By Lawyer Luu Thi Hue – UniLaw LLC

VIETNAM STOCK EXCHANGE MARKET – UNILAW’S PERSPECTIVES

The landscape of the Vietnam stock exchange market has undergone significant transformations, evolving from a frontier market into a destination that attracts massive inflows of foreign direct investment in Vietnam. For global investors, navigating the legal intricacies of share acquisitions, public offerings, and regulatory compliance is paramount. At Unilaw, we emphasize that investing việt nam requires a deep understanding of both the Law on Securities and the Law on Investment. This analysis provides a comprehensive look at the mechanisms governing the market, recent legislative updates, and practical lessons from real-world legal battles.

Real-World Dispute: The Sojitz Pla-Net Case and the Enforcement of International Arbitration

A landmark case that illustrates the complexities of fdi vietnam in the securities sector involves Sojitz Pla-Net Corporation (a Japanese investor) and a local entity referred to as Company R1. The dispute arose from a Share Purchase Agreement (SPA) signed on September 8, 2017, through which Sojitz became a shareholder of a Vietnamese company. However, Company R1 allegedly failed to fulfill several post-closing conditions as stipulated in the contract.

Sojitz initiated arbitration proceedings at the Singapore International Arbitration Centre (SIAC). On July 6, 2022, SIAC issued Final Award No. 090, terminating the SPA and ordering Company R1 to refund Sojitz approximately 156.9 billion VND. When Sojitz sought to recognize and enforce this award in Vietnam, the People’s Court of Ho Chi Minh City initially refused (Decision No. 42/2023/KDTM-ST), arguing that the SIAC tribunal failed to apply the Vietnamese Commercial Law 2005, which was deemed a violation of the “fundamental principles of Vietnamese law”.

However, upon appeal, the High People’s Court in Ho Chi Minh City issued Decision No. 95/2023/KDTM-PT. The appellate court overturned the lower court’s decision, affirming that the parties’ agreement and the tribunal’s findings were consistent with the principles of freedom of contract. The award was ultimately recognized and allowed for enforcement in Vietnam. This case serves as a vital reminder that for fdi to vietnam, particularly in equity transactions, the choice of governing law and dispute resolution venues must be handled with extreme care to ensure finality in recovery.

Fundamental Definitions in the Securities and Investment Framework

To succeed when investing việt nam, one must first master the terminology used by regulators. The Law on Investment 2020 provides the bedrock for these definitions. Under Article 3 of the Law on Investment:

“18. Investment project means a collection of proposals for medium or long-term capital contribution to conduct business investment activities in a specific area within a specified period of time.”

Explanation: This refers to any plan where you put money into a business over a period of time to make a profit in a specific location.

“22. Business investment means the investor’s contribution of capital to perform business activities.”

Explanation: This is the basic act of an investor spending their money or assets to start or run a business operation.

“25. Investment registration certificate means a document in paper or electronic form that records the registration information of the investor about the investment project.”

Explanation: This is the official “permit” or paper from the government that proves you are a registered investor for a specific project.

These definitions are critical because they determine which procedures apply when a foreign entity seeks to enter the vietnam stock exchange market via a direct purchase of shares in a local company.

Mechanisms for Foreign Direct Investment in Vietnamese Entities

Foreign investors often enter the market through capital contribution or purchasing shares. Article 21 of the Law on Investment lists the primary forms of investment:

“1. Establishment of a business organization.

2. Investment by capital contribution, purchase of shares or stakes.

3. Execution of an investment project.

4. Investment under a BCC contract.

5. New forms of investment and types of business organizations as prescribed by the Government.”

Explanation: Investors can choose to start a brand new company, buy into an existing one, or partner with others through special contracts without forming a new legal entity.

For those targeting the vietnam stock exchange market, Article 24 clarifies the rights to buy into existing organizations:

“1. Investors have the right to contribute capital, purchase shares, or purchase stakes of business organizations.

2. The foreign investor’s contribution of capital, purchase of shares or stakes must comply with… market access conditions for foreign investors… [and] ensuring national defense and security.”

Explanation: While you have the right to buy into Vietnamese companies, you must check if the specific industry allows foreign ownership and if the purchase affects national security.

Navigating Market Access and Foreign Ownership Limits (FOL)

One of the most frequent questions regarding fdi vietnam is the limit on how much a foreigner can own. Vietnam’s WTO commitments and local laws create a tiered system. In many service sectors, such as accounting or architectural services, 100% foreign ownership is now permitted after certain transition periods. However, the stock market often imposes stricter “Foreign Ownership Limits” (FOL).

According to Article 9 of the Law on Investment:

“2. Based on laws, resolutions of the National Assembly… the Government shall publish the Negative List for Market Access for Foreign Investors, including: a) Sectors and trades in which market access is not yet permitted; b) Sectors and trades in which market access is conditional.”

Explanation: The government keeps a list of “no-go” zones for foreigners and a list of industries where you can only invest if you meet specific requirements, like having a local partner.

In the context of public companies on the vietnam stock exchange market, Decree 155/2020 (as amended) provides specific rules for determining these limits. Under Article 143 of Decree 155:

“1. Business organizations that are public companies… shall apply regulations on foreign ownership ratios and investment procedures on the stock market as foreign investors when they have foreign investors holding more than 50% of the charter capital…”

Explanation: If a Vietnamese company is more than half-owned by foreigners, that company itself is treated like a “foreign investor” when it tries to buy shares in other companies on the stock market.

Procedures for Capital Contribution and Share Purchase

For many foreign direct investment in Vietnam scenarios, the investor must obtain approval before the transaction is finalized. Article 26 of the Law on Investment outlines when a “Registration of Capital Contribution/Share Purchase” is mandatory:

“2. A foreign investor shall perform procedures for registration of capital contribution, purchase of shares or stakes of a business organization before changing members or shareholders if… a) The contribution of capital… increases the ownership ratio of foreign investors in business organizations conducting business in sectors and trades with conditional market access… b) The contribution of capital… results in foreign investors… holding more than 50% of the charter capital…”

Explanation: You must get government permission before the sale if you are buying into a sensitive industry or if your purchase will make you (or a group of foreigners) the majority owner of the company.

If the company is not in a restricted sector and the ownership remains below the 50% threshold, the process is simpler. Article 26(3) states:

“3. Investors not falling into the cases specified in Clause 2 of this Article shall perform procedures for changing shareholders or members in accordance with relevant laws when contributing capital, purchasing shares or stakes…”

Explanation: If you don’t hit those major triggers, you just follow the standard corporate paperwork at the business registration office without needing a separate investment approval first.

The Rights of Shareholders and the Risk of Dilution

A critical lesson for those investing việt nam is the protection of minority rights. A significant case handled by the courts involved a foreign investor, Mr. Paul T, who held a 35% stake in a company referred to as DITP. Through a series of Board of Directors (HĐQT) meetings that were allegedly irregular and lacked a proper quorum, the company issued new shares to local partners. This action diluted Mr. Paul T’s ownership from 35% down to a mere 0.911%.

The court examined whether the Board had the authority to issue such resolutions without an Extraordinary General Meeting of Shareholders. This highlights the importance of Article 114 and 115 of the Law on Enterprises (often referenced in Unilaw’s memos) regarding the rights of shareholders to access information and challenge invalid resolutions. For fdi vietnam, the company charter must be carefully drafted to prevent such “ambush” dilutions. In fact, Vietnam’s WTO working party reports confirm that joint ventures can establish their own voting majorities (e.g., 51%) in their charters to bypass default statutory minimums if agreed upon during accession.

Investment in Bonds: Private Placements vs. Public Offerings

The vietnam stock exchange market is not just about stocks; the bond market is a major pillar for corporate fundraising. Decree 153/2020 and its subsequent amendments in Decree 65/2022 and Decree 08/2023 govern this area.

Article 1 of Decree 153/2020 defines the scope:

“1. This Decree prescribes the private placement and trading of corporate bonds in the territory of the Socialist Republic of Vietnam and the offering of corporate bonds to the international market.”

Explanation: This law covers how companies can sell bonds privately to a small group of investors rather than to the general public.

For investors, the protection of their principal is the primary concern. Article 34 of Decree 153 (amended by Decree 08/2023) discusses payment obligations:

“3. Pay fully and on time the bond principal and interest when due… In case the issuing enterprise cannot pay fully and on time… it may negotiate with the bondholders to pay… with other assets.”

Explanation: Companies must pay back what they owe, but if they are in financial trouble, they can try to give bondholders other things (like property or goods) instead of cash, as long as the bondholders agree.

Incentives and Special Investment Procedures

To further encourage foreign direct investment in Vietnam, the government has introduced “Special Investment Procedures” for high-tech and large-scale projects. Decree 19/2025 provides detailed guidance on these. Projects in industrial parks, export processing zones, or high-tech zones can benefit from faster processing times.

Furthermore, Article 15 of the Law on Investment provides a menu of incentives:

“1. Forms of investment incentives include: a) Corporate income tax incentives… b) Exemption from import tax on goods imported to create fixed assets… c) Exemption from or reduction of land rent… d) Accelerated depreciation…”

Explanation: The government offers “rewards” to investors, such as lower taxes, not having to pay import duties on machinery, or paying less to rent land from the state.

To qualify for these, as outlined in Decree 31/2021, a project might need a capital scale of over 6,000 billion VND with a minimum disbursement of 6,000 billion within 3 years.

Employee Stock Purchase Plans (ESPP) and Indirect Investment

Multinational corporations often offer ESPPs to their Vietnamese employees. This is considered a form of “indirect investment abroad” for the employees and is strictly regulated by the State Bank of Vietnam. In a case involving the Hanoi branch of a global logistics firm (Expeditors), Unilaw provided advice on registering their global ESPP with the State Bank to ensure Vietnamese staff could legally participate.

Under Article 138 of Decree 155/2020:

“2. In case of direct investment… foreign investors must register a securities transaction code… In case of indirect investment… foreign investors do not have to register a securities transaction code…”

Explanation: If you are a foreigner buying stocks yourself, you need a special ID code from the government. If you are doing it through an investment fund or a company plan, you might not need that individual code.

Establishing Presence: Representative Offices and Branches

Before committing fully to the vietnam stock exchange market, many firms establish a Representative Office (RO) or a Branch to conduct research. The Law on Commerce and Decree 07/2016 govern these.

Article 18 of the Law on Commerce defines the limits of an RO:

“1. Do not perform direct profit-making activities in Vietnam.

2. Only perform trade promotion activities within the scope permitted by this Law.”

Explanation: A representative office is for marketing and research; it cannot actually sell anything or sign contracts that make money directly.

Conversely, a Branch has broader powers. Article 19 states:

“3. Enter into contracts in Vietnam in accordance with the activities specified in the license…

5. Perform activities of purchasing and selling goods and other commercial activities…”

Explanation: A branch is more like a mini-version of the main company; it can actually do business, sign deals, and trade goods.

New Horizons: International Financial Centers in Vietnam

A recent and exciting development for investing việt nam is the plan to establish International Financial Centers (IFCs) in Ho Chi Minh City and Da Nang. These zones will offer “special mechanisms and policies” to attract global capital.

Key rights for members of these IFCs include:

“a) To be allowed to establish capital management companies (holding companies) to mobilize capital from abroad…

b) To be allowed to mobilize capital from organizations and individuals outside the territory of Vietnam… without performing licensing procedures…”

Explanation: Companies in these special centers will have a much easier time bringing in money from overseas without waiting for a long list of government approvals.

Additionally, foreign investors in these centers will not have to register their capital contributions under the usual Law on Investment procedures, provided they are not in the banking sector. This represents a significant deregulation aimed at making the vietnam stock exchange market a regional powerhouse.

Dispute Resolution: Litigation and Arbitration

When disputes arise in the securities or fdi vietnam arena, Article 14 of the Law on Investment provides the framework for resolution:

“1. Disputes related to business investment activities in Vietnam shall be resolved through negotiation and mediation. If negotiation and mediation fail, the dispute shall be resolved by Arbitration or a Court…”

Explanation: If you have a business fight, you should try to talk it out first. If that doesn’t work, you go to a private judge (arbitration) or a government court.

For transactions involving a foreign party, the options are even broader:

“3. Disputes between investors in which at least one party is a foreign investor… shall be resolved through one of the following agencies or organizations: a) Vietnamese Court; b) Vietnamese Arbitration; c) Foreign Arbitration; d) International Arbitration; dd) Arbitration established by the parties.”

Explanation: If a foreigner is involved, they can choose to have the fight settled in a Vietnamese court or a variety of different types of arbitration, including those based in other countries.

However, investors must be careful. As seen in the case of a shipping dispute, if a party is not properly notified of the arbitration proceedings at their registered business address, the Vietnamese courts may refuse to recognize the final award. The court in that instance emphasized that documents must be served correctly to the address listed on the Business Registration.

Conclusion: Strategic Steps for Success

The Vietnam stock exchange market offers unparalleled opportunities for foreign direct investment in Vietnam, but the path is paved with regulatory requirements. Whether you are conducting a share buyback, launching an ESPP, or establishing a presence in a new International Financial Center, the key to success lies in proactive compliance. Unilaw’s experience shows that the most successful investors are those who view legal due diligence not as a hurdle, but as a strategic asset. By securing your ownership rights, understanding FOL triggers, and choosing robust dispute resolution mechanisms, you can ensure that your journey in investing việt nam is both profitable and protected.

• Sojitz Pla-Net Corporation vs. Company R1: High People’s Court in HCMC Decision No. 95/2023/KDTM-PT. Related to Share Purchase Agreement and SIAC Award recognition.
• Paul T vs. Company P1 (DITP): High People’s Court at Da Nang Case No. 04/2024/KDTM-PT. Related to shareholder rights and capital increase dilution.
• Mandarine O vs. Company L: HCMC People’s Court Judgment No. 1811/2019/QĐST-KDTM and related appeals. Related to the failure of service of process in international arbitration.
• Law on Investment 2020: Articles 3, 4, 5, 6, 7, 9, 14, 15, 21, 22, 23, 24, 25, 26, 48, 51-68.
• Law on Commerce 2005: Articles 1, 3, 16, 17, 18, 19, 20, 22, 23, 321.
• Decree 155/2020 (as amended by Decree 90/2025): Articles 3, 5, 6, 107, 109, 121, 124, 126, 138, 142, 143, 145, 146, 149, 150, 151, 174, 178, 310.
• Decree 153/2020 (Corporate Bonds): Articles 1, 2, 3, 4, 34.
• Resolution on International Financial Centers: Clauses 1, 3, 4, 5, 6.