How to Draft M&A Contracts in Vietnam (2026): SPA, Escrow & Conditionality Strategies

Vietnam’s M&A market entered a new regulatory era on 1 March 2026 when the Law on Investment No.143/2025/QH15 took effect, followed by Decree 96/2026/ND-CP dated 31 March 2026 and Circular 55/2026/TT-BTC standardising investment-related forms. Together, these instruments have reshaped how SPA, escrow and conditionality mechanisms must be drafted in Vietnam to manage longer approval windows, stricter documentation requirements and heightened gun-jumping exposure. This practitioner playbook delivers the clause language, checklists and negotiation strategies that in-house counsel, PE sponsors and M&A lawyers need to close deals efficiently under the 2026 framework, with particular attention to escrow arrangements and land-heavy transaction risk.

Regulatory Landscape and Practical Consequences for SPA Drafting in Vietnam

Effective MA contract drafting in Vietnam now requires a precise understanding of three overlapping approval regimes. Each regime imposes its own filing threshold, competent authority and review timeline, and the SPA must account for all of them as conditions precedent to closing.

Who Grants Approvals and When

Under Law No.143/2025, foreign investors acquiring equity in Vietnamese enterprises may need an Investment Registration Certificate (IRC) from the Ministry of Planning and Investment (MPI) or the relevant provincial People’s Committee, depending on the project type and scale. Separately, the Vietnam Competition Commission (VCC), operating under the Ministry of Industry and Trade (MOIT), administers merger-control filings for economic concentrations that meet statutory asset, turnover, transaction-value or combined-market-share thresholds. Transactions touching regulated sectors, banking, telecoms, insurance, real estate, layer additional sectoral-licence requirements on top of the general investment and competition regimes.

Why This Matters for SPA Conditionality

The practical consequence is that most cross-border deals now face multi-track approval timelines. Decree 96/2026 introduced new documentary requirements, including standardised forms under Circular 55/2026/TT-BTC, that can extend processing periods if submissions are incomplete. Industry observers expect that early-stage deals signed in mid-2026 will encounter adjustment delays as regulatory bodies themselves adapt to the new filing templates. For drafters, the implication is clear: every SPA for a foreign-invested M&A transaction should include clearly sequenced regulatory approval conditions, realistic long-stop dates and remedies for failure to obtain approvals within the expected timeframe. Practitioners working on merger filing thresholds in Vietnam should cross-reference their analysis with the updated threshold provisions in the implementing decree.

Pre-Sign Due Diligence and Structuring Checklist

Before drafting any SPA, buyers and sellers should complete targeted due diligence to identify risk areas that will shape escrow sizing, warranty scope and conditionality. The checklist below organises the critical workstreams, the party responsible for preparation and the typical lead time practitioners should budget in 2026 transactions.

Red Flags That Push Toward Escrow or W&I Insurance

Certain due-diligence findings should immediately shift the risk-allocation negotiation toward protective mechanisms. The following red flags typically increase escrow amounts or trigger warranty and indemnity insurance discussions:

• Incomplete or disputed land-use right certificates. Title gaps are common in land-heavy M&A in Vietnam and require dedicated remediation escrow.
• Pending tax audits or assessments. Unresolved CIT or VAT exposures justify tax-specific holdbacks.
• Sector-licence renewal risk. Licences approaching expiry or subject to conditions create regulatory uncertainty that warranty and indemnity coverage can address.
• Material litigation or labour disputes. Ongoing claims against the target increase the need for indemnity escrow with clearly defined release triggers.
• Related-party transactions without arm’s-length documentation. Transfer-pricing exposure may warrant a separate tax-indemnity escrow tranche.

The negotiation playbook at this stage involves balancing three levers: timing (how quickly the buyer needs to close), price (purchase-price adjustments for identified risks) and indemnity structure (escrow versus warranty and indemnity insurance versus seller guarantees). For a deeper analysis of the Vietnam Investment Law 2026 requirements for foreign investors, consult the detailed guide on this site.

Drafting SPA Conditionality, Model Regulatory Approval Conditions and Redlines

The conditionality section is the structural core of any conditional sale agreement in Vietnam. It determines whether the deal proceeds, how long the parties remain bound, who bears approval risk and what happens if clearance is refused or delayed. Under the 2026 regulatory framework, getting these clauses right is more consequential than ever.

Conditional vs Unconditional Deals

Unconditional SPAs, where signing and closing occur simultaneously, remain workable for small domestic share transfers that do not trigger merger-control thresholds or require an IRC. However, for virtually all foreign-invested M&A and any transaction that meets VCC filing thresholds, the SPA must be structured as a conditional agreement with a gap between signing and closing. The mandatory pre-merger notification regime under the Competition Law means that completing a transaction before receiving VCC clearance constitutes gun-jumping, exposing both parties to penalties and potential unwinding.

Model “Subject to Competition Clearance” Clause

The following model clause illustrates a buyer-friendly formulation of the competition-clearance condition. Negotiation notes highlight where sellers typically seek adjustments.

Legal basis: mandatory pre-merger notification under the Competition Law and implementing regulations; procedural steps detailed in Decree 96/2026/ND-CP.

Buyer-friendly version:

“Completion shall be conditional upon the VCC issuing an unconditional clearance decision (or the statutory review period expiring without the VCC issuing a prohibition decision) in respect of the Transaction (‘Competition Clearance’). The Buyer shall use reasonable endeavours to file the merger notification within [10] Business Days of the date of this Agreement and shall keep the Seller reasonably informed of the progress of the filing. If Competition Clearance has not been obtained by the Long-Stop Date, either Party may terminate this Agreement by written notice.”

Seller redline, key adjustments:

• Efforts standard. Sellers often push for “best endeavours” or an obligation to offer remedies (divestiture commitments) to secure clearance, particularly in concentrated markets.
• Reverse break fee. In competitive auction processes, sellers may require a reverse break fee payable by the buyer if the deal fails due to a competition-law prohibition caused by the buyer’s market position.
• Narrowing termination rights. Sellers may insist that only the seller can terminate on the long-stop date, preventing the buyer from using a regulatory delay as a pretext to walk away from a deal that has become commercially unattractive.

Investment Approval Condition

Where the transaction requires an IRC or amendment to an existing IRC under Law No.143/2025, a separate investment-approval condition should be drafted alongside the competition-clearance condition. The clause should specify:

• Scope of approval. Precisely identify whether the condition is satisfied by issuance of a new IRC, an amended IRC or a written confirmation from the relevant People’s Committee.
• Filing responsibility. Allocate clearly which party prepares and submits the application, using the standardised forms under Circular 55/2026/TT-BTC.
• Timeline and long-stop date. Set a long-stop date that reflects realistic processing times under Decree 96/2026, typically 45 to 90 days beyond the expected statutory review period, depending on project complexity.
• Material adverse regulatory event (MARE). Include a MARE clause that entitles either party to terminate if a change in law or regulatory policy occurring after signing would materially impair the economic rationale of the transaction or impose conditions that fundamentally alter the deal terms.

Sample MARE Clause

“If, after the date of this Agreement and prior to Completion, any Governmental Authority enacts, issues or applies any Law, regulation, order or policy directive that would (a) prohibit or materially restrict the Transaction, (b) impose conditions on the Buyer or the Target Company that would reduce the projected EBITDA of the Target by more than [15]% on an annualised basis, or (c) require the divestiture of assets representing more than [20]% of the Target’s consolidated net asset value, then the affected Party may terminate this Agreement by written notice to the other Party, and neither Party shall have any further liability except under the Surviving Provisions.”

This formulation anchors the exit right to quantified thresholds, reducing the risk of opportunistic termination while giving genuine protection against regulatory overreach.

SPA Escrow Arrangements in Vietnam, Practical Mechanics, Amounts and Release Triggers

Escrow arrangements in Vietnam serve as the primary post-closing risk-management tool in the absence of a deep warranty and indemnity insurance market. Understanding escrow mechanics, including amount calibration, agent selection, release triggers and currency considerations, is essential for any buyer or seller structuring an M&A transaction in 2026.

Escrow vs W&I Insurance vs Simple Holdback

Three principal mechanisms exist for securing post-closing indemnity obligations. The choice depends on deal size, seller profile, risk type and whether the parties want third-party underwriting. Warranty and indemnity insurance has gained traction in larger transactions but remains less commonly deployed than escrow for mid-market Vietnam deals.

• Escrow. Purchase-price funds deposited with a third-party escrow agent, released upon satisfaction of conditions or expiry of a claims window. Provides hard security and is enforceable against the deposit itself.
• W&I insurance. A policy underwritten by an insurer covering breach of seller warranties. Useful where the seller demands a clean exit with no ongoing contingent liability, but premiums add transaction cost.
• Simple holdback. A portion of the purchase price retained by the buyer (not deposited with a third party). Simpler to administer but provides weaker comfort to the seller that funds will be available for release.

Typical Escrow Amounts and Duration

The following table reflects market practice observed in Vietnam M&A transactions. The ranges represent common parameters; actual amounts depend on deal-specific risk factors identified during due diligence.

Escrow Agent Selection

Parties should consider three options for escrow agent selection in Vietnam:

• Vietnam-licensed commercial bank. The most common choice. Provides local enforceability and straightforward currency handling for VND-denominated transactions. Joint instruction letters are standard.
• International custodian bank (offshore). Used in larger cross-border transactions where both parties want USD- or other hard-currency denominated escrow. Enforceability in Vietnam requires careful structuring of the escrow agreement to ensure Vietnamese courts or arbitral tribunals can order release.
• Trust arrangement. Rare in Vietnam, but occasionally used in PE-backed transactions with regional trust structures. Adds complexity and cost.

Tax, Withholding and Foreign-Currency Considerations

Interest earned on escrow deposits may be subject to Vietnamese corporate income tax. Where the escrow is denominated in foreign currency, the parties should address exchange-rate risk allocation in the escrow agreement. Vietnam’s foreign-exchange control regulations require that capital transactions be conducted through authorised banks, and escrow releases must comply with State Bank of Vietnam reporting requirements. Where possible, the SPA should specify the currency of the escrow deposit, the treatment of accrued interest and the allocation of any withholding-tax obligations between the parties.

Sample Escrow Release Clause, SPA Escrow Vietnam

“The Escrow Agent shall release [50]% of the Escrow Amount on the first anniversary of the Completion Date, provided that no Indemnity Claims remain outstanding or unresolved. The remaining [50]% shall be released on the second anniversary of the Completion Date, less the aggregate amount of any outstanding Indemnity Claims notified prior to such date. If a dispute exists regarding any Indemnity Claim at the time a release is due, the Escrow Agent shall retain an amount equal to [120]% of the disputed amount and release the balance.”

Managing Gun-Jumping and Interim Covenants While Awaiting Approvals

Gun-jumping in Vietnam occurs when parties implement a merger or acquisition, or exercise control over the target, before obtaining required VCC clearance or investment approvals. The consequences include administrative penalties, potential unwinding of the transaction and reputational damage. SPA drafting must include robust interim covenants that clearly delineate permissible and prohibited conduct between signing and closing.

Core Interim Covenant Framework

The following elements should be addressed in the interim-period covenants of any conditional SPA:

• Negative covenants (ordinary-course obligations). The target company must operate in the ordinary course of business. Define “ordinary course” by reference to the target’s historical practices and include a materiality basket (e.g., no capital expenditure exceeding VND [X] billion without buyer consent).
• Prohibited actions. Specify actions the target may not take without the buyer’s prior written consent: issuing new equity, incurring material debt, disposing of significant assets, entering related-party transactions, amending constitutional documents or terminating key employees.
• Information access and reporting. The buyer is entitled to periodic financial reporting and access to management, but must not exercise operational control. Draft information rights carefully to avoid any inference that the buyer is directing the target’s competitive behaviour, which would constitute gun-jumping.
• Independent monitoring. In sensitive cases, the parties may appoint an independent monitor or observer to attend board meetings during the interim period, reporting to both parties without decision-making authority.
• Permitted actions carve-out. Include a schedule of specific actions that are pre-approved (e.g., renewals of existing contracts, scheduled capital maintenance), avoiding the need for repeated consent requests that can delay operations.

Remedies for Interim Covenant Breach

The SPA should specify remedies for breach of interim covenants, including the buyer’s right to terminate the agreement, claim damages or seek specific performance. In practice, many Vietnam SPAs include a “material breach” threshold for termination (to prevent termination over minor operational deviations) and a closing purchase-price adjustment mechanism tied to interim-period losses caused by covenant breaches. Where the use of foreign documents in Vietnam is relevant to the transaction, ensure that any documentary conditions for the interim period account for legalisation timelines.

Land-Heavy M&A in Vietnam, Title, Remedies and Escrow for Remediation

Transactions involving significant land assets present distinctive challenges in Vietnam. Land-use rights, not freehold ownership, are the applicable concept, and the gap between registered title and actual physical possession or use can be substantial. Land-heavy M&A in Vietnam demands specialised due diligence and tailored SPA protections.

Key Risks and Drafting Responses

• LURC discrepancies. Land-use right certificates may not reflect current boundaries, permitted use categories or encumbrances. The SPA should include a detailed title schedule listing each parcel, its registered status and any known discrepancies, with vendor covenants to remediate before or after closing.
• Third-party claims. Historical land disputes, including claims by former users, co-operatives or adjacent landholders, must be identified during diligence. The vendor should provide specific indemnities for any third-party claims arising from pre-closing events.
• Foreign-investor restrictions. Foreigners cannot hold land-use rights directly in Vietnam; they access land through the Vietnamese target entity. The SPA should warrant that the target’s land-use rights are valid, properly registered and transferable in connection with the share-transfer transaction.
• Remediation escrow. Where title defects are identified but the parties agree to proceed, a dedicated remediation escrow, typically 5–15% of the purchase price, depending on the severity of the defect, should be established. Release triggers should be tied to specific milestones: issuance of corrected LURCs, resolution of boundary disputes or completion of permitted-use conversions.
• Layered indemnities with W&I limits. For the most material land risks, consider layering vendor indemnities (first recourse) with warranty and indemnity insurance (second recourse) and remediation escrow (third recourse), each with defined caps and de minimis thresholds.

Clause Bank: Ready-to-Use Drafting Snippets for SPA and Escrow

The following clauses are presented as starting points for negotiation. Each should be adapted to the specific transaction and reviewed by local counsel.

• Clause A, Approval Condition (Buyer-Friendly). “Completion is conditional upon the Buyer receiving, to its reasonable satisfaction, (i) Competition Clearance from the VCC, (ii) an amended IRC from the competent investment registration authority, and (iii) all sector-specific approvals listed in Schedule [X], in each case without conditions that would be materially adverse to the Buyer.”
• Clause B, Approval Condition (Seller-Friendly). “Completion is conditional upon receipt of Competition Clearance and the amended IRC. The Buyer shall use best endeavours, including offering reasonable remedies, to obtain such approvals. The Buyer may not terminate this Agreement for failure to obtain approvals unless it has complied in full with its obligations under this Clause.”
• Clause C, Escrow Funding and Release Trigger. “On the Completion Date, the Buyer shall deposit [10]% of the Purchase Price into the Escrow Account. The Escrow Agent shall release funds in accordance with the Escrow Release Schedule set out in Schedule [Y], subject to retention of amounts corresponding to any notified but unresolved Indemnity Claims.”
• Clause D, Escrow Dispute Resolution. “If the Parties are unable to agree on the release or retention of any Escrow Amount within [30] days of a release request, either Party may refer the dispute to arbitration under the rules of the Vietnam International Arbitration Centre (VIAC). The Escrow Agent shall continue to hold the disputed amount pending the arbitral award.”
• Clause E, Gun-Jumping Indemnity. “The Seller shall indemnify the Buyer against any Losses arising from any act or omission by the Seller or the Target Company during the Interim Period that constitutes a breach of the interim covenants set out in Clause [Z], including any penalties or fines imposed by the VCC or other Governmental Authority as a consequence of premature implementation of the Transaction.”

Post-Closing Mechanics, Holdback Releases and Enforcement

Post-closing administration is where many Vietnam M&A transactions encounter friction. Parties should agree at signing on a clear release schedule and claims process to avoid disputes that can tie up escrow funds indefinitely.

The standard approach uses staggered escrow releases, commonly 50% at 12 months and 50% at 24 months, with retention rights for notified claims. The claims process should require the buyer to deliver a written indemnity notice within a specified period (typically 30 to 60 days of becoming aware of a claim), with the seller given a response window before any escrow draw-down occurs. Where warranty and indemnity insurance is in place, the SPA should coordinate the claims process so that the insurer is notified simultaneously with the seller.

Enforcement in Vietnam favours arbitration over litigation for M&A disputes. VIAC arbitration is widely accepted, and foreign arbitral awards are enforceable under the New York Convention, to which Vietnam is a party. For deals involving parties across multiple jurisdictions, the SPA should specify the arbitral seat, governing law and language of proceedings at the drafting stage. For mobility-related issues arising during post-closing integration, including work-permit requirements for incoming management, the comprehensive guide to Vietnamese visa types provides useful background.

Conclusion, Structuring Vietnam M&A Contracts for 2026 and Beyond

The 2026 regulatory framework demands more from SPA drafting than at any point in Vietnam’s M&A history. Practitioners managing SPA, escrow and conditionality in Vietnam must now navigate multi-track approval regimes, stricter documentation standards under Circular 55/2026/TT-BTC and heightened enforcement attention from the VCC. The drafting strategies set out in this playbook, from model conditionality clauses and escrow release mechanics to gun-jumping safeguards and land-remediation escrow, provide a practical foundation for structuring deals that protect both buyers and sellers while achieving regulatory compliance. For transaction-specific advice, including clause adaptation and escrow structuring, find an M&A lawyer in Vietnam through the Global Law Experts directory.

Sources

1. Law on Investment No.143/2025/QH15, Official Gazette (vanban.chinhphu.vn)
2. Law No.143/2025/QH15, Government Gazette portal (congbao.chinhphu.vn)
3. Nghị quyết 66, Government/Party Resolution (vanban.chinhphu.vn)
4. Circular No.55/2026/TT-BTC, Ministry of Finance Forms (bacninh.gov.vn)
5. MOIT Legal Documents Database (vntr.moit.gov.vn)