ND-CP: New Rules on State Capital Restructuring Proceeds in Vietnam

On 15 September 2026, the Vietnamese Government issued Decree No. 357/2026/ND-CP on the management and use of proceeds arising from the restructuring of state capital in enterprises and the conversion of public service units into joint stock companies.

The Decree will take effect from 1 November 2026.

The new framework is particularly relevant to transactions involving state capital, state-owned enterprises, divestment, equitization and corporate restructuring. For investors and businesses involved in M&A transactions with state-capital elements, understanding how transaction proceeds are managed and accounted for is an important part of transaction structuring and legal due diligence.

1. What Does Decree 357/2026/ND-CP Regulate?

Decree 357/2026/ND-CP focuses on the management and use of proceeds generated from the restructuring of state capital and the conversion of public service units into joint stock companies.

The Decree addresses proceeds arising from activities such as:

Restructuring of state capital in enterprises;
Transfer or divestment of state capital;
Equitization and conversion of public service units into joint stock companies; and
Other forms of restructuring falling within the scope of the Decree.

It also establishes rules concerning the management and use of these proceeds, including their allocation for state budget purposes and permitted expenditures.

For businesses and investors, the key consideration is that proceeds arising from transactions involving state capital may be subject to specific management, accounting and remittance requirements.

2. Why Is Decree 357/2026/ND-CP Relevant to M&A Transactions?

Decree 357/2026/ND-CP is not an M&A regulation itself. However, it may have a direct practical impact on transactions involving state-owned or state-invested enterprises.

For example, a transaction may involve:

Transfer of state-owned shares;
Divestment by a state ownership representative;
Equitization of a state-owned enterprise;
Restructuring of an enterprise with state capital;
Acquisition of shares in a company undergoing state capital restructuring; or
M&A transactions involving enterprises that previously received or currently hold state capital.

In these transactions, parties need to look beyond the purchase price and ownership structure.

They should also determine how the transaction proceeds are treated, who is responsible for remitting them, and whether additional approvals or financial procedures are required.

This makes the new Decree relevant during both transaction structuring and legal due diligence.

3. What Types of Proceeds Are Covered?

3.1. Proceeds from State Capital Restructuring

The Decree covers proceeds arising from the restructuring of state capital in enterprises.

This is particularly relevant to transactions involving state capital transfers and divestment.

When reviewing a proposed transaction, parties should therefore determine whether the transferred shares or capital contribution constitute state capital subject to the restructuring framework.

This distinction can affect the applicable procedures for the transaction and the handling of proceeds.

3.2. Proceeds from Equitization and Conversion

The Decree also regulates proceeds arising from the conversion of public service units into joint stock companies.

Where an entity is being converted or restructured, the proceeds generated during the process may be subject to specific management and remittance requirements.

Accordingly, transaction documentation should clearly identify the source and treatment of relevant proceeds rather than treating all transaction proceeds as ordinary corporate revenue.

4. Management and Use of State Capital Restructuring Proceeds

One of the key principles under Decree 357/2026/ND-CP is that proceeds falling within its scope must be managed and remitted in accordance with applicable state budget requirements.

Depending on the relevant entity and transaction, proceeds may be associated with the central or local state budget.

The applicable management mechanism is therefore different from an ordinary private-sector share sale, where the seller generally receives the consideration under the terms of the transaction.

For transactions involving state capital, parties should establish at an early stage:

The nature and source of the proceeds;
The entity responsible for declaring and remitting the proceeds;
The applicable payment and remittance timeline;
Supporting documents required for the proceeds;
Accounting treatment; and
Any required approvals or confirmations.

These issues should ideally be addressed before the transaction documents are finalized.

5. Implications for State Capital Divestment

For a state capital divestment transaction, the parties should not assess the transaction solely based on the agreed purchase price.

The transaction structure should also take into account the applicable rules governing the proceeds generated from the divestment.

A legal review may therefore need to examine:

Area	Key Questions
Ownership	Who currently owns the shares or capital?
State Capital	Does the transaction involve state capital?
Authority	Which entity has authority to approve the transaction?
Transaction Proceeds	How must the proceeds be managed and remitted?
Accounting	How should the transaction and proceeds be recorded?
Approvals	What approvals are required before completion?
Historical Liabilities	Are there outstanding obligations related to previous restructuring?
Closing	What documents and financial procedures are required before completion?

This assessment is particularly important where the transaction involves multiple layers of ownership or a corporate group with both state and private shareholders.

6. Decree 357/2026/ND-CP and Legal Due Diligence

For investors considering an acquisition involving state capital, legal due diligence should extend beyond standard corporate and commercial matters.

Depending on the transaction, counsel may need to review:

Corporate Ownership

Current shareholding structure;
State ownership percentage;
Ownership history;
Parent and subsidiary relationships;
Relevant state ownership representative.

Capital Restructuring

Whether the company is subject to a restructuring or divestment plan;
Previous equitization or restructuring activities;
Outstanding obligations arising from previous transactions;
Applicable approvals and decisions.

Transaction Proceeds

Source of transaction proceeds;
Payment structure;
Applicable remittance obligations;
Accounting treatment;
Supporting documentation.

Regulatory Compliance

Corporate approvals;
Investment requirements;
M&A approval requirements, where applicable;
Sector-specific restrictions;
Foreign ownership restrictions, where relevant.

For a foreign investor, these issues should be reviewed together with the applicable foreign investment and M&A regulations.

7. Considerations for Foreign Investors

Foreign investors participating in transactions involving Vietnamese companies with state capital may need to assess several legal layers simultaneously.

These may include:

Foreign investment regulations;
Regulations on management and investment of state capital;
Rules on transfer of shares or contributed capital;
Equitization and divestment regulations;
M&A procedures;
Tax and financial obligations;
Competition considerations, where applicable; and
Corporate approval requirements.

The legal structure of the transaction may also affect the applicable approval and registration procedures.

For this reason, investors should assess the target’s ownership structure and state-capital status before committing to the transaction structure.

8. Practical Checklist for Businesses and Investors

Businesses and investors involved in transactions potentially covered by Decree 357/2026/ND-CP should consider the following checklist:

Before the transaction

☐ Identify whether state capital is involved.

☐ Identify the relevant state ownership representative.

☐ Review the company’s ownership and restructuring history.

☐ Determine whether the transaction forms part of a state divestment or restructuring plan.

☐ Identify applicable approval requirements.

During transaction structuring

☐ Determine how transaction proceeds will be treated.

☐ Identify the party responsible for financial and remittance obligations.

☐ Reflect relevant obligations in the transaction documents.

☐ Review potential conditions precedent to closing.

Before closing

☐ Verify required corporate and regulatory approvals.

☐ Confirm payment and remittance procedures.

☐ Review supporting financial documents.

☐ Confirm completion requirements and post-closing obligations.

9. How LTS Law Can Assist

Decree 357/2026/ND-CP creates practical considerations for businesses and investors involved in state capital restructuring, divestment and M&A transactions.

LTS Law can assist clients with:

M&A advisory;
Legal due diligence;
Transaction structuring;
Share and capital transfer transactions;
Corporate restructuring;
Review of ownership and corporate structures;
Regulatory and investment compliance;
Preparation and review of transaction documents; and
Legal support throughout the transaction process.

For foreign investors, these services can be combined with foreign investment advisory to assess market-entry requirements, ownership restrictions, investment procedures and transaction-specific regulatory issues.

10. Key Takeaways

Decree 357/2026/ND-CP, effective from 1 November 2026, introduces a framework for managing and using proceeds arising from state capital restructuring and the conversion of public service units into joint stock companies.

For companies and investors involved in transactions with state-capital elements, several issues deserve particular attention:

Identify whether the transaction involves state capital.
Determine the applicable mechanism for managing transaction proceeds.
Review the relevant approval and remittance requirements.
Conduct legal due diligence on the target’s ownership and restructuring history.
Address relevant financial and regulatory obligations in the transaction documents.
For foreign investors, assess state-capital rules together with foreign investment and M&A requirements.

Early legal review can help parties identify transaction-specific requirements before signing or completing a transaction.

Conclusion

Decree 357/2026/ND-CP is relevant not only to state-owned enterprises and state ownership representatives but also to investors and businesses participating in transactions involving state capital.

For M&A, divestment and restructuring transactions, understanding the legal status of the target’s capital and the treatment of transaction proceeds should form part of the transaction planning process.

LTS Law supports domestic and foreign investors with legal due diligence, M&A advisory, corporate restructuring and investment-related legal matters in Vietnam.

Disclaimer

This article is provided for general informational and reference purposes only and does not constitute legal advice. The application of relevant laws and procedures may vary depending on the specific documents, circumstances, and countries or territories involved.

For advice tailored to your specific circumstances, please contact LTS LAW FIRM for further consultation and legal assistance.

LTS LAW FIRM

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Nhieu Loc Ward, Ho Chi Minh City, Vietnam
Tel: (+84) 965 000 524
Email: contact@lts.com.vn

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