Share purchase agreement drafting is where a Vietnamese deal is either protected or exposed. The document has to do more than record a price: it identifies exactly what is being sold, allocates the risks diligence found, sets the conditions that must be met before completion, and provides a route to recovery if the business is not what the buyer was told.
Vietnamese transactions add requirements that a foreign precedent will not contain. Ownership passes when the change is recorded in the company’s register and reflected in the enterprise or investment registration, not on payment; approvals from the provincial authority and, in some cases, the competition regulator sit between signing and closing; and the corporate formalities are prescribed by statute. A share purchase agreement that ignores those steps can be perfectly drafted and still fail to transfer the company.
The agreement allocates the risks diligence identified. Photo: Pexels.
A share purchase agreement is the central risk-allocation document in a Vietnam M&A transaction. It should do more than state the number of shares and the price. A well-structured SPA explains how the deal reaches closing, what information the parties can rely on, how liabilities are allocated and what happens if expectations are not met.
Parties and subject matter of the share purchase agreement
The share purchase agreement should identify every seller, buyer, target company and relevant guarantor accurately. It must specify the class, number and percentage of shares being transferred, together with ownership rights, encumbrances and any related shareholder loans. Definitions should reflect the target’s Vietnamese constitutional documents and enterprise registration records.
If the buyer acquires in stages, the share purchase agreement should explain each tranche, voting rights between tranches and the consequences if a later transfer does not occur.
Purchase price and adjustment mechanism
The agreement should state the enterprise value, equity value and payment currency, as well as the treatment of cash, debt, debt-like items and working capital. A locked-box structure requires a clear locked-box date, permitted leakage rules and leakage remedies. Completion accounts require accounting policies, preparation deadlines and an expert determination procedure.
Deposits, retentions, escrow and deferred consideration should be coordinated with the principles described in deposits and break fees in Vietnam acquisition agreements.
Conditions precedent
Conditions precedent may include Vietnam M&A approval, merger-control clearance, sector consent, release of security, third-party consents, internal approvals and completion of agreed restructuring. Each condition should identify the responsible party, required evidence, cooperation obligations and long-stop date.
The share purchase agreement should distinguish a genuine closing condition from a pre-closing obligation. Waiver rights must reflect whether the condition protects one party or is legally mandatory.
Pre-closing covenants
Between signing and closing, the seller normally agrees to operate the target in the ordinary course and restrict unusual transactions. The covenant may cover dividends, new debt, asset disposals, material contracts, hiring, capital expenditure and related-party dealings. Consent rights should protect value without giving the buyer premature control.
Representations and warranties
Seller warranties commonly address title to shares, authority, corporate records, accounts, tax, employment, licences, contracts, assets, intellectual property, data protection, compliance, disputes and insolvency. The buyer may also give warranties concerning authority, funding and regulatory status.
Warranties should be qualified carefully by knowledge, materiality and disclosed information. The disclosure letter must identify exceptions with enough detail for the buyer to assess their effect.
Indemnities and claims procedure
Specific indemnities are appropriate for identified risks that are not adequately covered by general warranties. The share purchase agreement should explain how claims are notified, defended, settled and quantified. It should also address mitigation, insurance recovery, tax benefits and double recovery.
Financial limitations may include de minimis thresholds, baskets, caps and time limits. Different limits may apply to fundamental warranties, tax claims, specific indemnities and fraud.
Each clause should answer a question the deal has already raised. Photo: Pexels.
Closing mechanics
A detailed closing schedule should list documents, payments, corporate resolutions, resignations, share records, seals, digital credentials and company assets to be delivered. The sequence should align ownership transfer with payment and required Vietnamese filings. If closing items are not simultaneous, escrow or conditional release mechanics may be needed.
Completion in Vietnam is a sequence, not a moment, and the share purchase agreement should set it out step by step: delivery of the signed transfer instrument and share certificates, board and shareholder resolutions approving the transfer and the new management, updating the register of shareholders or members, filing for an amended enterprise registration certificate and, where applicable, the investment registration certificate, handover of the company seal, statutory books and bank mandates, and only then release of the final payment. Tying the last tranche of the price to the registration step rather than to signature is the single most effective protection a buyer has.
Termination and long-stop date
The SPA should state when either party may terminate before closing, including material breach, failure of conditions and expiry of the long-stop date. Cure periods, notice requirements and the treatment of deposits should be clear. Confidentiality, dispute resolution, costs and accrued rights normally survive termination.
Restrictive covenants and transition support
Depending on the transaction, sellers may agree to non-compete, non-solicitation and confidentiality obligations that are reasonable in duration, geography and scope. Transition support may cover customer introductions, banking changes, licence handover, technology access and retention of key personnel.
Non-compete and non-solicit covenants are enforceable in Vietnam only so far as they are reasonable, and courts and tribunals look closely at duration, geography and scope of activity. Two to three years, limited to the target’s actual business lines and the provinces in which it trades, is defensible; an unlimited covenant is not. Where key individuals are leaving, the share purchase agreement should also include a short transition services schedule with named people, a fixed term and an agreed fee, so that operational knowledge does not disappear on completion.
Governing law and dispute resolution
The governing law and dispute forum should be chosen with enforceability in mind. Cross-border parties may select arbitration, including the seat, institution, language, number of arbitrators and interim-relief arrangements. The clause should coordinate with any Vietnamese mandatory rules affecting share ownership or company filings.
Share purchase agreement drafting checklist
- Confirm the share title and transfer structure.
- Define price, adjustments, currency and payment route.
- Allocate responsibility for every condition precedent.
- Protect the target between signing and closing.
- Draft warranties, disclosures and specific indemnities together.
- Set claims procedures, caps and time limits.
- Prepare a detailed closing deliverables schedule.
- Align termination and dispute clauses with enforcement strategy.
Conclusion
An effective Vietnam share purchase agreement converts commercial expectations and due diligence findings into precise, executable obligations. The strongest SPA is internally consistent: price mechanics, conditions, warranties, indemnities and closing steps all address the same transaction structure. Early coordination between legal, tax, financial and operational teams reduces drafting gaps and closing surprises.
Frequently asked questions about share purchase agreement
When does ownership of the shares actually transfer in Vietnam?
Not on payment. For a joint stock company the transfer takes effect when it is recorded in the register of shareholders; for a limited liability company the buyer becomes a member when the change is recorded and the enterprise registration certificate is amended. Where the target is foreign-invested or operates conditional business lines, prior approval from the provincial investment authority may also be required. The share purchase agreement should make the final payment conditional on those steps being completed.
Should the share purchase agreement be governed by Vietnamese or foreign law?
Commercial obligations between the parties may be governed by a foreign law where the transaction has a genuine foreign element, provided that does not conflict with fundamental principles of Vietnamese law. But matters concerning the company itself, including the validity of the transfer, corporate approvals and registration, are governed by Vietnamese law regardless. Most cross-border deals therefore use a Vietnamese-law transfer document alongside a share purchase agreement governed by the parties’ chosen law.
Does the share purchase agreement need to be in Vietnamese?
A bilingual version is standard and practical. The filing authority will require Vietnamese-language transfer documents and resolutions, and any document submitted to a court or a Vietnamese arbitral tribunal must be in Vietnamese. Where both versions are executed, the share purchase agreement should state which language prevails in the event of inconsistency, and the transfer instrument submitted for registration should match the commercial terms exactly.
What price mechanism is normally used?
Either completion accounts, where the price is adjusted after closing for actual cash, debt and working capital, or a locked box, where the price is fixed by reference to an agreed balance sheet date with a leakage indemnity covering value extracted after it. Completion accounts are more common in Vietnam because financial reporting quality varies and buyers want the adjustment; locked box works where the accounts are audited and reliable.
What are the most commonly missed clauses?
Three recur. First, a clear allocation of responsibility and cost for the Vietnamese filings, with deadlines. Second, wording confirming that the covenants and warranties survive completion and are not extinguished by it. Third, a practical payment mechanism for a cross-border seller, addressing the account through which funds move, foreign exchange compliance and any withholding, since a share purchase agreement that cannot be performed through the banking system creates a dispute of its own.
Next step
Draft the agreement from the completion sequence backwards. List every corporate resolution, filing and register update required under the Law on Enterprises, decide who delivers each one, and only then fix the payment tranches and the long-stop date around that timetable.
IVLF Lawyer drafts and negotiates share purchase agreements for foreign buyers and Vietnamese sellers, and runs the registration process through to completion. An experienced Vietnam M&A lawyer will make sure the contract and the filings say the same thing. See our legal services or contact IVLF Lawyer.
Related reading: Conditions precedent vs closing conditions in Vietnam M&A, Indemnification clauses: scope, duration and liability limits, and Dispute resolution clauses in cross-border M&A contracts.
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.
