M&A of Enterprises Trading Goods in Vietnam: Key Considerations under Decree No. 342/2026/ND-CP.
In mergers and acquisitions (M&A) involving Vietnamese enterprises, foreign ownership is not merely a matter of shareholder structure. For enterprises engaged in goods trading and activities directly related to goods trading, changes in the investor profile or foreign ownership ratio may also affect investment registration, Business License requirements and Retail Establishment License requirements.
Decree No. 342/2026/ND-CP (“Decree 342”), issued on 3 September 2026, will take effect on 18 October 2026, replacing Decree No. 09/2018/ND-CP (“Decree 09”). It sets out detailed rules governing goods trading and activities directly related to goods trading by foreign investors and foreign-invested economic organizations in Vietnam.
For M&A transactions expected to close before or after 18 October 2026, the parties should identify the applicable legal regime, review the target’s actual business activities and assess the licensing implications before completion.
1. When is a Business License required, and when may activities be registered under investment and enterprise laws?
1.1. Under Decree 342
Article 5 of Decree 342 identifies activities for which a foreign-invested economic organization must obtain a Business License. Depending on the applicable market-access commitments and the relevant goods or services, these include:
- Retail distribution of goods;
- Import rights or wholesale distribution rights for certain regulated goods;
- Certain logistics services;
- Leasing of goods within the scope specified by the Decree;
- Certain trade promotion, commercial intermediary and goods or services tendering services; and
- Management and operation of certain e-commerce and related commercial platforms.
This list does not mean that every foreign-invested enterprise must obtain a Business License for every business activity. The licensing analysis depends on the proposed activity, the relevant goods or services, the market-access conditions applicable to the investor and the activities already registered or approved.
Under Article 6 of Decree 342, activities covered by the Decree but not falling within the Business License categories may be carried out after the relevant activities have been registered in documents issued by the competent authorities under the laws on investment and enterprises, as applicable.
Accordingly, the presence of a relevant business line in an Enterprise Registration Certificate does not, by itself, establish that all investment and trading licensing requirements have been satisfied. Conversely, it should not be assumed that every wholesale activity or every activity related to goods trading requires a separate Business License.
1.2. Comparison with Decree 09
Decree 09 also distinguishes between activities requiring a Business License and activities carried out under relevant investment and enterprise documents. When transitioning to Decree 342, however, the parties should reassess the activity categories, goods, services and applicable conditions rather than rely solely on an earlier analysis under Decree 09.
M&A recommendation: Before signing or closing, prepare a licensing matrix comparing (i) actual business activities, (ii) registered business lines, (iii) activities recorded in relevant investment documents and (iv) the scope of any existing Business License. The review should also cover activities planned for expansion after completion.
2. When is a Retail Establishment License required?
2.1. Under Decree 342
Article 5 of Decree 342 provides for a Retail Establishment License for a foreign-invested economic organization establishing a retail establishment. In principle, an economic organization falling within Clause 1, Article 20 of the Law on Investment must follow the Business License procedure for activities subject to licensing and the Retail Establishment License procedure when establishing a retail establishment subject to the Decree.
The Decree allows an application for the Business License and the first Retail Establishment License to be submitted simultaneously where the first retail establishment is located in the same province or centrally governed city as the enterprise’s head office and the applicable procedural requirements are met.
Particular attention should be paid to a target that already operates retail establishments in Vietnam and, after receiving foreign capital or shares, becomes an economic organization falling within Clause 1, Article 20 of the Law on Investment. Under Clause 6, Article 5 of Decree 342, the enterprise must carry out procedures for both the Business License and the Retail Establishment License. Article 36 governs the procedure for a Retail Establishment License permitting an existing retail establishment to continue operating.
During this process, the enterprise may continue retail activities at its existing retail establishments until the relevant licenses are issued, subject to a maximum transitional period of 12 months calculated from the milestone specified in the Decree concerning the legal documents confirming that the foreign investor satisfies the conditions for the capital contribution or share acquisition. This is not an indefinite exemption from licensing.
2.2. Comparison with Decree 09
Decree 09 also required licensing in circumstances where an enterprise with existing retail establishments became subject to the foreign-investment licensing regime after receiving foreign capital. The procedure for permitting existing retail establishments to continue operating was addressed in Article 38 of Decree 09.
Decree 342 continues to regulate this situation, but the new procedural requirements, documents and time limits must be followed. Existing licenses or prior retail operations should not be treated as automatically replacing licensing obligations arising from a change in ownership.
M&A recommendation: The parties should review each retail location, the legal entity operating it, the licenses issued, its actual operating status and the relevant site conditions. These matters should be reflected, where appropriate, in conditions precedent, seller undertakings, post-closing cooperation obligations and risk allocation if the licenses are not obtained on schedule.
3. Economic Needs Test (ENT): Key points under Decree 342
3.1. When is ENT required?
Under Article 22 of Decree 342, an ENT review is required for a retail establishment other than the first establishment where the foreign investor is from a country or territory that is not party to an international treaty with Vietnam containing a commitment to abolish ENT, unless an exemption under the Decree applies.
A notable exemption covers a retail establishment with an area of less than 500 m², located in a shopping mall and not operating as a convenience store, mini-supermarket or supermarket. Whether ENT applies therefore requires consideration of the investor’s treaty status, the sequence of the retail establishment, its floor area, location and type.
3.2. ENT criteria under Decree 342
Article 22 sets out criteria that include:
- The affected geographical market area: for a retail establishment below 5,000 m², the relevant market area is considered at commune or ward level, or an equivalent level; for an establishment of 5,000 m² or more, it is considered at provincial or centrally governed city level;
- The impact on market stability and on existing retail establishments and traditional markets in the relevant area;
- Local demand and the proposed establishment’s capacity to meet that demand;
- Potential contributions to socio-economic development, including modernization of the retail sector and improvements in residents’ living conditions; and
- Compatibility with requirements relating to security, public order, social safety, border and island security, and military areas.
An ENT application is therefore not merely a procedural formality. The enterprise should prepare substantive explanations concerning the market, demand, business model, impact on existing businesses and socio-economic contribution.
3.3. Comparison with Decree 09
Under Article 23 of Decree 09, ENT also applied to retail establishments other than the first establishment, subject to the exemption for qualifying establishments of less than 500 m² in shopping malls and the relevant store-type conditions under the former rules. The earlier criteria included market size, the number of existing retail establishments, effects on markets and traditional markets, traffic, the environment, fire prevention and fighting, and socio-economic contributions.
Decree 342 makes notable adjustments, including the use of a 5,000 m² threshold to determine the geographical market area and a revised presentation of the assessment criteria. Applications for new retail establishments should therefore be prepared against the new criteria rather than simply reusing ENT submissions previously prepared under Decree 09.
M&A recommendation: If the post-closing business plan involves opening additional stores, supermarkets or retail outlets, assess ENT early in the due diligence phase. This is particularly important where the target’s valuation depends on expanding its retail network.
4. An existing license holder divests equity and no longer falls within Clause 1, Article 20 of the Law on Investment
This situation requires a distinction between a change in the enterprise’s status under investment law and the validity of licenses already issued.
4.1. Do the licenses automatically become invalid?
Decree 342 addresses termination of licensed activities in Article 41 and revocation of Business Licenses and Retail Establishment Licenses in Article 42. Depending on the type of license, the listed grounds include revocation of the Enterprise Registration Certificate, termination or revocation of the relevant investment documents, false information in licensing applications, reporting failures, and other specified breaches or termination events.
A change in foreign ownership resulting in the enterprise no longer falling within Clause 1, Article 20 of the Law on Investment should not automatically be treated as causing every existing license to cease to be valid at the exact time of the share transfer. Equally, the enterprise should not assume that it may continue using all existing licenses without reviewing whether an adjustment, notification, partial termination or license-return procedure is required.
Decree 342 contains provisions concerning license contents, amendments, termination of licensed activities and revocation. The appropriate procedure must be determined by reference to the particular license, the licensed activity, the post-transaction ownership structure and the relevant investment documents.
4.2. Reporting and ongoing compliance
While a license remains in effect, the enterprise should not unilaterally stop complying with reporting obligations or other requirements stated in the license merely because foreign ownership has decreased. Under Articles 38 and 42 of Decree 342, failures to submit periodic reports or to provide reports, documents or explanations requested by the licensing authority may lead to revocation in the circumstances specified by the Decree.
After a divestment, the enterprise should:
- Reassess its legal status under the Law on Investment and related implementing regulations;
- Review the Business License, Retail Establishment License and relevant project investment documents;
- Confirm with the licensing authority whether an amendment, notification or termination procedure is required;
- Continue reporting and compliance until there is a clear legal basis for changing or ending the relevant obligations; and
- Retain the documents evidencing the ownership change and communications with the competent authorities.
4.3. Comparison with Decree 09
Decree 09 also regulated termination of licensed activities and license revocation. A change in ownership ratio should not, by itself, be treated as conclusive proof that a license automatically becomes invalid. Under Decree 342, enterprises should review the new provisions on license contents, amendments, termination and revocation to identify the procedures that apply.
Key point: For transactions completed on or after 18 October 2026, the analysis should be based on Decree 342 and the investment laws applicable at that time, rather than relying exclusively on the previous practice under Decree 09.
5. A foreign investor acquires shares or capital contributions, causing the target to become subject to licensing requirements
If a Vietnamese enterprise engaged in goods trading or retail receives foreign capital or shares and, following the transaction, becomes an economic organization falling within Clause 1, Article 20 of the Law on Investment, the parties should assess the licensing consequences arising from the transaction itself.
Under Clause 6, Article 5 of Decree 342, an enterprise that already has retail establishments in Vietnam and becomes subject to the relevant foreign-investment regime after receiving foreign capital must carry out procedures for the Business License and Retail Establishment License. The Decree also provides a transitional mechanism allowing existing retail establishments to continue operating during the licensing process, for a maximum of 12 months calculated from the specified milestone.
For a target that does not yet have retail establishments, the required procedures should be assessed based on its proposed business activities, whether those activities require a Business License and whether it plans to establish retail establishments after closing. Foreign investment does not, in every case, mean that the enterprise must obtain both licenses; the precise obligations depend on the activities and applicable legal conditions.
Comparison with Decree 09
Decree 09 also addressed enterprises with existing retail establishments that became subject to the licensing regime after receiving foreign capital. Decree 342 continues to address this situation, but the parties must follow the new procedures, documentation requirements and transitional time limits.
M&A recommendation: Before closing, determine:
- Whether the target will fall within Clause 1, Article 20 of the Law on Investment after the transaction;
- Which activities require a Business License;
- Whether existing retail establishments or planned new establishments are involved;
- Whether ENT or product- or service-specific conditions apply; and
- The time required to complete the licensing process and whether the business can continue operating during the transitional period.
If the licenses are material to the target’s continued operations, the M&A agreement should clearly allocate responsibility for licensing, document provision, cooperation with the authorities and the consequences if the procedures are not completed as planned.
6. Practical recommendations for M&A transactions involving goods trading in Vietnam
To reduce legal and operational risks, investors and target enterprises should consider the following steps.
First, conduct activity-based legal due diligence. Review not only the business lines in the Enterprise Registration Certificate but also the actual wholesale, retail, import, distribution and directly related service activities.
Second, prepare a licensing matrix. Identify licenses already held and those that may need to be obtained, amended or terminated. Match each license to the relevant legal entity, business location and actual activity.
Third, assess the ownership structure before and after closing. Determine whether changes in shareholders, members or foreign ownership cause the enterprise to fall within Clause 1, Article 20 of the Law on Investment. The assessment should be based on Law No. 143/2025/QH15 on Investment and the relevant rules in force at the transaction date.
Fourth, assess ENT and expansion plans. Where additional retail establishments are planned, determine early whether ENT applies and prepare the necessary market, location and socio-economic impact analysis.
Fifth, address licensing in the transaction documents. Depending on the due diligence findings, the parties may consider conditions precedent, representations and warranties, cooperation obligations, payment holdbacks or adjustments, remediation periods and allocation of licensing risks.
Sixth, confirm the applicable transitional rules. For transactions or applications close to 18 October 2026, review Decree 342’s transitional provisions and the date on which the competent authority received the application.
Conclusion
Decree No. 342/2026/ND-CP represents an important regulatory change for goods trading and retail activities conducted by foreign investors and foreign-invested economic organizations in Vietnam. In M&A transactions, the key issue is not simply whether a license exists, but whether the post-transaction ownership structure creates, changes or ends licensing obligations.
Licensing due diligence should therefore begin at the transaction review stage and be reflected in the transaction structure and post-closing plan.
Disclaimer: This article provides general legal information as of the date of its latest update and does not constitute legal advice in relation to any specific transaction. Its application must be assessed in light of the relevant transaction documents, ownership structure, actual business operations, and applicable laws and regulations in force at the time the transaction is undertaken. BFSC Law LLC accepts no liability for any reliance on the information contained in this article in connection with a specific factual situation without prior consultation with qualified legal counsel.
For legal advice concerning mergers and acquisitions (M&A) involving target companies engaged in the sale and purchase of goods or activities directly related to the sale and purchase of goods, please contact the Secretariat of BFSC Law LLC at its Hanoi Office.