What is due diligence in Vietnam? Legal due diligence for M&A and investment

What is due diligence?

Due diligence is the process of reviewing a target before committing to a deal. The buyer, investor or lender asks the other side for documents and information, tests them against reality and against the law, and prepares a report on what exists and what could go wrong.

Two points avoid confusion:

• Vietnamese law does not define due diligence. Neither the Law on Enterprises 2020 nor the Investment Law 2025 contains the concept. It is an international transaction practice used in Vietnamese M&A, so its content is a matter for the parties.
• The law sets the conditions of a transaction; due diligence tests whether they are met. Each item reviewed should therefore tie back to a specific rule, as in the sections below.

Types of due diligence in Vietnam: legal, financial, data

A large transaction usually has several teams working in parallel:

This entry focuses on legal due diligence. For the privacy and PDPL side of a deal, see the handbook entries on transfer of personal data and cross-border data transfer.

Why it matters: risk depends on deal structure

What the buyer actually receives differs by structure, which is why the scope of review differs:

The sale contract usually adds warranties, conditions precedent and an indemnity mechanism. Those terms are built on what due diligence finds; they are negotiated between the parties, not mandated by law.

Scope of legal due diligence in Vietnam: what is reviewed

The list below ties each item to the current rule a lawyer will test. It adjusts by sector and deal structure.

1. Legal status and capital structure.

• Enterprise Registration Certificate, charter, register of members or shareholders, legal representative.
• Whether charter capital has been fully paid. A limited liability company with two or more members must have capital paid in full within 90 days of the ERC; a member who has not contributed automatically ceases to be a member, and a member who has not contributed in full holds rights only in proportion to what was paid (Clauses 2 and 3, Article 47 of the Law on Enterprises). This is a frequent way for the ownership the buyer thinks it is buying to turn out wrong.
• Transfer restrictions and pre-emption rights in the charter or shareholders' agreement.

2. Investment and market access (where foreign parties are involved).

• The IRC for each project, the schedule, and whether its content still matches reality; see what is an IRC.
• Which group the target falls into under Article 20 of the Investment Law; see what is an FDI company.
• Whether the sector is in Annex I of Decree 96/2026/ND-CP (Section A lists 23 sectors not yet open, Section B lists 62 with conditions), and the maximum foreign ownership (Clause 10, Article 17).
• Whether the deal falls into the three cases requiring registration of the capital contribution (Clause 3, Article 21 of the Investment Law).

3. Licences and business conditions. Whether the target holds the licences and meets the conditions for its sector. The list of conditional sectors in Annex IV of the Investment Law (198 sectors) is temporarily replaced by a 142-sector list under Resolution 66.17/2026/NQ-CP (1 July 2026 to the end of 28 February 2027) and is to be replaced from 1 March 2027 by a list of 137 sectors under Law No. 24/2026/QH16; existing licences may be used until they expire if the business wishes (Clause 3, Article 3 of Law 24/2026/QH16). See the summary of the Investment Law 2025.

4. Key contracts. Contracts with customers, suppliers, landlords and banks: change-of-control termination rights, exclusivity, non-competes, guarantees, security. See drafting and reviewing commercial contracts in Vietnam.

5. Employment. Labour contracts, social insurance, internal rules, collective agreements, and whether foreign staff hold work permits or fall under an exemption; see Vietnam employment law advice.

6. Assets and land. Land use rights, fixed assets, assets under security, intellectual property.

7. Disputes and penalties. Pending or threatened lawsuits and arbitration, administrative penalty decisions, inspections.

8. Personal data. Whether the target processes customer or staff data, on what legal basis, with what notices, whether data is sent abroad, and any incidents. Law 91/2025/QH15 took effect on 1 January 2026 and permits transfer of personal data to continue processing on a merger or consolidation (Point c, Clause 1, Article 17), but this does not remove the target's compliance obligations. See the Personal Data Protection Law.

9. Merger control. Whether the deal reaches the thresholds for notification under competition law. This must be checked against the rules in force at the time of the deal. See what is economic concentration in Vietnam for the forms, the current thresholds and the fines. The review of ownership in item 1 should also cover the declared beneficial owners.

How due diligence in Vietnam usually runs

The steps below are transaction practice, not a legal requirement, so order and timing vary by deal:

1. Sign a confidentiality agreement (NDA) and a term sheet or letter of intent that fixes the scope of the deal.
2. Draw up a document request list based on the deal structure and sector.
3. The seller opens a data room and answers follow-up questions. If an electronic data room holds personal data of staff or customers, there must be a proper basis for processing it.
4. Review, interviews and checks against public records, such as business registration, land registration and court judgments.
5. Prepare the report, setting out findings, risk levels and proposed handling: a price adjustment, a condition precedent to closing, an indemnity, or abandoning the deal.
6. Carry the results into the contract and into post-deal procedures such as registering the capital contribution and changing members or shareholders.

The due diligence report is a reference document for the buyer. It does not replace warranties in the contract and does not bind the seller.

Common mistakes in due diligence

• Using a generic checklist instead of one tied to the deal structure. Buying a project and buying shares raise different questions, as the table above shows.
• Reading paper without testing against reality, for example a registered line of business that does not match what the target actually does.
• Ignoring the buyer's own conditions. A foreign buyer should test market access and registration of the capital contribution from the start, because Article 21 of the Investment Law sets conditions on the foreign investor itself, not only on the target.
• Leaving out personal data when the target lives on customer data, as in e-commerce, finance, healthcare or education.
• Not turning findings into contract terms. If the report flags a risk but the contract has no matching warranty, the buyer has no basis for an indemnity claim.

The seller usually opens the data room only after the parties sign a confidentiality agreement; see what an NDA is in Vietnam for the scope of confidential information, exceptions and remedies.

Due diligence preparation checklist

1. Fix the deal structure: share purchase, capital contribution purchase, project purchase or merger.
2. Set the scope of each workstream: legal, financial, tax, data.
3. Prepare a request list for each, with response deadlines.
4. If the buyer has foreign elements: check Annex I, Article 20 and Clause 3, Article 21 of the Investment Law.
5. Review the IRC and licences, and compare their content with actual operations.
6. Log each finding by severity and attach a response: price adjustment, condition precedent, warranty or exclusion.
7. Carry the results into the contract and the post-deal procedure timetable.

If you need legal due diligence on a specific deal, see legal due diligence for M&A and investment in Vietnam and M&A advisory.