Abolishing 38 Conditional Business Lines in Vietnam, What M&A Buyers & Sellers Must Know

Vietnam’s amended Investment Law abolishes 38 conditional business lines in Vietnam, effective July 1, 2026, reshaping the regulatory landscape for every live and pipeline M&A transaction in the country. The reform eliminates ex-ante licensing requirements across services, data processing, hospitality and logistics sub-sectors, while simultaneously shifting supervision toward post-inspection enforcement. For buyers conducting due diligence, sellers preparing disclosure schedules, and deal counsel drafting share-purchase agreements, the practical consequences are immediate: conditions precedent must be re-evaluated, warranty schedules rewritten, and post-closing compliance roadmaps rebuilt. This guide walks through the abolition scope, the approvals that remain, and the transaction-level steps every deal team should take before and after July 1, 2026.

Executive Summary, If You Only Read One Thing

The Investment Law amendments remove 38 activities from Appendix IV of the Law on Investment, cutting the total number of conditional business lines and eliminating the requirement for operators in those sectors to obtain pre-operational licences or satisfy conditions before commencing business. The changes take effect on July 1, 2026.

• Effective date. July 1, 2026, all 38 abolished lines cease to be classified as conditional from that date.
• Core consequence. Targets operating in abolished lines no longer need the previously required conditional licences. However, many adjacent approvals, land-use rights, construction permits, environmental impact assessments, financial-sector licences, remain fully in force.
• Buyer action. Cross-check every target activity against the current official list on the enterprise registration portal. Do not assume that abolition of a conditional line removes all regulatory requirements for that activity.
• Seller action. Update disclosure schedules and business registration certificates to reflect current classifications. Prepare to demonstrate post-closing compliance with any remaining sectoral requirements.

Industry observers expect the reform to accelerate deal timelines in services-heavy sectors, but the likely practical effect will be a reallocation, not an elimination, of regulatory risk within transaction documents.

Background, Investment Law Amendments and the Conditional Business Lines in Vietnam Framework

Vietnam’s conditional business line regime has its origins in the 2014 Law on Investment and was substantially revised under the 2020 Law on Investment (Law No. 61/2020/QH14). Appendix IV of the 2020 law listed 227 conditional business lines, activities for which enterprises must satisfy specific conditions (capital adequacy, professional qualifications, facility standards or security requirements) before commencing operations. The official list is maintained and updated by the Ministry of Planning and Investment (MPI) through the enterprise registration portal at dangkykinhdoanh.gov.vn.

Key Legislative Instruments

The 2025–2026 amendment package is part of a broader government initiative to reduce administrative burdens on enterprises, aligned with resolutions on business-environment improvement issued by the Prime Minister’s office. The Ministry of Finance (MOF) had earlier proposed removing an even larger number of lines, early indications suggested the MOF consultation paper referenced removal of up to 58 lines with amendments to 14 others, but the final instrument settled on the abolition of 38 conditional business lines in Vietnam. Practitioners should always verify final numbers against the official Appendix IV as published on the government portal.

What the Abolition of Conditional Business Lines in Vietnam Means, Scope, Examples and What Remains

The 38 abolished conditional business lines are concentrated in services-intensive sectors. While the government has not published an informal “plain-language” explainer, practitioner analyses from Vietnamese law firms and advisory groups identify the following broad categories of affected activities.

Sector Snapshots, What Was Abolished

• Data processing and digital services. Certain data-related conditional business lines, particularly those applying to mid-tier data processing operators and ancillary IT services, have been removed. However, core data-privacy obligations under Vietnam’s data-protection framework, cross-border data transfer rules and cybersecurity requirements remain fully operative. Enterprises must still comply with sectoral data licences where applicable.
• Hospitality and tourism sub-services. Several sub-service lines within the hospitality and tourism sector (ancillary tourism services, certain accommodation categories) have been deregulated. Building permits, fire-safety certifications and land-use approvals for hotel and resort properties remain ex-ante requirements.
• Logistics and specialised transport services. Certain logistics service conditions and specialised freight-handling activities have been abolished. Vehicle safety certifications, dangerous-goods transport permits and core transport operator licences continue to apply.

What Remains Conditional

Deal teams should not treat the abolition as a blanket deregulation. The following categories of approvals remain firmly in place and continue to require ex-ante compliance:

• Land-use right certificates and land allocation decisions
• Construction permits and building-completion certificates
• Environmental impact assessments and environmental licences
• Fire-safety design approvals and inspection certificates
• Financial-sector licences (banking, insurance, securities)
• Pharmaceutical and healthcare facility licences
• Education and training institution approvals

The official list of remaining conditional business lines is published and periodically updated on the enterprise registration portal. For any specific activity, counsel should verify classification directly against the current Appendix IV.

Practical Implications for M&A Transactions, Deal Lifecycle Walkthrough

The conditional licences abolition changes the risk profile at almost every stage of a typical Vietnam M&A deal. Below is a stage-by-stage guide to the key adjustments buyers, sellers and their advisers should consider for Vietnam M&A approvals.

Stage 1: Target Screening and LOI

• Confirm whether the target’s registered business lines include any of the 38 abolished activities.
• If they do, note that the target may no longer hold (or need to hold) the corresponding conditional licence, but verify whether adjacent, still-conditional approvals apply.
• Adjust preliminary valuation assumptions: removal of licensing barriers may increase competition in the target’s sector, potentially affecting revenue projections.

Stage 2: Due Diligence

• Request the target’s current Enterprise Registration Certificate (ERC) and confirm registered business lines match operational activities.
• Cross-reference every registered activity against the official conditional business list to establish which approvals remain required.
• For abolished lines, investigate whether the target held the previously required licence and whether any transitional obligations apply.
• Flag any activity where the target operates without a still-required licence, this is a red flag regardless of the abolition.

Stage 3: SPA Negotiation and Conditions Precedent

• Remove conditions precedent that reference abolished conditional licences, but only after confirming abolition with local counsel.
• Retain or add CPs for all remaining ex-ante approvals (land, construction, environmental, financial, FDI).
• Negotiate interim operating covenants requiring the seller to maintain compliance with all applicable regulations through closing.

Stage 4: Closing and Post-Closing Compliance

• Execute closing only after all remaining CPs are satisfied or expressly waived with appropriate indemnity coverage.
• Implement a post-closing compliance roadmap addressing any newly applicable post-inspection requirements for deregulated activities.
• Calendar regulatory filing deadlines and inspection-readiness milestones for the first 12 months post-closing.

Immediate Due Diligence Checklist for Vietnam, Documents and Red Flags

This due diligence checklist for Vietnam is designed for M&A transactions closing on or after July 1, 2026. Counsel should request the following from the seller at the earliest stage of diligence.

• Enterprise Registration Certificate (ERC). Current version showing all registered business lines. Confirm the ERC has been updated post-abolition if applicable.
• Conditional licence files. Copies of all sectoral licences, permits and certificates currently held, including those for activities that may have been abolished (historical compliance matters for warranty purposes).
• Land-use right certificates (LURCs). For real estate M&A, obtain originals or certified copies of LURCs, lease agreements and land allocation decisions.
• Construction permits and completion certificates. Verify that all structures on the target’s land are properly permitted and that completion certificates have been issued.
• Environmental impact assessment (EIA) and environmental licence. Confirm the target holds a valid EIA approval and environmental licence for its current operations.
• Fire-safety certificates. Both design-approval certificates and post-construction inspection certificates.
• FDI approval documents. Investment Registration Certificate (IRC), any prior approval letters from MPI or provincial People’s Committees, and records of capital contributions.
• Tax clearance and social insurance compliance. Current tax filings, outstanding tax liabilities, and social insurance contribution records.
• Previously conditional licences. Even if abolished, request evidence that the target was compliant during the period the condition was in force, gaps create warranty and indemnity exposure.
• Post-inspection readiness assessment. For activities shifting to post-inspection supervision, request the target’s internal compliance documentation, standard operating procedures and any prior inspection reports.

Any gaps in the above should be flagged immediately and addressed through SPA risk allocation mechanisms, warranties, indemnities or escrow arrangements.

SPA Drafting and Risk Allocation After the Conditional Licences Abolition

The abolition of 38 conditional business lines creates a drafting challenge for deal counsel: how to allocate risk for activities that were regulated yesterday but are deregulated today, while preserving remedies for historical non-compliance and future post-inspection exposure. Below are model approaches for the key SPA provisions.

Representations and Warranties

Sellers should represent that the target has, at all relevant times, held all licences, permits and approvals required by applicable law for the conduct of its business, including any conditional business licences that were required prior to the date of abolition. This historical compliance warranty is critical because regulatory authorities may still investigate pre-abolition conduct during the statutory limitation period.

Model language: “The Company has obtained and maintained in full force and effect all licences, permits, approvals and registrations required under applicable law for the conduct of its business as carried on at any time during the Warranty Period, including without limitation any conditional business licences required under the Law on Investment prior to the Abolition Effective Date.”

Conditions Precedent

Remove CPs that reference abolished conditional licences. Replace them with a general CP requiring that no material regulatory proceeding or investigation relating to the target’s prior conditional-licence status is pending or threatened as of closing.

Model language: “No Governmental Authority shall have commenced, or provided written notice of intention to commence, any investigation, proceeding or enforcement action against the Company in connection with any conditional business licence held or required to be held prior to [Abolition Effective Date].”

Indemnities and Escrow

For targets operating in sectors with heightened post-inspection risk, buyers should negotiate a specific indemnity covering regulatory fines, penalties and remediation costs arising from post-inspection findings during an agreed period (typically 18–24 months post-closing). Where the indemnity amount is material, consider a dedicated escrow funded at closing.

Interim Operating Covenants

Between signing and closing, the seller should covenant to maintain compliance with all applicable laws, not apply for any new conditional licences that are not required, and promptly notify the buyer of any regulatory communication relating to the target’s business lines. This is especially relevant for deals signed before July 1, 2026, but scheduled to close after the abolition takes effect.

Sector Focus, Real Estate M&A in Vietnam

Real estate M&A in Vietnam is particularly sensitive to the conditional business line reforms because land-intensive transactions sit at the intersection of multiple regulatory regimes, most of which are not affected by the abolition.

Approvals That Remain for Real Estate Transactions

• Land-use right certificates (LURCs). Allocation, lease and transfer of land-use rights remain governed by the Land Law and require provincial People’s Committee approval.
• Construction permits. Issued by the Department of Construction; required before any building works commence.
• Environmental licences. Projects exceeding prescribed thresholds require environmental impact assessments approved by the Ministry of Natural Resources and Environment or provincial-level authorities.
• Fire-safety approvals. Both design-stage and post-construction inspection certificates issued by the fire department.
• Planning and zoning compliance. Confirmation that the project site is zoned for the intended use under the local master plan.

Worked Example, Developer Acquisition

Consider a foreign PE fund acquiring a 70% stake in a Vietnamese residential-development company. Pre-July 1, 2026, the target held a conditional business licence for certain ancillary real estate services. Post-abolition, that specific licence is no longer required, but the target’s LURC, construction permits, EIA approval and fire-safety certificates remain mandatory. The SPA should retain CPs for each remaining approval, include a historical compliance warranty covering the abolished licence period, and establish a post-closing compliance roadmap with milestone dates for fire-safety recertification and environmental licence renewal. Any indemnity for post-inspection risk on the abolished service line should be capped and time-limited, funded by a closing escrow.

Foreign Investor Approvals and Registrations

A common misconception is that abolition of a conditional business line automatically removes foreign investor approval requirements for that activity. This is not the case. Foreign investor approvals in Vietnam operate under a separate framework governed by the Law on Investment and its implementing decrees.

Key Points for Foreign Acquirers

• Investment Registration Certificate (IRC). Foreign-invested enterprises must hold an IRC issued by the provincial Department of Planning and Investment (DPI). The IRC requirement is independent of whether the target’s activities are conditional.
• Market-access conditions and the negative list. Certain sectors remain subject to foreign ownership caps or market-access restrictions under Vietnam’s WTO commitments and domestic negative lists. Abolition of a conditional business line does not override these restrictions.
• M&A-specific approvals. Acquisitions by foreign investors that result in a foreign-owned enterprise, or that increase foreign ownership above prescribed thresholds, require DPI approval. For transactions involving targets in sectors subject to the mandatory tender offer rules (listed companies), additional Securities Commission procedures apply.
• Typical timelines. DPI approval for a standard M&A transaction typically takes 15–30 working days from submission of a complete application. Deals involving national-defence or security-sensitive sectors may require additional review by the MPI or the Prime Minister’s office, extending timelines to 45–60 working days or more.

Timing, Enforcement and Post-Inspection Supervision, What to Expect

The shift from ex-ante conditional licensing to post-inspection supervision represents a fundamental change in how regulators will oversee the 38 deregulated activities. Instead of requiring enterprises to satisfy conditions before commencing operations, authorities will monitor compliance after the fact through periodic and targeted inspections.

Early indications suggest that inspection priorities will focus on sectors with high consumer-protection or safety profiles, hospitality, data services and certain logistics activities. Penalties for non-compliance discovered during post-inspection may include administrative fines, orders to suspend operations, and mandatory remediation within prescribed timeframes. For M&A buyers, this means that operational risk does not disappear with the abolition, it migrates from a pre-closing licensing hurdle to a post-closing enforcement exposure. Deal teams should build inspection-readiness into their post-closing compliance plans, including internal audit protocols, document-retention systems and designated compliance officers for deregulated activities. Engaging experienced corporate services providers can help enterprises maintain ongoing regulatory readiness.

Comparison Table, Pre- vs Post-July 1, 2026 Approval Requirements

Conclusion, Navigating the Conditional Business Lines in Vietnam Reforms

The abolition of 38 conditional business lines in Vietnam is the most significant deregulation event for M&A deal teams since the 2020 Law on Investment overhaul. For buyers, the reform streamlines target screening and may accelerate deal timelines, but it also demands more rigorous post-closing compliance planning as enforcement shifts to post-inspection regimes. For sellers, updated disclosure schedules and clean regulatory histories become even more valuable in negotiations. Deal teams working on transactions closing around or after July 1, 2026, should engage qualified Vietnamese M&A counsel early to re-map approvals, adjust SPA risk allocation and build inspection-ready compliance frameworks from day one.

The Global Law Experts lawyer directory connects international acquirers with experienced practitioners across Vietnam’s M&A and real estate sectors.

Sources

1. Đăng Ký Doanh Nghiệp, Official List of Conditional Business Lines
2. Viet An Law Firm, Vietnam’s Official 2026 Conditional Business Lines List
3. Acclime Vietnam, Legal Shift on Abolishing 38 Conditional Business Lines
4. Vietnam Briefing, Vietnam Cuts Conditional Business Lines: Implications for Investors
5. Dentons LuatViet, Continued Reduction of Conditional Business Lines
6. Vietnam Business Law, Compliance Burdens Under New Conditional Data-Related Business Lines