🌟 M&A Approval in Vietnam: Navigating Foreign Investment Restrictions and Location Impacts 🌟
Securing M&A Approval in Vietnam presents unique challenges due to foreign ownership restrictions and the geographical considerations of target projects. Investors must thoroughly evaluate both regulatory requirements and the potential sensitivities surrounding national defense and security.
LEGAL SHARING
Nguyen Thi Lan Giang
5/8/20241 min read
1. Foreign Investment Restrictions
Foreign investors acquiring shares in Vietnamese companies must comply with the Law on Investment and Decree No. 31/2021/ND-CP, which outline conditions under the Conditional Business Sector List. Key triggers for M&A Approval include:
✅ Investment in restricted business sectors (e.g., hydropower or construction materials manufacturing).
✅ Acquisitions increasing foreign ownership above specific thresholds (e.g., exceeding 50%).
✅ Target companies possessing land use rights in sensitive areas (e.g., border or coastal regions).
Local Departments of Planning and Investment (DPI) often adopt a conservative approach, sometimes requiring approval even for unlisted businesses. To expedite approvals, deregistering non-core business lines that are restricted to foreign investors can be a strategic solution.
2. Location-Specific Considerations
M&A projects near sensitive areas, such as borders or military zones, face added scrutiny. Authorities like the Ministry of National Defence and Ministry of Public Security may assess potential national security risks, possibly extending the approval timeline.
👉 Early engagement with local authorities, leveraging local expertise, and clear documentation are crucial to success.
3. Additional Requests in Practice
Authorities may request extra documentation to assess the financial capacity and technical expertise of foreign investors, including:
🔸 Detailed financial statements
🔸 Proof of funding sources
🔸 Track records of successful projects
Demonstrating strong technical capabilities and financial stability can significantly expedite the approval process.
4. Recommendations
🔹 Align business lines with foreign ownership rules.
🔹 Prepare financial statements and experience documentation in advance.
🔹 Anticipate timelines of 2-6 months for sensitive or conditional projects.
🔹 Collaborate with local authorities to address concerns proactively.
🔗 A strategic and compliant approach can help navigate Vietnam’s M&A approval complexities successfully!
hashtag#MergersAndAcquisitions hashtag#ForeignInvestment hashtag#VietnamBusiness hashtag#Compliance hashtag#InvestmentApproval hashtag#M&Approval hashtag#M&A
