Inheritance of Business Assets in Vietnam: A Legal Guide to Cross-Border Ownership Transfers for Foreign Partners

Introduction

Business asset succession planning in Vietnam poses unique legal challenges for foreign partners, particularly in the context of cross-border ownership transfers. This legal guide provides a comprehensive overview of the regulatory framework governing the inheritance and transfer of business assets, and analyzes key legal considerations that stakeholders must evaluate to ensure the transfer process is lawful, efficient, and legally risk-mitigated.

See also: Legal Aspects of Corporate Bond Issuance in Vietnam

Overview of the Legal Framework

The inheritance and transfer of business assets in Vietnam are governed by various domestic legal instruments, including:

Law on Enterprises 2020: provides specific regulations on the forms, conditions, and procedures for transferring capital contributions, shares, and other business assets;
Law on Investment 2020: governs foreign investment activities, including ownership ratio limits and conditions applicable to conditional business sectors;
Civil Code 2015: regulates the inheritance of assets, including capital contributions or shares owned by individuals in enterprises;
Bilateral and multilateral international treaties to which Vietnam is a party (e.g., Bilateral Investment Treaties – BITs, and agreements such as EVIPA, CPTPP) may directly affect the rights and obligations of foreign investors in the course of asset inheritance or ownership transfer in Vietnamese enterprises.

Key Legal Issues to Consider

Ownership Transfer under the Law on Enterprises

The Law on Enterprises recognizes the right of members/shareholders to transfer their capital contributions or shares to others, including foreign individuals or entities. However, such transfers must comply with the company’s charter and applicable legal restrictions regarding eligible transferees—particularly in sectors subject to market entry conditions.

Foreign Ownership Limitations

Under the Law on Investment and Vietnam’s commitments under the WTO and EVFTA, certain business sectors are subject to foreign ownership caps. Any inheritance or transfer of ownership must ensure compliance with these restrictions to avoid regulatory violations.

Cross-Border Transactions and Capital Transfers

Equity transfers involving foreign elements are subject to Vietnam’s foreign exchange control regulations, as administered by the State Bank of Vietnam. Foreign investors making direct investments must register their capital contributions with the investment registration authority, open a direct investment capital account (in foreign currency or VND) at a licensed bank, and conduct all capital contribution, transfer, and capital repatriation transactions through such an account.

In cases where capital contributions are transferred abroad, the remittance of proceeds must comply with capital transfer confirmation procedures, tax obligations, and foreign exchange transaction reporting requirements as stipulated in Circular No. 06/2019/TT-NHNN dated 26 July 2019 and Circular No. 12/2016/TT-NHNN dated 29 June 2016.

Impacts of International Investment Protection Agreements

In the course of inheriting or transferring ownership interests in a Vietnamese enterprise, a foreign investor encountering disputes with governmental authorities or acts deemed to breach investment protection obligations may invoke rights under applicable Bilateral Investment Treaties (BITs) or Free Trade Agreements (FTAs) to which Vietnam is a party. Commonly protected rights include:

The right to Fair and Equitable Treatment (FET);
Protection against unlawful or uncompensated expropriation or nationalization;
The freedom to transfer profits and capital related to the investment.

See also: Acquisition of a Limited Liability Company in Vietnam – Legal Requirements and Procedures

Business Succession Planning Process

Business succession planning must follow a clearly structured process to ensure legal compliance, transparency, and risk mitigation during the transfer of ownership. The following are key steps in this process:

Preparation of Legal Documents and Records

Essential documents include:

Enterprise Registration Certificate (original and notarized copy): to verify the enterprise’s legal status and current ownership structure;
Capital/Share Transfer Agreement: stipulating the conditions, method, and value of the transfer; must be notarized or authenticated in accordance with applicable law;
Internal corporate governance documents: such as the company’s Charter, minutes of the Members’ Council/General Meeting of Shareholders, and resolutions approving the transfer transaction;
Enterprise valuation reports (if any): to support tax calculation and ensure transparency of the transaction.

Compliance with Legal Requirements

Given the cross-border nature of the transfer, the process must comply with the following legal requirements:

Investment approval or share/capital acquisition registration for foreign investors (in accordance with the Law on Investment 2020 and Decree No. 31/2021/ND-CP);
Amendment of the Enterprise Registration Certificate to reflect changes in members/shareholders (if there is a change in the legal representative or equity holders).

Stakeholder Management

The transfer of business assets is not only a legal transaction but also affects the rights and interests of multiple stakeholders, including:

Shareholders’ or Members’ Agreements: should be reviewed and updated to reflect the new ownership structure and protect the rights of remaining stakeholders;
Succession planning for key personnel: particularly for executive or managerial positions, to ensure operational continuity;
Communication strategy with clients and partners: to reinforce trust and maintain business relationships following the succession.

Key Considerations in Cross-Border Business Succession

Business succession involving foreign elements requires concurrent compliance with legal frameworks in both Vietnam and the country of residence or nationality of the foreign investor. The following are critical legal issues that must be carefully considered:

1. Tax Implications in Both Jurisdictions

In Vietnam, income derived from the transfer of capital contributions or shares is subject to personal income tax under Article 31 of the Law on Personal Income Tax 2007 and Article 16 of Circular No. 111/2013/TT-BTC guiding the implementation of the Personal Income Tax Law.

Meanwhile, the country in which the successor resides may apply a worldwide income taxation principle, potentially resulting in double taxation unless a Double Taxation Agreement (DTA) is in place. Therefore, it is essential to review the relevant DTA between Vietnam and the foreign jurisdiction involved.

2. International Asset Transfer Regulations

Certain jurisdictions require declaration of inherited foreign assets or may impose restrictions on citizens receiving assets in a third country. The transfer of ownership over assets such as equity interests, shares, or proprietary rights across borders must be scrutinized to ensure compliance with both domestic and international legal regimes, including laws on asset transfers, investment controls, and inheritance regulations.

3. Dual Compliance with Legal Systems

Foreign investors and successors must ensure that all transactions, documentation, and procedures related to succession are legally recognized and enforceable in both jurisdictions. Procedures such as notarization, consular legalization, and/or apostille (where applicable) are mandatory for foreign documents to be valid and enforceable under Vietnamese law.

Practical Approaches to Effective Business Succession Planning

To ensure a smooth and legally sound business succession process, enterprises and foreign investors should adopt the following best practices:

1. Early Planning with a Long-Term Vision

Succession planning should be initiated early—well before unforeseen events such as death, incapacity, or sudden capital withdrawal occur. Proactive preparation helps protect assets and maintain continuity in corporate governance.

2. Seek Legal Advice in Both Jurisdictions

Given the complex interplay of laws governing investment, inheritance, and taxation, it is essential to consult legal professionals in both Vietnam and the jurisdiction of the successor. This ensures that the succession structure is both legally compliant and strategically optimal.

3. Clear Communication with Stakeholders

The succession plan should be clearly communicated to shareholders, key management personnel, and strategic partners to avoid internal disputes, organizational instability, or reputational risks.

4. Periodic Review and Updates

Succession plans should be reviewed regularly and updated in response to changes in law, personnel, or corporate strategy—particularly in light of the dynamic and evolving global legal and commercial environment.

Common Challenges and Solutions in Cross-Border Business Succession
Identifying and analyzing common obstacles in cross-border succession planning enables businesses to develop suitable strategies, minimize legal and operational risks, and ensure a smooth ownership transition. Below are key categories of challenges and corresponding solutions:

1. Legal and Administrative Barriers

Challenge: The approval process for foreign investment, capital transfer registration, and business license updates can be complex—particularly for foreign investors.

Solution: Companies should engage experienced legal counsel with in-depth knowledge of investment and corporate procedures, particularly those familiar with handling dossiers before the Department of Planning and Investment, tax authorities, and the State Bank of Vietnam.
Estimated Timeline: Depending on the transaction’s scale and the locality of registration, businesses should anticipate a timeframe of 6 to 12 months to complete all legal procedures, including enterprise registration amendments and foreign remittance (if applicable).

2. Cultural Differences and Business Practice Gaps

Challenge: Differences in governance philosophy, management style, and decision-making approaches may lead to conflicts or disruptions during the succession process.

Solution: Enterprises should implement a structured cultural integration and internal communication plan. A phased succession process with a defined transition period is advisable to help all parties adapt and maintain continuity.

Conclusion

Succession planning for businesses operating in Vietnam—especially those with foreign ownership structures—requires thorough preparation and deep understanding of both Vietnamese law and applicable foreign regulations.

The success of ownership transition depends on the following key factors:

Early planning with consideration for risk and force majeure scenarios (e.g., death, legal incapacity, or regulatory changes);
Comprehensive knowledge of domestic and international legal frameworks, including the Law on Enterprises, Law on Investment, tax regulations, foreign exchange controls, and bilateral or multilateral treaties;
Consultation with legal experts experienced in both Vietnamese and international legal systems—especially in capital transactions, asset management, inheritance law, and cross-border compliance advisory;
Complete legal documentation, including share transfer agreements, notarized and legalized documents, proof of inheritance rights (if applicable), and full compliance with procedures required by competent authorities.

Recommendation

To ensure that business succession proceeds smoothly and in compliance with the law, foreign investors should consult lawyers specializing in foreign-invested enterprises, and closely coordinate with accountants, tax advisors, and banking institutions. This integrated approach ensures legal, financial, and operational effectiveness across jurisdictions.

Harley Miller Law Firm

Email: info@luatminhnguyen.com or miller@hmlf.vn
Website: luatminhnguyen.com or hmlf.vn
Hotline: +84 9372 15585