Foreign Ownership Cap Raised
On May 19, a new decree entered into force raising the ownership cap on foreign shareholdings in certain Vietnamese banks and credit institutions. Published on 18 March, Decree No. 69/2025/ND-CP (“Decree 69”) amends several provisions of Decree No. 01/2014/ND-CP (“Decree 01”) on foreign investment in financial institutions.
Until this month, there was a blanket 30 per cent cap on the shareholdings of foreign investors and individuals in Vietnamese non-bank credit institutions. However, this limit has now been raised to 49 per cent of the charter capital of institutions acquiring so-called “weak” credit institutions, subject to the approval of the Prime Minister.
So-called “weak” credit institutions could include those which have, for instance, been defined as such by the State Bank of Vietnam (“SBV”) or those which have been compulsorily transferred.
This lifting of the foreign ownership cap is intended to help these financial institutions raise more capital, increase liquidity, and strengthen restructuring efforts across the banking sector. However, financial institutions in which the state holds more than half (50 per cent) of the charter capital are not eligible for this higher cap on foreign ownership.
Foreign investors who surpass these thresholds must first divest their shareholdings within six months to a level that brings them back below the prescribed limits before purchasing new shares.
Decree 69 also contains other notable changes which will be of interest to international investors in Vietnam:
- Foreign-invested enterprises receive the same treatment as foreign individuals or investors in terms of foreign ownership limits.
- The definitions of “foreign individuals” and “foreign organisations” have been clarified.
- Foreign investors can only purchase treasury stocks that were bought by credit institutions before 1 January 2021.
APFL Partners is one of the leading international law firms in Vietnam. Our team has particular experience advising foreign investors – including investment funds and multilateral financial institutions – on their international banking and capital markets transactions. For more information about Decree 69, or investing in Vietnam, please contact the APFL Partners team on: contact@apflpartners.com
Disclaimer: This article and its content are for information only and are not given as legal or professional advice. they do not necessarily reflect all relevant legal provisions with respect to the subject matter. Readers should seek legal or professional advice before taking or refraining to take any action.
