Deal documents and closing mechanics: the share purchase agreement under Vietnamese or foreign law, the short-form Vietnamese transfer contract, conditions precedent, payment through the investment capital account, escrow and W&I insurance, warranties and indemnities, closing deliverables and post-closing filings

The document set

A Vietnamese acquisition of any size uses a familiar set of documents: a term sheet or letter of intent, often with binding exclusivity and confidentiality; the main share purchase agreement or, for an LLC, capital transfer agreement (in this section, the SPA); a disclosure letter against the warranties; where the sellers stay on as minority owners, a shareholders' agreement and an amended charter (Joint ventures, deadlock and exit rights); and ancillary agreements such as an escrow agreement, transitional services, a non-compete, and employment or consultancy contracts for key founders. Vietnam adds one document of its own: the short-form transfer contract in Vietnamese, signed by the seller and buyer, which is filed with the business registration office to record the change of members or foreign shareholders and which the bank and the tax office also rely on.

The short-form contract exists because the registration office needs a Vietnamese document that identifies the parties, the capital or shares transferred and the price, and that it can read without a translation. It should be kept short, refer to the SPA, and state that the SPA prevails between the parties. Two rules govern it in practice. First, the price must be the real price. The short-form contract and the seller's tax declaration must agree, and an understated price in the filed contract is a tax understatement by the target that declares on the seller's behalf, exposing it to the 20% penalty on the shortfall or worse (FAQ 30). Second, it should not take effect earlier than the SPA intends, because the tax point for the seller's 2% tax is the date on which the initial transfer agreement takes effect (Tax on share transfers and dividends).

Vietnamese or foreign governing law

Where at least one party is a foreign investor, or a company more than 50% foreign-owned, Article 13(3) of Law No. 143/2025/QH15 allows disputes to be referred to foreign or international arbitration as well as to Vietnamese arbitration or courts, and contracts with a foreign element may generally choose a foreign governing law under the Civil Code (FAQ 72). An SPA between a foreign buyer and a foreign seller of a Vietnamese company is often governed by English or Singapore law with arbitration at SIAC or another international institution; an SPA between a foreign buyer and Vietnamese individual sellers is more often governed by Vietnamese law with arbitration at VIAC, because Vietnamese sellers resist foreign law and because the remedies will ultimately be enforced against assets in Vietnam (Commercial arbitration and VIAC).

A foreign governing law does not take the transaction outside Vietnamese law. The transfer of the capital or shares, the pre-emption rights, the registers, the Article 21 registration, the foreign exchange rules and the tax are governed by Vietnamese law whatever the SPA says, and a Vietnamese court asked to recognise a foreign award may refuse it if enforcement would conflict with the basic principles of Vietnamese law (FAQ 74). A foreign-law SPA should therefore be drafted with Vietnamese counsel so that its conditions, covenants and remedies work with the Vietnamese steps, and the parties should accept that some common-law concepts, such as broad liquidated damages and indemnities for unproven loss, may be read differently if they are ever enforced in Vietnam. Where an SPA is governed by Vietnamese law, it is usually signed in a bilingual English and Vietnamese version, and the parties should state which language prevails; the authorities will read only the Vietnamese.

Conditions precedent and the interim period

Conditions precedent in a Vietnamese SPA typically include: the Article 21 registration notice where required (Acquiring a Vietnamese company); clearance by the National Competition Commission where the deal is notifiable (Merger control and competition law); approval of the change of owner by a sector regulator where one is required; written pre-emption waivers by the other members of a multi-member LLC, or the general meeting's approval of a transfer of founders' shares in a JSC within its first three years; cure of specific due diligence findings, such as unpaid charter capital or a nominee holding (Due diligence in Vietnam); release of security over the shares or key assets; and the absence of a material adverse change.

Interim covenants protect the buyer between signing and completion: the target carries on business in the ordinary course and does not, without the buyer's consent, change its charter or capital, declare dividends, incur debt, dispose of assets, hire or dismiss senior staff, or settle disputes. Where the deal is notifiable for merger control, covenants must not go so far as to give the buyer control of the target's commercial conduct before clearance, since implementation before clearance is fined under Decree No. 75/2019/ND-CP as amended by Decree No. 102/2026/ND-CP. A long-stop date, with each party's right to terminate if the conditions are not met by it, should allow for a sensitive-land defence opinion or an official merger review, either of which can take months.

Price, payment and the investment capital account

How the price moves depends on who the parties are. Under Circular No. 38/2026/TT-NHNN, a payment for capital or shares between a resident and a non-resident passes through the target's investment capital account and is valued and settled in dong; a transfer between two non-residents may be settled offshore in foreign currency; and a transfer between two residents is settled in dong through ordinary accounts (The investment capital account). Where the deal takes the target above 50% foreign ownership, the target must open its investment capital account before payment, and from then on capital, profits and divestment proceeds pass through it. Where a foreign buyer acquires 50% or less of a company that is not subject to the investment capital account regime, it pays through its own dong indirect investment account under Circular No. 03/2025/TT-NHNN. Paying outside the prescribed channel causes problems later, because the bank will not treat a future resale or capital return as a return of capital that was never recorded.

Price mechanisms follow international practice. A locked-box price fixed on a historical balance sheet with a leakage covenant is common in smaller deals and suits a target whose accounts are audited; completion accounts with a net debt and working capital adjustment suit larger or less predictable businesses. Deferred consideration and earn-outs are lawful, but the seller's tax is computed on the whole consideration, and the treatment of later adjustments should be agreed with the tax position in mind. Where the price is fixed in foreign currency but settled in dong, the SPA should fix the exchange rate source and date.

Escrow, retentions and warranty and indemnity insurance

Buyers commonly hold back part of the price to secure the sellers' indemnities, the seller's tax and any completion adjustment. A retention by the buyer is the simplest form. An escrow with a bank is more neutral: where both parties are non-residents, it is usually held offshore with an international bank; where a resident party is involved, the arrangement must fit the investment capital account rules and the bank's own requirements, and Vietnamese banks differ in their willingness to act as escrow agent for share transfers, so the bank should be approached early. A tax escrow, from which the 2% tax of a foreign corporate seller is paid within the ten-day declaration period, is standard practice where the target declares on the seller's behalf.

Warranty and indemnity (W&I) insurance is available for Vietnamese targets from international underwriters, mainly on larger transactions led by financial sponsors and regional strategic buyers. As elsewhere, policies exclude matters disclosed or known to the buyer, forward-looking warranties and, frequently, specific risk areas in which underwriters regard Vietnamese exposure as hard to assess, which can include certain tax, social insurance, land and environmental matters. Underwriters expect a full due diligence report from reputable advisers. Premiums and retentions are a matter of market negotiation and should be quoted by a broker for the specific deal.

Warranties, indemnities and remedies under Vietnamese law

Under a Vietnamese-law SPA, warranties are contractual undertakings that facts are true, and a breach gives rise to liability for damages under Articles 360 and 419 of the Civil Code 2015 (Law No. 91/2015/QH13). The claimant must prove actual loss, causation and the amount; a court or tribunal will not award a sum simply because the contract calls it an indemnity. Indemnities for specific risks, such as a tax assessment or social insurance arrears, are best drafted as an undertaking to pay the amount of a defined liability when it is assessed or paid, with a mechanism for proving it, so that the obligation is a debt rather than a claim for unliquidated damages.

A contractual penalty is enforceable only if agreed. Under Article 301 of the Commercial Law it is capped at 8% of the value of the breached obligation, and damages are recoverable in addition only if the contract so provides (Commercial contracts in Vietnam); under Article 418 of the Civil Code the parties may agree the amount freely. Whether an SPA is a commercial contract subject to the 8% cap or a civil transaction is not settled, and practitioners draft on the assumption that the cap may be applied. The limitation period is three years for contractual claims under Article 429 of the Civil Code and two years under Article 319 of the Commercial Law, which is shorter than the warranty periods often negotiated; claims notices and standstill provisions should be drafted with this in mind. Caps, baskets, de minimis thresholds and time limits for claims are agreed in the usual way and are generally respected.

Closing day and the filings that follow

1. Confirm the conditionsArticle 21 notice, any merger clearance or regulator approval, pre-emption waivers, cure of specific findings and release of security, each evidenced in writing.
2. Sign the closing documentsThe short-form Vietnamese transfer contract (if not signed earlier), members' council or board resolutions approving the transfer and the new charter, resignation and appointment of managers and the legal representative, and the escrow release instructions.
3. Pay the priceThrough the investment capital account in dong where a resident is party, or offshore between non-residents; fund the tax escrow or retention.
4. Update the registersEnter the buyer in the members' register or shareholder register, which is the moment the buyer becomes owner as a matter of company law; issue the capital contribution certificate or share certificate.
5. Declare the seller's taxThe target, or a Vietnamese buyer that pays, files Form 05/TNDN for a foreign corporate seller and pays the 2% tax no later than the tenth day after the transfer agreement took effect; individual sellers' PIT is declared under Law No. 109/2025/QH15.
6. File the change with the business registration officeWithin ten days, the change of members (LLC) or notice of foreign shareholders (unlisted JSC), the new legal representative and charter if changed, and the updated beneficial owner information; a valid filing is processed in three working days.
7. Update banks, licences and the investment projectNotify the account banks and update signatories; update sector licences and, where an older IRC names the foreign investors, adjust it; include the change in the next investment report.