In this note, we discuss significant issues relating to a proposed acquisition of a non-Vietnam investor in a Vietnamese electronic game company (Local Target), particularly:

1 – Market Access

The electronic game business (CPC 964) is not fully open up to foreign investment, evidenced by two following significant restrictions:

  • Corporate forms: Investment must be in the form of either a business cooperation contract (BCC) or a joint venture with a local partner (JVC).
  • Foreign ownership cap: 51% of the charter capital (analogous to paid-up equity in other jurisdictions) under CPTPP and can be unlimited (but still in the form of a joint venture platform) after 14 January 2024, i.e., 5 years after the effective date of CPTPP.


  • The above restrictions do NOT apply to prize-winning electronic games which are closer to casino-alike businesses;
  • A BCC is a contractual arrangement between the foreign investor and the Local Target without creating a company. In essence, the foreign investor contributes cash and technology while the Local Target offers ‘licenses’ to provide games in Vietnam. BCC is not preferred by foreign investors and, therefore, rarely used in practice.
  • A JVC is a company (can be a limited liability company or a joint-stock company) with full legal entity status.

2 – Game Classification

Games are classified by interactions among players (man) and game servers (machine) machines into G1, G2, G3, and G4.

  • G1: ‘Man vs. man’ via machine;
  • G2: ‘Man vs. machine;
  • G3: ‘Man vs. man’ without machine;
  • G4: Internet download games without any interactions among players or players with game servers

3 – Sub-Licenses

Sub-licenses are required at both developer and game levels.

  • Developer level: E-game business is a conditional business sector where game developers must meet specific conditions and obtain licenses for themselves. Licenses and licensing practices vary by game classification (as noted above).
  • Game level: Game content approval for G1 games and notification of game release for G2, G3, G4 games.

Fact: Up to mid-2021, 77% of G1 license holders are inactive.

4 – Licensing Authority

The Provincial Department of Planning Investment (DPI) concerning M&A approval, i.e., a green light for the investor to acquire the e-game local target.

The Department of Radio and Television and Electronic Information under the Ministry of Information and Communication (MIC) concerning the gaming sub-licenses.

5 – Possible Investment Structures

Depending on how much shareholding the foreign investor would hold in the Local Target and expectations to avoid game censorship, some foreign investors often arrive at several options.

  • Cross-border services. To provide cross-border games (via app markets like iOS or Android or console networks, e.g., PlayStation or Xbox Live, etc.). The Local Target’s founders can move part of its business to a foreign country like, for example, Singapore. The foreign investor would buy the shares of the Singaporean entity.
  • Equity acquisition.
      • If 51%: To stay in Vietnam and acquire no more than 51% shares of the Local Target. 
      • If 100%:
          • To use local nominee(s);
          • To create multiple corporate layers so that ultimately the Local Target is still considered a local company;
  • Other contractual options.
      • To use BCC with more special rights for the foreign investor;
      • To use several service agreements to track the profits of the business.

Each of the above options would represent its pros and cons [also risks]. This is because the Government of Vietnam is tightening the gaming business. Some of the above arrangements can be considered as a fabricated transaction and therefore materially breaches Vietnamese law. Hence, foreign investors are strongly recommended to have a detailed understanding and clear guidance before any actual investment.



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