Key takeaways

Decree 69 signifies a progressive step toward financial sector reform in Vietnam. By selectively increasing the foreign ownership limits (FOL) while introducing stricter compliance obligations to ensure foreign investors adhere to the FOL, Decree 69 aims to foster economic stability while maintaining safeguards against excessive foreign influence. This approach balances economic openness with financial stability, offering investment opportunities while safeguarding national interests.

Key takeaways include the following:

1. Expanding scope for FOL: Aligning with investment regulations for consistency
2. Clarified share subscription methods: Synchronizing with security regulations
3. Higher FOL for distressed credit institutions and acquiring banks: For distressed credit institutions, the prime minister may set the higher FOL, while banks (excluding stated-owned credit institutions with over 50% state ownership) acquiring distressed credit institutions in a compulsory transfer may have the FOL increased to 49%
4. Stricter compliance obligations: New restrictions for foreign investors whose shareholding ratios have exceeded the FOL

In depth

1. Expanding the scope for FOL

Decree 69 broadens the scope of entities and individuals subject to the FOL. The shareholding ratios of not only foreign individuals and organizations but also foreign-invested economic organizations treated as foreign investors when participating in investment, capital contribution and share acquisition in Vietnam, will be calculated for the purposes of the FOL. This change ensures consistency with Investment Law 2020.

1. Foreign individuals

Decree 1 defined foreign individuals as those not holding Vietnamese nationality, which created ambiguity for multinational individuals with Vietnamese nationality. Decree 69 resolves this by defining foreign individuals as those holding foreign nationality.

2. Foreign organizations

The definition of foreign organizations has been updated to include those incorporated under foreign law and conducting investment business in Vietnam. Specific types of foreign-invested organizations, such as closed-end funds, member funds and securities investment companies with over 49% foreign capital, are no longer considered foreign organizations under Decree 69.

2. Clarified share subscription methods

Decree 1 permits foreign investors to buy shares from a Vietnamese credit institution either by subscribing to newly issued shares or by purchasing treasury shares.

Decree 69 further specifies that this subscription includes shares offered in a public offering, shares issued to raise capital and treasury shares that the institution had redeemed before 1 January 2021. This amendment aligns with Article 310.4 of Decree No. 155/2020/ND-CP, which permits a public company to sell treasury shares redeemed before 1 January 2021.

3. Higher FOL for distressed credit institutions and acquiring banks

The FOL for Vietnamese credit institutions remains unchanged: 5% for an individual foreign investor, 15% for an institutional foreign investor and 20% for a strategic foreign investor. When combining the shareholding ratios of a foreign investor and its related persons, the FOL is set at 20%.

The FOL in a Vietnamese commercial bank and a nonbank credit institution is capped at 30% and 50% respectively.

However, these FOLs may be exceeded under specific circumstances.

1. Distressed credit institutions

In exceptional circumstances, to safeguard the credit institution system, the prime minister may allow the FOL for an institutional foreign investor, a strategic foreign investor and all foreign investors in a distressed joint-stock credit institution to exceed the FOL mentioned above.

1. A distressed credit institution means any of the following:
2. A credit institution under special control of the State Bank of Vietnam (SBV)
3. A commercial bank subject to compulsory transfer
4. A credit institution rated as "weak" according to the latest rating results from the SBV

2. Commercial banks taking over a distressed credit institution

The FOL in a commercial bank taking over a distressed credit institution in a compulsory transfer ("Acquiring Bank") may raise from 30% to 49% of the charter capital of the Acquiring Bank, in the following circumstances:

1. The FOL increase is in accordance with the approved compulsory transfer plan.
2. The state does not hold more than 50% of the Acquiring Bank's charter capital.

Once the transfer plan's term expires, foreign investors are not allowed to purchase additional shares in the Acquiring Bank until the FOL in such Acquiring Bank drops below the 30% threshold, except in cases where shares are offered to existing shareholders or transferred between foreign investors per their agreement.

This amendment aims to detail the Acquiring Banks' rights to sell and issue their shares to foreign investors in a compulsory transfer as set out in Article 185.1(n) of Credit Institutions Law 2024. By allowing foreign investors to hold a greater shareholding in Acquiring Banks, Decree 69 enhances their ability to attract foreign capital, improve governance and innovate technology, supporting the implementation of compulsory transfer plans. The SBV has assessed that these changes will not negatively impact the Vietnamese banking system, given the small market shares of the Acquiring Banks and the consistent conditions and procedures for foreign investors acquiring shares in Acquiring Banks and in other credit institutions.

According to public reports, between late 2024 and early 2025, the SBV completed the transfer of four distressed banks: Construction Bank, Ocean Bank, DongA Bank and GPBank to Vietcombank, Military Bank, HDBank, and VPBank respectively. Given Vietcombank is ineligible for an FOL increase as the state owns approximately 74.8% of its charter capital,  these changes may benefit Military Bank, HDBank and VPBank by increasing their FOL to 49%.

4. Stricter compliance obligations

Decree 69 introduces stricter compliance obligations applicable to foreign investors if the FOL is exceeded. In particular, when a foreign investor purchases additional shares offered by a credit institution corresponding to the proportion of ordinary shares of each shareholder, and this results in exceeding the FOL, as follows:

1. If the shareholding ratio of a foreign investor, or a foreign investor and its related person, exceeds the applicable FOL, the foreign investor must reduce its shareholding ratios to comply with the FOL within six months from the time of exceeding the FOL.
2. If the total shareholding ratios of foreign investors exceed the FOL, the foreign investors are not allowed to purchase additional shares of that credit institution until the total shareholding ratios of foreign investors comply with the FOL.

Considering these new provisions, foreign investors are encouraged to carefully monitor their shareholding ratios to avoid potential forced divestments or restrictions on future share acquisitions.

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If you would like to discuss the details of Decree 69 and its impact on your business, please do not hesitate to contact us.

1 Decree No. 01/2014/ND-CP of the government dated 3 January 2014 on foreign investors purchasing shares in Vietnamese credit institutions.

2 Information as of 17 March 2025. See: https://www.vietcombank.com.vn/-/media/Project/VCB-Sites/VCB/Nha-Dau-tu/Files/Cong-bo-thong-tin/Thong-tin-co-dong/250317_VNE_Danh-sach-co-dong-so-huu-tren-1-phan-tram-VDL-tai-VCB.pdf?ts=00010101000000.