Private placement is how most Vietnamese companies actually raise equity – faster and more discreet than a public offer, but wrapped in conditions that trip up first-time issuers. Here is how a private placement works under the current framework and where deals go wrong.
What counts as a private placement
Under the Securities Law 2019 and Decree 155/2020 (updated by Decree 245/2025), a private placement by a public company is an offer to fewer than one hundred investors, excluding professional securities investors, or exclusively to strategic investors and professional investors. Non-public companies place shares under the Enterprise Law with lighter formality – one reason structure matters before the first term sheet.
The conditions that bind
A public-company private placement needs shareholder approval identifying investors or clear selection criteria, a use-of-proceeds plan, and pricing that respects the rules on discounts. The signature constraint is the lock-up: strategic investors hold for three years, professional investors for one year. Investors who miss this in diligence discover their exit is legally frozen.
Four steps to a clean private placement
1. Structure and eligibility check
Confirm the issuer type, the investor categories and the foreign ownership room before anyone drafts. A private placement that breaches the FOL cannot simply be registered around.
2. Corporate approvals
Shareholder resolutions with the specificity Decree 155 requires – generic authorisations are the most common rejection ground.
3. Subscription documents
The subscription agreement, disclosure schedule and, for strategic deals, the shareholder agreement covering board seats, reserved matters and exit – negotiated as one package.
4. Filing, payment and share issuance
Report to the SSC where required, complete payment through the proper accounts (critical for foreign investors), issue shares and update the register within statutory deadlines.
Pricing and dilution mechanics founders should model
Before approving any private placement, model three numbers. First, effective dilution including any warrants, convertibles or ESOP refresh negotiated alongside the round. Second, the price floor rules – placements below book value or recent market prices face extra scrutiny and shareholder challenge risk. Third, the control map after closing: a strategic investor at twenty-five percent with reserved matters holds more practical power than the percentage suggests, as our work on shareholder structures shows repeatedly. A private placement is a governance event dressed as a financing; the money arrives once, the shareholder stays.
Sellers of secondary stakes should note that transfers by existing shareholders follow different rules from a primary private placement by the company – conflating the two is a recurring and expensive error in term sheets drafted without Vietnamese counsel.
Documents that decide the deal
Three documents carry the weight of any private placement. The subscription agreement sets price, conditions precedent and warranties – keep warranties to what a Vietnamese company can actually certify, and tie disclosure to a schedule rather than general knowledge qualifiers. The shareholder agreement allocates power after closing: board composition, reserved matters, information rights, transfer restrictions, exit mechanics. And the amended charter must actually implement what the shareholder agreement promises, because Vietnamese courts enforce the charter first when documents conflict.
We see the same defect repeatedly in deals papered abroad: a beautifully negotiated shareholder agreement sitting on top of an unamended template charter, discovered only when a dispute makes the inconsistency expensive. A private placement closed on aligned documents costs slightly more in drafting and dramatically less in litigation.
Timing note for foreign strategic investors: the licensing step for acquiring a stake in a conditional sector runs before closing, not after, and its timeline – not the negotiation – usually sets the closing date.
Private placement: frequently asked questions
Can foreign investors take part?
Yes, within sector limits, with payment routed through indirect investment accounts. Cross-border mechanics are where our capital flow analysis matters most.
Private placement or rights issue – which fits?
A rights issue treats all shareholders equally; a private placement targets chosen investors at a negotiated price. Founders weighing dilution should read our guide to forms of capital increase.
How long does it take?
Six to twelve weeks from approved plan to issued shares for a domestic deal; add licensing time when foreign strategic investors join. Our capital markets team quotes the full path as a fixed fee; regulations sit with the Ministry of Finance.
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.
