NEW RULES ON THE TRANSFER OF ENFORCEMENT OBLIGATIONS FOR COMMERCIAL LEGAL ENTITIES DURING CORPORATE RESTRUCTURING UNDER DECREE NO. 251/2026/ND-CP
On 30 June 2026, the Government of Vietnam issued Decree No. 251/2026/ND-CP on the Enforcement of Criminal Judgments against Commercial Legal Entities (“Decree 251”), which came into effect on 1 July 2026.
The new Decree introduces several provisions that may significantly affect M&A transactions, corporate restructuring, business conversions and asset acquisitions, particularly where a target company is subject to criminal judgment enforcement.
This Legal Update highlights several key developments that businesses, investors and legal advisers should take into account.
1. Greater Involvement of Enterprise Regulatory Authorities in Enforcement Proceedings
One of the notable changes under Decree 251 is the proactive involvement of enterprise regulatory authorities in criminal judgment enforcement against commercial legal entities.
The Decree adopts a broad concept of enterprise regulatory authorities, extending beyond the business registration authority to include other competent governmental bodies responsible for supervising the relevant enterprise, such as tax authorities, customs authorities, agriculture and environmental authorities, and other regulators designated by the criminal judgment enforcement authority.
Conversely, these authorities are required to provide information regarding proposed corporate restructuring measures—including demergers, divisions, mergers, consolidations and business conversions—to the criminal judgment enforcement authority whenever such information becomes available during their administrative procedures.
This mechanism substantially increases information sharing among governmental authorities and may affect the timing and execution of restructuring transactions.
2. Reporting Obligations for Corporate Restructuring
Decree 251 also introduces new reporting obligations for commercial legal entities that intend to undertake restructuring or business conversion while subject to criminal judgment enforcement.
Before implementing restructuring measures such as divisions, demergers, mergers, consolidations or business conversions, the enterprise is expected to report:
- the status of enforcement of the criminal judgment; and
- the proposed allocation of enforcement obligations following the restructuring.
These requirements will become an important consideration during legal due diligence for M&A and restructuring transactions.
However, the Decree leaves several practical issues unresolved.
Although the Procuracy and the Court are entitled to provide opinions on the proposed restructuring, the Decree does not clearly specify whether these authorities may refuse or prevent the restructuring from proceeding.
Likewise, where neither authority expresses a definitive opinion, it remains uncertain whether other competent authorities may suspend or reject the restructuring process.
These uncertainties should be carefully addressed through transaction documentation and risk allocation mechanisms.
3. Increased Risk of Asset Transfers Being Challenged
Another significant issue concerns asset transfers involving enterprises subject to criminal judgment enforcement.
During enforcement proceedings, enforcement authorities may impose coercive measures over various categories of assets, including:
- land use rights;
- assets attached to land;
- equity interests;
- intellectual property rights; and
- other assets owned by the enterprise.
Accordingly, transactions involving such enterprises should be carefully structured to ensure that they satisfy the principles of arm’s-length dealing and fair market value.
Otherwise, there is a potential risk that an asset transfer could be challenged as a sham transaction designed to dissipate assets, resulting in legal proceedings seeking to invalidate the transaction.
This consideration is particularly important for purchasers, investors and lenders conducting legal due diligence.
Practical Implications
Businesses involved in acquisitions, restructuring or corporate reorganisations should carefully assess whether a target company is subject to criminal judgment enforcement.
The new reporting obligations, increased governmental coordination and enhanced scrutiny of asset transfers may materially affect transaction timing, closing conditions, representations and warranties, as well as post-closing risk allocation.
Early legal due diligence and appropriate transaction structuring will therefore become increasingly important under the new regulatory framework.
Disclaimer
This publication is intended solely as a summary of newly issued legislation and does not constitute legal advice from BFSC Law LLC regarding criminal judgment enforcement or any specific M&A transaction, asset acquisition, corporate restructuring or business conversion involving commercial legal entities.
Readers should not rely on this publication as legal advice for any particular transaction or factual circumstances.
For transaction-specific advice, please contact BFSC Law LLC – Hanoi Office.
BFSC’ Editorial Team