Notable issues in the transfer of companies to foreign investors.

I. Demand for transferring companies to foreign investors

In the context of global economic integration, the transfer of companies to foreign investors has become increasingly common—especially in Vietnam, a country attractive for its open-door policies and investment incentives. Foreign investors may acquire shares or capital contributions in limited liability companies (LLCs), joint stock companies (JSCs), or partnerships, creating opportunities to expand business operations and access new markets.

However, to legally transfer ownership, both enterprises and investors must comply with the Law on Enterprises 2020, the Law on Investment 2020, and relevant decrees and circulars.

II. Legal provisions on transferring companies to foreign investors

1. Conditions for transferring companies to foreign investors

Pursuant to Article 24 of the Law on Investment 2020, foreign investors may acquire capital contributions or shares in Vietnamese companies provided the following conditions are met:

- The business sector is not listed as restricted or conditional for foreign market access (Appendix I, Decree 31/2021/ND-CP);

- The foreign ownership ratio does not exceed the applicable cap for conditional business sectors;

- The acquisition complies with national security and defense regulations, particularly in sensitive sectors such as telecommunications, banking, insurance, and real estate.

2. Procedures for transferring companies to foreign investors

The legal basis includes:

- Law on Investment 2020 (Points b and c, Clause 2, Article 24);

- Decree 31/2021/ND-CP (Article 66);

- Official Letter No. 8909/BKHĐT-PC (Section 1, Point 3.2).

Step 1: Apply for approval of capital contribution / share purchase

Required documents:

- Registration form for capital contribution/share purchase;

- Notarized copy of ID/passport or business registration certificate of the investor;

- Copy of the Vietnamese company’s enterprise registration or investment registration certificate;

- Capital contribution/share purchase agreement;

- Supporting documents for land use rights (Article 24, Law on Investment 2020);

- Power of attorney and identification of the authorized representative.

Submit to the Department of Planning and Investment (DPI); processing time is 10–15 business days.

Step 2: Amend investment registration certificate

Required only if the company already has foreign investment. After receiving approval for capital contribution/share acquisition, submit the amendment dossier to the investment registration authority.

If the enterprise has not yet separated its investment registration certificate from the enterprise registration certificate, this separation must occur prior to amendment.

Step 3: Execute the share/capital transfer

Required documents:

- Approval document for capital contribution;

- Updated list of members/shareholders after transfer;

- Transfer agreement;

- Contract liquidation minutes;

- Investor’s identification;

- Power of attorney and representative's ID.

Submit to the Business Registration Division of DPI or through the National Business Registration Portal. Within 5–7 business days, a new Enterprise Registration Certificate will be issued.

3. Can foreign individuals acquire shares in a joint stock company?

Although the law allows free transfer of shares, foreign individuals must meet specific conditions:

a) Not restricted by the company charter

- If the charter restricts foreign shareholding, the transfer will be subject to such internal rules;

- These restrictions must be clearly indicated on the share certificates.

b) Comply with legal conditions in specific business sectors 

Under the Law on Investment 2020:

- Some sectors allow limited foreign ownership only;

- Others prohibit foreign investment;

- Registration of investment is required if the foreign individual holds over 50% charter capital or joins a foreign-invested enterprise.

c) Registration with the Department of Planning and Investment 

Per Article 26, Law on Investment 2020, foreign individuals must register their share acquisition if:

- They acquire 50% or more of charter capital;

- The transaction alters control or involves conditional business sectors;

- It relates to a foreign-invested company.

If none of the above applies, the foreign individual only needs to update shareholder information with the Business Registration Office, without going through investment registration.

III. Questions on transferring companies to foreign investors

1. In which cases is company transfer to foreign investors permitted?

Transfers are governed by the Law on Enterprises 2020 and Law on Investment 2020, including:

Transfer of shares in a JSC (Article 127, Law on Enterprises 2020):

- Shareholders may freely transfer shares unless restricted by the charter;

- Founding shareholders may only transfer shares after 3 years unless otherwise specified;

- If the transferee is a foreign investor, Article 26 of the Law on Investment 2020 must be observed (sector restrictions, ownership limits, and investment registration).

Transfer of capital in an LLC:

- Multi-member LLCs: Members must offer shares to other members before selling to outsiders (Article 52);

- Single-member LLCs: The owner may transfer full capital to a foreign buyer (Article 66).

Transfer of sole proprietorship (Article 192):

- The owner may sell the business to a foreign entity, which must meet all business conditions.

Transfer of investment projects (Article 46, Law on Investment 2020):

- Companies may transfer part or all of an investment project if legal conditions are satisfied.

2. Is Registration Required If a Foreign Individual Acquires Shares from a Foreign Shareholder?

No registration required if:

- The foreign buyer’s post-transfer ownership remains below 50%;

- The business sector is not restricted to foreign investors.

Registration required if:

- The foreign buyer will hold over 50% after transfer;

- The business sector is conditional for foreign investors;

- The shares are transferred from a domestic investor to a foreign individual.

-> If the transfer occurs between two foreign investors without breaching ownership thresholds or sector restrictions, registration is not required.

3. What Are the Legal Forms of Payment in Share Transfers?

Pursuant to Circular 06/2019/TT-NHNN, legal payment methods include:

- Bank transfer: Must be in Vietnamese Dong or foreign currency via a direct investment capital account at a commercial bank in Vietnam;

- No cash payments are allowed;

- Proof of fund origin: Foreign investors must prove the lawful source of funds.

-> Using investment capital accounts helps ensure compliance with Vietnam’s foreign exchange management regulations.

IV. Legal Consulting Services for Company Transfers to Foreign Investors

To ensure the legality and minimize risk when transferring companies to foreign investors, it is crucial to seek professional legal support. NPLaw provides comprehensive legal services—from contract drafting and legal advisory to procedural support. Our expertise helps you save time and ensures your transaction is successful and legally compliant.