate or equipment to the people it owes money to, provided the bondholders agree. It helps avoid immediate bankruptcy by finding alternative ways to settle debts during a crisis.

Investor Responsibilities and Information Disclosure Standards

In the high-reward world of capital markets, the principle of caveat emptor (buyer beware) is codified through rigorous disclosure requirements. Investors are not merely passive recipients of profit; they bear a legal duty to conduct due diligence. This is particularly relevant for those working with an international law firm in Vietnam to ensure compliance with both local and global standards. The law places the burden of understanding risk squarely on the investor’s shoulders.

Clause 7, Article 1 of Decree 65/2022/NĐ-CP stipulates: “Investors must access full information disclosed by the issuing enterprise; clearly understand the terms and conditions of the bonds and other commitments… and self-assess and take responsibility for their own investment decisions and the risks arising from the investment.”

This means that before you buy a bond, you have a legal duty to read all the documents the company gives you and understand the risks of losing your money. You cannot later claim you didn’t know the risk if the company followed the rules for sharing information.

To support this, issuers are held to high standards of honesty. Clause 1a, Article 6 of Decree 155/2020/NĐ-CP (as amended) states: “Public companies, issuers, listed organizations, and registered trading organizations are responsible for disclosing information fully, accurately, and promptly; ensuring the right of investors to access information related to decisions on offering and issuing securities.”

This rule forces companies to be honest and fast when sharing news about their stocks or bonds. They must make sure all investors get the same information at the same time so that no one has an unfair advantage or gets tricked by false data.

Foreign Ownership Limits and WTO Accession Commitments

For any law firm in Vietnam advising foreign clients, understanding market access is the first step. Vietnam’s accession to the World Trade Organization (WTO) established a roadmap for opening the capital markets to international participants. While many sectors are now fully open, certain strategic areas, particularly banking and finance, remain subject to caps on foreign equity participation. These commitments are detailed in the Schedule of Specific Commitments in Services.

The WTO Schedule (WT/ACC/VNM/48/Add.2), under the section for Banking and Other Financial Services, specifies: “For capital contribution in the form of buying shares, the total equity held by foreign institutions and individuals in each Vietnam’s joint-stock commercial bank may not exceed 30% of the bank’s chartered capital, unless otherwise provided by Vietnam’s laws or authorized by a Vietnam’s competent authority.”

In simple terms, foreign investors can only own up to 30% of a Vietnamese bank. This limit is there to make sure that the country’s banking system remains under domestic control while still allowing some international investment.

Outside of specifically restricted sectors, the principle of National Treatment usually applies. Article 9 of the Law on Investment 2020 confirms that: “Foreign investors shall be applied market access conditions as prescribed for domestic investors, except for cases in the List of sectors and trades with restricted market access for foreign investors.”

This means that unless a business is on a special “restricted” list, a person from another country has the same rights to start a business or invest as a Vietnamese person. It promotes fairness and encourages more foreigners to bring their money and skills to Vietnam.

M&A Procedures and Capital Contribution for Foreign Investors

Executing an M&A transaction in the capital market involves more than just a private contract; it requires administrative clearance from the Department of Planning and Investment (DPI) or the State Securities Commission (SSC). A lawyer in Hanoi or a law firm in Ho Chi Minh City must meticulously follow the procedures for registering capital contributions and share purchases, especially when the target company operates in “conditional” sectors.

Clause 2, Article 26 of the Law on Investment 2020 mandates: “Foreign investors shall perform procedures for registration of capital contribution, purchase of shares… if the capital contribution or purchase of shares results in the increase of the ownership ratio of foreign investors in business organizations conducting business in conditional market access sectors.”

This law says that if a foreigner wants to buy enough shares to gain more control over a company in a sensitive industry, they must first get permission from the government. It’s a check to make sure that the foreign investment is good for the country and follows safety rules.

The international law firm in Vietnam must also be aware of the “Investment Guarantee” provisions. Article 10 of the Law on Investment 2020 guarantees: “The lawful assets of investors shall not be nationalized or confiscated by administrative measures. In case the State compulsory purchases or requisitions assets… the investor shall be paid or compensated in accordance with the provisions of the law.”

This is a promise from the government that they won’t just take away an investor’s property or business for no reason. If they absolutely have to take it for a public need, they must pay the investor a fair price for it, which gives investors more confidence to put their money into the country.

Special Procedures for Strategic Technology and R&D Projects

Vietnam is actively encouraging investment in high-tech sectors, semiconductors, and innovation centers. To facilitate this, the government has introduced “Special Investment Procedures” to bypass traditional bureaucratic bottlenecks. This is a crucial area of practice for any capital markets attorney in Vietnam representing technology firms.

Article 36a of the Law on Investment (as supplemented by Law No. 57/2024/QH15) provides a fast-track for: “Investment in the construction of innovation centers, research and development (R&D) centers; investment in the field of semiconductor integrated circuit industry, design technology, component manufacturing… and high-tech fields prioritized for development.”

This new rule creates a “fast lane” for companies that are doing very advanced tech work, like making computer chips or doing scientific research. It helps these important projects get started much more quickly by cutting down on the normal paperwork and waiting times.

Under these special procedures, the Management Board of Industrial Zones or High-Tech Parks takes a more proactive role. Article 3 of Decree 19/2025/NĐ-CP requires investors to provide a “Preliminary assessment of the project’s suitability with the conditions, standards, and technical regulations… and a commitment to satisfy construction, environmental protection, and fire prevention and fighting requirements.”

Instead of waiting for every single permit first, the investor can give a detailed promise that they will follow all the safety and environmental rules. This allows them to get their Investment Registration Certificate faster, provided they hold themselves responsible for keeping those promises as they build.

Legal Pitfalls in Brokerage and Intermediary Services

The role of middlemen and brokers in share transfers is another fertile ground for litigation. The case of Cathay I vs. Ms. S1 (Judgment 02/2023/KDTM-GĐT) highlights the danger of “brokerage fees” being mischaracterized or poorly documented. In this dispute, Ms. S1 arranged a share sale between Company C and Company F regarding a Titanium-zircon mine in Binh Thuan province. Company C paid a “deposit” of 600,000 USD, which Ms. S1 received. When the mine’s reserves were found to be insufficient and the deal collapsed, Company C sued Ms. S1 to return the money.

The Court scrutinized the Guarantee Letter signed by Ms. S1, which stated that she would return the 600,000 USD if the main contract was voided. The Supreme Court ruled that since the mine project failed to meet the volume requirements stipulated in the contract, the refund obligation was triggered. Ms. S1’s argument that this was a non-refundable “brokerage fee” was rejected because the written documents clearly linked the payment to the fulfillment of the share transfer contract. For a capital markets attorney in Vietnam, the takeaway is clear: all side agreements and guarantee letters must be perfectly aligned with the primary transaction documents to avoid personal liability for intermediaries.

The Impact of “Basic Change of Circumstances” on Financial Contracts

Capital markets are highly sensitive to “Black Swan” events or sudden changes in government policy. Article 420 of the Civil Code 2015 is a powerful tool for a lawyer in Hanoi when a contract becomes impossibly burdensome due to reasons beyond the parties’ control. This was the central theme in the Hung T Company dispute mentioned earlier.

Article 420, Clause 1 of the Civil Code 2015 defines a fundamental change of circumstances when: “(a) The change is due to objective reasons occurring after the conclusion of the contract; (b) At the time of conclusion, the parties could not have foreseen the change; (c) The change is so great that if the parties had known, the contract would not have been concluded or would have been concluded with completely different contents.”

In plain language, if something totally unexpected and major happens after you sign a deal—something that neither side could have guessed—the law might allow you to change or end the contract. It’s like if you agreed to buy a house, but then a new law was passed the next day saying that house can never be lived in; it wouldn’t be fair to make you pay the full price.

The law encourages the parties to negotiate first. Article 420, Clause 2 states: “In the event of a fundamental change of circumstances, the party whose benefits are affected has the right to request the other party to renegotiate the contract in a reasonable period of time.”

This means the first step isn’t going to court; it’s sitting down and trying to find a new, fair agreement that works for both sides given the new situation. Courts will only step in if the parties fail to reach a compromise themselves.

Specialized Market Segments: Startups and Green Bonds

Recognizing the need for innovation, the Vietnamese government has established specialized platforms for different types of capital raising. This includes the development of a dedicated trading board for startups and the introduction of Green Bonds. These initiatives are essential for an international law firm in Vietnam looking to provide future-proof advice to clients.

Article 41 of the Law on High Technology (as trích dẫn in source 134) states: “The Vietnam Stock Exchange and its subsidiaries are allowed to organize a specialized stock trading market for innovative startup enterprises through a specialized board for trading and listing shares of innovative startup enterprises.”

This law allows the stock market to have a special section just for new, creative companies (startups) that might not be big enough for the main market yet. it gives these young businesses a way to get money from investors so they can grow faster.

Similarly, for environmentally conscious projects, Decree 153/2020/NĐ-CP (as amended) introduces Green Bonds. Clause 11, Article 4 defines them as: “Corporate bonds issued to invest in projects in the field of environmental protection and projects bringing environmental benefits in accordance with the law on environmental protection.”

This is a special kind of loan where the company promises to use the money only for projects that help the earth, like cleaning up pollution or creating clean energy. It’s a way for investors to support the environment while still earning a profit.

M&A Disputes involving State-Owned Enterprises (SOEs)

Transactions involving the divestment of state capital are among the most regulated activities in Vietnam. The case of DaHC Company and the Vietnam Rubber Group (VRG) (Judgment No. 06/2024/KDTM-PT) illustrates the complexity of SOE share transfers. VRG, a state-owned giant, planned to divest its entire holdings in five hydropower companies. DaHC won the competitive bidding with a price of over 1.4 trillion VND and paid a deposit of 141 billion VND. However, the contract could not be executed because the final approval from the Prime Minister—a mandatory step for state divestment at this scale—was delayed due to changes in land and asset management policies.

DaHC sued to cancel the contract and demanded a refund of the deposit plus a 100% penalty and interest. The High People’s Court in Ho Chi Minh City ruled that both parties were “not at fault” for the failure to perform, as the delay was caused by the pending approval from a competent state authority. Therefore, while DaHC was entitled to the return of its 141 billion VND deposit, it was not entitled to the penalty or interest. This case reminds every capital markets attorney in Vietnam that when dealing with SOEs, “Force Majeure” or “State Acts” are significant factors that can override private contract penalties.

Why Choose UNILAW for Capital Market Transactions?

At UNILAW, we combine the global perspective of an international law firm in Vietnam with the deep local roots of a premier law firm in Hanoi and Ho Chi Minh City. Our team of experts includes some of the most respected lawyers in Hanoi, dedicated to providing pragmatic, business-oriented solutions. We understand that in the capital markets, timing and legal certainty are everything. Our services include:

• Structuring Public Offerings and Private Placements: We guide issuers through the complex maze of SSC registrations and Decree 153 compliance.
• Sophisticated M&A and Due Diligence: We provide comprehensive legal audits to uncover risks before they become liabilities, as seen in the Hung T and DaHC cases.
• Dispute Resolution and Litigation: Our litigators have successfully argued cases before the High Courts and the Supreme Court, specializing in share transfer and investment agreement disputes.
• Foreign Investment Strategy: We help international clients navigate WTO commitments and foreign ownership caps to maximize their equity participation in Vietnam.

The Vietnamese capital market offers unparalleled opportunities for those who understand its rules. With UNILAW as your partner, you can move forward with the confidence that your investments are protected by a world-class legal team. Contact us today at unilaw.vn/en to discuss how we can support your strategic objectives in Vietnam.