Pre-IPO restructuring is the step that decides whether a Vietnamese company can list abroad at all. Nasdaq, NYSE, HKEX and SGX investors rarely buy shares in a Vietnamese limited liability company or joint stock company directly. They expect an offshore holdco with clean title, familiar governing law and a share structure that supports preference shares and ESOP.
Getting there means working through the Law on Investment 2020, the Law on Enterprises 2020, the Law on Competition 2018, tax on the transfer, outbound investment for founders and State Bank of Vietnam (SBV) foreign-exchange controls. This guide maps the route and the traps.
Table of Contents
- Why Vietnamese Companies Need Pre-IPO Restructuring
- Choosing the Offshore Holdco: Cayman, BVI or Singapore
- Share Swap or Asset Transfer: Two Routes for a Holdco Flip
- Vietnam Approvals for a Pre-IPO Restructuring
- Foreign Ownership Caps and Conditional Sectors
- Capital Gains and Transfer Taxes on a Pre-IPO Restructuring
- Outbound Investment Registration and SBV Approvals
- ESOP and Preference-Share Conversion
- Tax Residency and CFC-Like Risks
- Frequently Asked Questions
Why Vietnamese Companies Need Pre-IPO Restructuring
A Vietnamese operating company cannot easily list on a foreign exchange without a pre-IPO restructuring. Underwriters and exchanges want a listing vehicle incorporated in a jurisdiction whose company law, shareholder remedies and share classes they know. Vietnam does not offer that: a Vietnamese limited liability company cannot issue preference shares at all, and a joint stock company’s preference shares are limited to the categories in Article 114 of the Law on Enterprises 2020.
A pre-IPO restructuring therefore interposes an offshore holdco above the Vietnamese business, so that investors hold shares in the holdco and the holdco owns the Vietnamese subsidiary.
The pre-IPO restructuring model is well known. Publicly reported examples include VinFast Auto Ltd., a Singapore-incorporated company listed on Nasdaq in 2023. Each pre-IPO restructuring has its own facts, and the Vietnamese-law steps cannot be copied from a precedent.
What a Pre-IPO Restructuring Achieves
A well-run pre-IPO restructuring delivers four outcomes: a listing-ready entity; a cap table that accommodates venture investors, ESOP and dual-class or preference rights; a clearer exit and dividend route; and a single governing law for the shareholder agreement. It also costs money, triggers regulatory filings and can create tax before a single dollar of IPO proceeds arrives. The work in any pre-IPO restructuring is to sequence these effects, not to avoid them.
Choosing the Offshore Holdco: Cayman, BVI or Singapore
For a pre-IPO restructuring, the choice is driven by the target exchange, investor expectations and tax profile. Each jurisdiction works, but they are not interchangeable.
Cayman Holding Company
The Cayman holding company is the default for Nasdaq, NYSE and HKEX listings. Cayman law is flexible on share classes, redemption and weighted voting, imposes no direct corporate tax and is familiar to US and Hong Kong counsel. The trade-off is that Cayman has no double tax treaty with Vietnam, and the entity needs real governance to satisfy exchange rules and economic substance requirements.
BVI as an Intermediate Layer
BVI companies are inexpensive and quick to form, and are often used as founder holding vehicles beneath a Cayman listing entity. BVI is rarely the listing vehicle itself on a major exchange. Founders should check whether a personal BVI company triggers Vietnamese outbound registration and reporting (see below).
Singapore Holdco
A Singapore holdco suits SGX listings, regional operations and groups that want treaty access. Vietnam and Singapore have a double tax agreement, a credible regulatory image and strong substance. Singapore tax is higher on operating income, and a Singapore holdco must genuinely be managed there to claim residence. Verify the current treaty text on dividends, interest, and capital gains before relying on it.
| Factor | Cayman | BVI | Singapore |
|---|---|---|---|
| Typical listing venue | Nasdaq, NYSE, HKEX | Rarely the listing entity | SGX, Nasdaq, NYSE |
| Corporate income tax | None | None | 17% headline rate |
| Treaty with Vietnam | No | No | Yes (verify current terms) |
| Share-class flexibility | High | High | Good |
| Substance expectation | Economic substance rules | Economic substance rules | Real management and control |
| Best fit | US/HK IPO | Founder layer | SGX or treaty-driven group |
Share Swap or Asset Transfer: Two Routes for a Holdco Flip
In a pre-IPO restructuring, a holdco flip can be executed by moving the shares of the Vietnamese company, or by moving the business itself. The two routes have very different cost and risk profiles.
The Share-Swap Route
In a share swap, existing shareholders transfer their shares or capital contributions in the Vietnamese company to the offshore holdco and receive holdco shares in exchange. The Vietnamese company, its licences, land-use rights, employees and contracts stay in place. This is the usual holdco flip. The difficulty is tax: Vietnamese law offers no general tax-deferral for share swaps, so the transfer is a taxable disposal measured by value, even though the sellers receive only holdco shares and no cash.
The Asset-Transfer Route
In an asset transfer, the Vietnamese company sells its business or assets to a new offshore-owned entity. This can be used where a clean break is wanted, but it brings value-added tax, corporate income tax on gains, registration fees, novation of contracts, licence re-issuance and employee transfer. For most operating businesses in a pre-IPO restructuring it is slower and costlier than a share swap, and it is typically reserved for carve-outs or sector licences that cannot otherwise move.
A third variant is a staged flip: founders first contribute onshore shares to a founder-owned BVI or Cayman company, then insert the listing entity above it. Staging a pre-IPO restructuring helps with valuation and timing but multiplies filings.
Vietnam Approvals for a Pre-IPO Restructuring
Once an offshore holdco acquires the Vietnamese company, the holdco is a foreign investor under Vietnamese law, even if it is wholly owned by Vietnamese founders. That single fact drives most of the approvals in a pre-IPO restructuring.
Law on Investment 2020 and Market Access
Under Articles 22 to 26 of the Law on Investment 2020 and Decree 31/2021/ND-CP, a foreign investor buying shares or capital contributions must satisfy market-access conditions for the sector, and in specified cases must register the share purchase with the investment authority before completion. Those cases include acquisitions that result in foreign ownership above 50% of the target, acquisitions in conditional sectors, and acquisitions involving land in border or coastal areas relevant to national defence.
A flip typically takes the foreign share from nil to 100%, so registration for the pre-IPO restructuring is normally required. Since the 2025 government reorganisation, the competent body is a provincial Department of Finance rather than the former Department of Planning and Investment (verify the current allocation of authority).
The Law on Enterprises 2020 governs the transfer mechanics: pre-emption and consent rights for limited liability company members, charter restrictions on transfer, and the company-type conversion needed if preference shares are to be created onshore. Several amendments to the Law on Investment and the Law on Enterprises were passed in 2025 (verify effective dates and transitional rules before filing).
Economic Concentration under the Law on Competition 2018
The Law on Competition 2018 and Decree 35/2020/ND-CP require pre-closing notification of an economic concentration where thresholds are met, including total assets or revenue in Vietnam of VND 3,000 billion, a transaction value of VND 1,000 billion, or a combined market share of 20% (verify current figures and the sector-specific thresholds for financial institutions).
A flip that does not change ultimate control is generally treated as intra-group and falls outside notification, but this depends on the facts, and a flip combined with a new strategic investor may cross the line. Closing a notifiable pre-IPO restructuring without clearance carries penalties.
Foreign Ownership Caps and Conditional Sectors
The offshore holdco becomes a 100% foreign owner, so the Vietnamese target must be in a sector that permits a pre-IPO restructuring of this kind. Market access is set by the Law on Investment 2020, its conditional-sector lists, and Vietnam’s WTO and FTA commitments. Examples of restricted or capped areas include banking and credit institutions (aggregate foreign caps), insurance, telecommunications, certain media, education, logistics sub-sectors and some trading and distribution activities.
Public companies and listed companies are subject to separate foreign room rules under the Law on Securities 2019 and Decree 155/2020/ND-CP, with a general 49% reference point where no sector limit applies (verify).
If a cap applies, the options are a compliant sub-structure (for example, a Vietnamese-owned operating entity with contractual arrangements, which carries enforceability risk), a carve-out of the restricted business, or a different listing route. Any pre-IPO restructuring in a capped sector needs sector-regulator advice at the outset, and licences often need re-issuance or notification on a change of owner. Land-intensive businesses should also check land-use and real estate business rules, since a foreign-invested economic organisation faces different land conditions.
Capital Gains and Transfer Taxes on the Pre-IPO Restructuring
Tax is usually the largest cash cost of a pre-IPO restructuring, and in a pre-IPO restructuring it falls on the sellers rather than the company.
Capital Gains Tax
Vietnamese corporate shareholders pay corporate income tax (20% headline rate) on gains from transferring shares or capital contributions. Resident individual founders pay personal income tax at 20% on gains from transferring capital in a limited liability company, and for joint stock company shares tax is generally charged at 0.1% of the transfer price, with some cases permitting a gain-based election (verify, as personal income tax rules are under reform).
Gain is measured against market value, so an undervalued swap invites reassessment. Foreign sellers, including offshore shareholders, can face tax on direct and indirect transfers of Vietnamese assets under foreign contractor tax guidance and applicable treaties.
Other Transfer Costs
Asset-transfer routes add value-added tax and registration charges, and land-related transfers can trigger land-use fees and transfer taxes. Stamp-type charges are limited, but notarisation, valuation and licence-amendment fees accumulate. Because no cash changes hands in a share swap, founders must fund the tax from other sources or from a staged sale. Advance-ruling or written guidance from the tax authority is sensible for significant deals.
Outbound Investment Registration and SBV Approvals
Where Vietnamese founders or Vietnamese companies hold or fund the offshore holdco, outbound investment rules apply to the pre-IPO restructuring. Under Articles 51 onward of the Law on Investment 2020 and Decree 31/2021/ND-CP, outbound investment generally requires an outbound investment registration certificate, with approval by the National Assembly or Prime Minister for larger or sensitive projects (verify thresholds). SBV Circular 12/2016/TT-NHNN and its amendments require a direct investment capital account at an authorised bank, and remittances abroad must run through it.
The position of individual founders is the most sensitive point. Many founders already hold BVI or Cayman vehicles that were never registered. Regularising these holdings before an IPO, so that disclosure in the prospectus matches the Vietnamese position, is a due-diligence priority. Underwriters’ counsel will ask. Profits and disposal proceeds from outbound investment generally must be repatriated within prescribed periods (verify).
SBV may also need to be involved when the offshore holdco takes on loans or guarantees from Vietnamese entities, and where foreign investors open a direct investment capital account for the acquisition. Early engagement with the authorised bank reduces delay.
ESOP and Preference-Share Conversion
Employees and early investors hold onshore equity that a pre-IPO restructuring must migrate, not lose.
Onshore ESOP plans, whether shares, options or phantom plans, are generally replaced by an offshore plan at holdco level, typically with option grants over holdco shares. Vietnamese employees who receive holdco shares are taxed as employees on employment income (verify timing at grant, vesting or exercise), and holding foreign securities may carry reporting and foreign-exchange implications. Plans should be settled in the offshore holdco shares on equivalent value.
For preference shares, a Vietnamese limited liability company must first convert to a joint stock company (Article 202, Law on Enterprises 2020) before it can issue them. Existing venture investors, whose preference rights (dividend, voting, redemption, conversion) exist onshore, are normally exchanged into holdco preferred shares with equivalent economics, and the shareholders’ agreement is rewritten under the offshore governing law.
The founder voting-preference period under Article 116 is limited, so check it before replicating dual-class rights (verify). Preference conversion at IPO into ordinary shares is standard after a pre-IPO restructuring in a Nasdaq or HKEX listing.
Tax Residency and CFC-Like Risks
An offshore holdco created in a pre-IPO restructuring does not remove Vietnamese tax exposure. If the offshore company is effectively managed from Vietnam, it risks being treated as a Vietnamese resident, and under a treaty the place of effective management or central management and control becomes the test. A Singapore or Cayman board that only ratifies decisions taken in Ho Chi Minh City or Hanoi is a red flag.
Directors, board meetings, bank accounts and decision-making must genuinely sit offshore, and the holdco needs the substance to show it.
Vietnam has no classic controlled-foreign-company regime, but there are CFC-like exposures: resident individuals are taxed on worldwide income, including dividends from the holdco; transfer-pricing rules under Decree 132/2020/ND-CP apply to related-party charges between the holdco and the Vietnamese subsidiary; and tax authorities can look through arrangements that lack commercial substance. Pillar Two top-up taxes apply to very large multinational groups only (verify the current thresholds). Ongoing compliance, including CRS reporting, should be planned in the pre-IPO restructuring, not after the IPO.
Frequently Asked Questions
Can a Vietnamese company list directly on Nasdaq or HKEX?
In practice, almost never. Foreign exchanges and underwriters generally require an offshore holding company, so Vietnamese businesses restructure under an offshore holdco before filing.
Is a share swap tax-free in Vietnam?
No general tax deferral exists. The transfer is typically a taxable disposal measured by value, even if sellers receive only holdco shares, so founders should plan how to fund the tax.
Do founders need to register an offshore holdco with Vietnamese authorities?
Often yes. Outbound investment generally requires a registration certificate and a capital account at an authorised bank. Individual founders’ position is sensitive, so verify with counsel before funding or restructuring.
Which is better for a Vietnamese company, Cayman or Singapore?
It depends on the exchange, treaty needs and substance. Cayman suits US and Hong Kong listings; Singapore suits SGX or treaty-driven groups with real management there.
How long does a pre-IPO restructuring take?
Commonly several months, driven by valuation, investment-authority registration, any competition notification, tax planning and outbound approvals. Starting early, before auditors and underwriters are engaged, avoids delays.
The best next action for your pre-IPO restructuring is to commission a short structure paper that maps your sector, cap table, founder holdings and target exchange against the approvals and taxes above, before any entity is formed offshore. The firm’s capital markets team and M&A practice run each pre-IPO restructuring together with tax and banking advisers, and Vietnamese law relevant to a listing can be checked against the national legal document database and exchange requirements on the US SEC website.
Planning an international IPO? IVLF Advisors LLC offers a confidential preliminary consultation on pre-IPO restructuring, from holdco jurisdiction choice to Vietnamese approvals, tax and foreign-exchange steps. Contact our Ho Chi Minh City or Hanoi office to arrange it.
This article provides general information only and is not legal, tax or financial advice. Laws and thresholds change; verify current rules and obtain advice on your specific facts before acting.
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.
