A share transfer foreign investor Vietnam transaction is deceptively simple on paper and procedurally demanding in practice. The transfer instrument is short; the approvals, payment routing and tax filings around it are what determine whether the buyer actually owns what it paid for.
This guide sets out the six steps in the correct order, and the three points at which transactions most often go wrong.
Share Transfer Foreign Investor Vietnam: Determine Whether Approval Is Required
Approval from the provincial investment authority is required before a share transfer where the transaction results in foreign investors holding more than the prescribed proportion of charter capital, where the company operates in a conditional business line, or where it holds land use rights on islands or in border or coastal communes and wards.
Where none of these applies, the transfer proceeds directly to enterprise registration. Testing this at the outset governs whether the timetable is three weeks or three months. Our note on M&A approval covers the dossier.
Share Transfer Foreign Investor Vietnam: Check Charter and Pre-emption
The company charter and any shareholders’ agreement commonly impose pre-emption rights, transfer restrictions, tag-along and drag-along rights and consent requirements. In a joint stock company, founding shareholders face statutory transfer restrictions during the first three years.
Waivers must be obtained in writing before signing, not assumed. A transfer completed in breach of pre-emption is vulnerable to challenge by the omitted shareholder even after registration.
Share Transfer Foreign Investor Vietnam: Route the Payment Correctly
Where both seller and buyer are foreign, the consideration is settled offshore between them and does not pass through the target’s direct investment capital account. Where the seller is Vietnamese, or where a Vietnamese entity is a party, settlement must run through that account.
This is the most common practical failure in a share transfer foreign investor Vietnam deal: the parties agree a payment mechanism the bank cannot execute, and completion stalls with the transfer signed but unpaid. Confirm the routing with the bank before signing. See our guide to the DICA account.
Share Transfer Foreign Investor Vietnam: Capital Gains Tax
A corporate seller is subject to corporate income tax on the gain, calculated as consideration less cost of the capital transferred and transfer expenses. An individual seller is taxed under the personal income tax regime, with the basis differing between a limited liability company interest and shares in a joint stock company.
The declaration and payment deadline runs from the transfer, and in practice the buyer bears the consequences of the seller’s default because the registration and later remittance depend on the tax position being clean. A tax retention held back from the price is standard practice.
Share Transfer Foreign Investor Vietnam: Registration Filings
After completion, the company amends its enterprise registration certificate to record the new owner or member within ten days of the decision. Where the company holds an investment registration certificate, an adjustment is filed to record the change in investor.
The members register or shareholders register must also be updated, and for a joint stock company the share register is the primary evidence of ownership rather than the certificate. Buyers should take delivery of the updated register at completion, not afterwards.
Share Transfer Foreign Investor Vietnam: Post-Transfer Housekeeping
Replace the legal representative if agreed, update banking mandates and signatory lists, notify landlords and lenders where change of control provisions apply, and review sub-licences that name the owner and require reissue.
Where the seller was also providing intercompany services or funding, unwind or novate those arrangements and confirm the transfer pricing position for the new group. Our note on post-merger integration covers the first hundred days.
Frequently Asked Questions
How long does a share transfer take?
Three to four weeks without M&A approval; two to four months with it, depending on the sector and the land position.
Can the price be paid in foreign currency?
Between two foreign parties, yes, settled offshore. Payments involving a Vietnamese resident party are subject to the foreign exchange regime.
Is a notarised transfer instrument required?
Not generally for shares, though notarisation is often used for evidential comfort and may be required by the bank.
What if the seller will not file its tax return?
Hold a retention. The buyer’s later remittance and registration steps are exposed to the seller’s non-compliance.
Execute Your Transfer Correctly
IVLF Advisors structures share transfers, obtains M&A approval, agrees payment routing with the bank, manages the tax filings and completes the registration updates. See also our FDI acquisition guide and the Ministry of Finance. Contact our team.
This article is provided for general information only and does not constitute legal advice for any specific case. Regulations may change – please consult a qualified professional before acting. Should further analysis be required, please contact one of our lawyers below.
