Changes in the ownership of foreign-invested companies are becoming increasingly common in the context of corporate restructuring and capital transfers. However, it is not merely an internal adjustment but is subject to strict regulation under Vietnamese law. Improper implementation may expose enterprises to legal risks and administrative sanctions. The following article provides a comprehensive overview of the relevant regulations, conditions, and main considerations when changing the ownership of a foreign-invested company.

I. Overview of ownership changes in foreign-invested companies in the current context

Continuous fluctuations in foreign investment flows, changes in the ownership of foreign-invested companies are becoming increasingly prevalent in Vietnam. Such changes may arise from corporate restructuring needs, capital transfers, mergers, or investment expansion strategies.

However, a change in ownership is not merely an internal agreement among parties but directly involves legal procedures, tax obligations, and corporate rights. Therefore, understanding the applicable legal framework and following the prescribed procedures is essential to avoid potential legal risks.

1. Definition of ownership change in a foreign-invested company

A change in ownership of a foreign-invested company refers to the transfer of ownership of capital contributions or shares held by a foreign investor in a Vietnamese enterprise to another individual or organization in accordance with the law. Such a change may result from transactions such as capital transfers, mergers, consolidations, or investment restructuring.

While such a change does not terminate the legal entity status of the enterprise, it may entail obligations to amend investment registration records, enterprise registration details, and other related legal rights and obligations.

2. Practical examples relating to ownership changes in foreign-invested companies

In practice, many foreign-invested enterprises transfer capital contributions or shares to new investors but fail to promptly update ownership information with the business registration authority.

Such a situation often arises when a foreign parent company undergoes restructuring, mergers, or changes in investment strategy in Vietnam. As a result, the enterprise may encounter difficulties in executing contracts, fulfilling tax obligations, or may even be subject to sanctions for non-compliance with legal requirements on ownership changes.

3. Cases requiring changes in ownership of foreign-invested companies

Ownership changes are required in cases involving shifts in ownership or investment structure within an enterprise. These include:

  • Transfer of all or part of capital contributions or shares to another investor;
  • Changes resulting from mergers, consolidations, divisions, or separations of enterprises;
  • Changes where the foreign corporate owner undergoes legal restructuring or internal reorganization;
  • Transfers arising from inheritance, donation of capital, or decisions of competent authorities in accordance with law.

III. Legal regulations governing ownership changes in foreign-invested companies

1. Main legal provisions to note regarding ownership changes

When a company owned by foreign investors intends to change ownership through capital transfer, share acquisition, or adjustment of ownership ratios, Vietnamese law requires compliance with registration and notification procedures with competent authorities.

Specifically, pursuant to Clause 1, Article 31 of the Law on Enterprise 2020 (as amended by Clause 13, Article 1 of the amended Law on Enterprise 2025), in the case of a non-listed joint stock company changing foreign shareholders, the enterprise must notify the Business Registration Authority within the prescribed time. The notification must include the name, address, type and ratio of shares held, and other relevant information of the foreign shareholder.

In practice, changes of certain foreign ownerships may require prior registration of capital contribution or share acquisition with the Department of Finance, particularly where such changes result in ownership exceeding specified thresholds (e.g., foreign ownership exceeding 50% of charter capital or involving conditional business sectors).

Compliance with these requirements ensures the legal validity of ownership transfer transactions and helps avoid administrative sanctions or subsequent corrective obligations.

2. Conditions for implementing ownership changes in foreign-invested companies

Vietnamese law imposes several mandatory conditions to ensure the legality of transactions involving capital transfers, share acquisitions, or capital contributions by foreign investors, especially in sectors subject to market access restrictions or national security considerations.

  • Market access and business sector conditions: The transferee must satisfy market access conditions in accordance with Clause 2, Article 24 of the Law on Investment 2020, ensuring that the business sector is not restricted or subject to specific conditions applicable to foreign investors.
  • National security and land management conditions: Where the enterprise holds land use rights in sensitive areas (such as islands, border regions, coastal zones, or areas affecting national security), the foreign investor acquiring ownership must comply with regulations on national security and land use.
  • Compliance with enterprise law: Capital transfers and share acquisitions must be registered with the Business Registration Authority in accordance with the type of enterprise and relevant corporate regulations, including approvals from existing members, updates to membership records, and foreign shareholder information.
  • Conditions on foreign ownership ratios: Where ownership changes result in an increase in foreign ownership in conditional sectors or exceed statutory limits, such transactions must comply with applicable caps under investment, customs, securities, or specialized laws.

In summary, ownership changes in foreign-invested companies require compliance with market access conditions, national security considerations, land management regulations, and foreign ownership limits, along with completion of registration and notification procedures with competent authorities.

3. Measures for handling violations related to ownership changes

Failure to comply with legal requirements when changing foreign ownership may result in regulatory enforcement measures, including:

  • Mandatory notification of changes in foreign shareholder information: Pursuant to Article 54 of Decree No. 168/2025/ND-CP, enterprises must notify the provincial Business Registration Authority of any changes in foreign shareholder information (such as name, nationality, number and type of shares) within 03 working days from the date of change. Failure to notify or delayed notification constitutes a violation.
  • Administrative sanctions: Although specific penalties may not yet be explicitly stipulated, general enforcement mechanisms include:
  • Compulsory completion of registration procedures in accordance with regulations;
  • Mandatory correction or disclosure of inaccurate information in registration records;
  • Revocation, reinstatement, or adjustment of the Enterprise Registration Certificate where information does not reflect actual circumstances.
  • Legal liability of the enterprise and its legal representative: Under Clause 2, Article 5 of Decree No. 168/2025/ND-CP, enterprises and their founders are responsible for the truthfulness, legality, and accuracy of registration information. Intentional misreporting or delayed updates may lead to additional administrative measures.
  • Remedial measures relating to foreign investment compliance: Where ownership changes affect foreign investment conditions (e.g., exceeding foreign ownership limits), enterprises may be required to amend the Investment Registration Certificate or face sanctions under both investment and enterprise laws.

Accordingly, non-compliance with ownership change obligations may lead to mandatory corrective actions, administrative sanctions, and legal liability for both the enterprise and its representatives.

IV. Questions regarding ownership changes in foreign-invested companies

1. Does a change in ownership affect existing contracts?

A change in ownership does not affect previously executed contracts. Pursuant to Clause 3, Article 41 of Decree No. 168/2025/ND-CP, the enterprise retains its independent legal entity status; therefore, rights and obligations arising from prior contracts remain enforceable, unless the contract provides otherwise.

2. How long does it take to process ownership change applications?

The processing time is typically 03 working days from the date the Business Registration Authority receives a valid dossier (Clause 7, Article 46 and Clause 2, Article 47 of Decree No. 168/2025/ND-CP).

If the dossier is incomplete or invalid, the authority will issue a written request for amendment or supplementation. Similar timelines apply in special cases such as ownership changes due to inheritance, sale, or donation.

3. What happens if procedures are not properly followed?

Failure to comply with procedures may result in administrative sanctions under Clause 5 and Point b, Clause 6, Article 49 of Decree No. 122/2021/ND-CP, with fines ranging from 20,000,000 VND to 30,000,000 VND for organizations, along with mandatory notification to rectify the violation.

For individuals, fines are equal to half of those imposed on organizations. Additional remedial measures may apply depending on the duration of non-compliance.

4. Is it necessary to notify customers of ownership changes?

Current law does not require enterprises to notify customers of ownership changes where such changes are limited to internal shareholding or capital ownership structures. However, enterprises must notify the Business Registration Authority within 10 days from the date of change in founding shareholders or foreign investors, pursuant to Clause 1, Article 31 of the Law on Enterprise 2020 (as amended in 2025).

Customer notification is only required where stipulated in contractual agreements, such as service contracts, confidentiality agreements, or data-sharing arrangements.

5. In which cases is ownership change not permitted?

Ownership changes may be restricted or prohibited in the following cases:

  • Exceeding permitted foreign ownership ratios in conditional sectors, according to Decree No. 01/2014/ND-CP (as amended by Decree No. 69/2025/ND-CP);
  • Transfer of shares of founding shareholders within 03 years from enterprise registration without approval of the General Meeting of Shareholders (Clause 3, Article 120 of the Law on Enterprise 2020, as amended in 2025);
  • Business sectors prohibited or subject to strict conditions for foreign investors, pursuant to Article 6 of the Law on Investment 2020 and Article 10 of Decree No. 31/2021/ND-CP.

In such cases, enterprises must ensure compliance with ownership limits, transfer restrictions, and sector-specific conditions before proceeding with ownership changes.

V. Are you looking for legal assistance for ownership changes in foreign-invested companies?

If you are encountering difficulties in changing the ownership of a foreign-invested company, NPLaw offers in-depth legal advisory services to ensure compliance, efficiency, and risk mitigation. We assist in preparing documentation, handling procedures, and addressing all legal concerns, enabling enterprises to avoid legal risks and optimize transfer processes.

The above information is provided for reference purposes only. For detailed advice tailored to specific cases, please contact NPLaw for prompt assistance.