How to Legally Transfer Shares Between Foreigners in a Vietnamese Company: FIE Compliance Case Study (2025)

How to Legally Transfer Shares Between Foreigners in a Vietnamese Company: FIE Compliance Case Study (2025)

Introduction

At United Consulting, we get a lot of enquiries about company set up, but we were recently approached by a client—an inexperienced Australian investor—who was acquiring shares in a manufacturing company based in an industrial area north of Saigon, from another foreign shareholder who is based in Singapore. While the transaction seemed straightforward, it raised a couple of interesting questions about Vietnam’s legal obligations when both the seller and buyer are foreigners. Could the share transfer proceed without government involvement? Would the company need to update its registration? And what if this triggered new reporting or tax obligations?

This case highlighted how, despite both parties being foreign investors, the Vietnamese legal framework still treats share transfers in Foreign-Invested Enterprises (FIEs) as regulatory events. Through this case, we guided the client in managing the procedural steps with the Department of Planning and Investment (DPI), updating registration certificates, and complying with foreign exchange laws. The experience revealed essential lessons that apply broadly to other foreign investors.

In this case study, we walk through the compliance obligations and practical steps required for share transfers between foreigners in a Vietnamese company.

1. Is Registration with DPI Required?

Yes. Under the Law on Investment (2020), a share transfer involving a foreign investor must be either notified to or approved by the Department of Planning and Investment (DPI), depending on the situation.

• Notification (Post-Transfer):
  If the transaction does not result in foreign investors holding more than 50% of charter capital (or does not increase foreign ownership above an existing 50% threshold), and the company is not in a restricted or conditional sector, then post-transfer notification is generally sufficient.
  Timeline: Must notify DPI within 60 days after the transaction.
  Note: Failure to comply with this timeline may lead to administrative penalties or delays in recognizing the new investor.
• Pre-Approval:
  Required if:
  • Foreign ownership exceeds 50% post-transfer
  • The company operates in a conditional sector (e.g., logistics, education, etc.)
  • The buyer is from a country subject to investment restrictions

In such cases, you must obtain DPI approval before the transfer is executed.

2. Enterprise Registration Certificate (ERC Amendment)

Following the share transfer, the company must update its ERC to reflect the new shareholder structure. This is required regardless of whether the transfer needs DPI pre-approval or not.

• For multi-member LLCs: update list of members
• For JSCs: update list of founding or contributing shareholders

3. Investment Registration Certificate (IRC Amendment)

In most cases, amending the IRC is not required unless:

• There is a change in investment capital
• Project goals, business lines, or location change
• New investor brings in a different investment structure

However, local DPI practices may vary, and some provinces may request IRC updates as part of administrative completeness. To avoid confusion, companies should clarify with the local DPI whether an IRC update is required alongside the ERC amendment.

4. Update Company Charter and Internal Registers

The company charter and internal documents (e.g., shareholder register, resolutions, capital contribution records) must also be updated to reflect the new ownership structure. These changes should be recorded promptly after the share transfer is complete.

5. Ensure Compliance with Foreign Exchange and Tax Regulations

• The transaction must be made via the company’s capital account, in foreign currency
• Supporting documents (SPA, resolutions, payment evidence) should be provided to the bank
• Capital gains tax may apply to the selling foreign investor, depending on the tax treaty and jurisdiction

Summary of Key Learnings and Things to Watch Out For

• DPI Notification or Pre-Approval is required even for foreign-to-foreign share transfers. Know which applies to your case based on ownership percentages and business sectors.
• ERC Amendment is always required to reflect the new shareholder(s), regardless of whether prior DPI approval was needed.
• IRC Amendment is usually not required but may be requested depending on the province—check local DPI practice.
• Supporting Documents Must Be Updated, including the company charter, shareholder registers, and capital contribution records.
• Transactions Must Be Done via Capital Account and properly documented for banking compliance.
• Capital Gains Tax Obligations may apply to the seller—ensure tax planning is considered in advance.
• Failure to notify DPI within 60 days can result in fines and administrative delays—mark your deadlines carefully.

Even when both the buyer and seller are foreign investors, Vietnamese law treats share transfers in FIEs as regulatory events that require formal compliance. Properly registering the share transfer, updating enterprise documents, and verifying foreign exchange flows are critical to avoid future legal or tax complications.

Need Help with a Share Transfer in Vietnam?

United Consulting supports foreign investors with legal, administrative, and strategic advice for structuring company ownership in Vietnam. Whether you’re acquiring shares or restructuring ownership, we ensure smooth compliance with the DPI, IRC/ERC amendments, and bank reporting.

Contact United Consulting today to schedule a consultation or get help with your share transfer process.

Disclaimer:

The information provided in this article is for general informational purposes only and does not constitute legal, tax, or investment advice. While every effort has been made to ensure accuracy at the time of publication, laws and regulations may change. Readers are encouraged to consult with qualified legal or financial advisors before making decisions related to foreign investment or share transfers in Vietnam. United Consulting is not liable for any actions taken based on this content.