Legal and strategic considerations for acquiring schools in Vietnam 8 min read
Vietnam’s private education sector is experiencing rapid growth, underpinned by favourable demographics and a strong national commitment to educational advancement. Foreign investors are increasingly targeting this market, with M&A transactions emerging as the preferred entry strategy. Acquiring established schools enables investors to access operational expertise and market share, while mitigating the risks associated with greenfield investments.
This Insight gives a practical overview of Vietnam's regulatory framework governing foreign investment in the education sector—including recent updates to the M&A process, and the key legal and operational considerations for successful execution.
Legal framework for foreign investment in education
100% foreign ownership permitted, with additional regulatory requirements
Foreign investors are permitted to hold up to 100% equity in education institutions across all levels, including preschools, K-12 school and universities. While this open ownership regime is attractive, foreign-invested schools were previously subject to additional regulatory requirements compared with local schools. That said, the gap is now almost closed, as most of the requirements previously applicable only to foreign-invested schools have been extended to newly established local schools.
Foreign-invested vs local schools
A foreign investor cannot directly hold equity in a school. Instead, investments must be routed through a locally incorporated company that owns the school, either directly or through a holding structure.
- Direct foreign ownership: where a foreign investor holds equity in the company that directly owns the school (OpCo), the school is classified as a foreign-invested school—irrespective of the foreign ownership percentage in OpCo. In this case, the school is subject to all regulatory requirements applicable to foreign-invested schools.
- Indirect foreign ownership: where a foreign investor holds equity in a holding company (HoldCo) that in turn owns OpCo, the regulatory position is less clear. Some guidance from the Ministry of Education and Training suggests that only direct foreign ownership at the OpCo level triggers schools' foreign-invested status. However, indirect ownership through HoldCo—especially where HoldCo is majority foreign owned—may also result in the school being treated as foreign invested. Careful structuring is essential if the foreign investor wishes to maintain the school’s status as a local Vietnamese education institution post investment.
A local Vietnamese school is one that is not classified as a foreign-invested school.
Conversion of a local school into a foreign-invested school
Any acquisition of a local school by a foreign investor at the OpCo level will lead to conversion of the school. A majority foreign acquisition at HoldCo level may also cause HoldCo to be treated as a foreign investor in OpCo, with the result that both OpCo and the school may be treated as foreign invested.
To preserve the school’s local status, the transaction is typically structured at HoldCo level as follows:
- Minority foreign acquisitions: foreign investors can invest at HoldCo level. Provided foreign ownership remains below 50%, HoldCo is treated as a Vietnamese investor and its schools retain their local status.
- Majority foreign acquisitions: these require more complex structuring, such as tiered ownership arrangements, to maintain HoldCo's status as a Vietnamese investor and to preserve the local classification of the schools post investment.
Regulatory procedures for education M&A transactions
Historical regulatory gaps
Vietnamese regulations historically focused on the establishment of new foreign-invested schools, with limited guidance on foreign acquisition of existing schools, and the process for converting a local school into a foreign-invested school following an acquisition. In certain cases, conversion had to involve dissolving and re-establishing the school as a foreign-invested school on paper—a burdensome process for the investor, despite it causing no actual interruption to operations.
Recent changes in education regulations are expected to address these constraints by introducing a clearer framework for changes in school ownership and school conversion, as explained below.
M&A procedures and approvals
Given that a foreign investor must acquire interest in a school through the school’s HoldCo or OpCo, the transaction will first need to comply with the investment law approval process for share acquisition by a foreign investor. Following completion, the investor will also need to follow procedures for changes in school investors or school conversion, if applicable.
An education M&A transaction will typically involve the following key approvals and licensing steps:
- Investment licensing procedures: standard investment procedures will apply, including:
- M&A approval and merger control clearance (before completion): the investor must obtain M&A approval from the local Department of Finance (if applicable), and merger control clearance from the Vietnam Competition Commission (if it is a control acquisition and any reportable thresholds are met) for acquisition of equity in OpCo/ HoldCo.
- Corporate registration (post completion): the acquired OpCo/ HoldCo must update its corporate registration to reflect changes in ownership.
- Amendment to school Investment Registration Certificate (IRC) (post completion): where the school has an existing IRC and the acquisition results in any change to it, the school's IRC must be amended in accordance with the applicable investment regulations.
- Educational licensing procedures (post completion):
- Notification of change in investors: the school must notify the competent education authorities (ie People's Committee and/ or Department of Education and Training) of the change in its investors within 14 business days of completion of the equity transfer.
The notification must identify the transferor and transferee investors, the transferred interests and the updated investor list. In tiered ownership structures, the notification obligation depends on which entity is recorded as the school investor. Changes at the OpCo level may trigger notification, but changes further up the chain should not—subject to evolving practice. - Amendment to education operation licence: if the transaction involves a local school and results in its conversion into a foreign-invested school, the school must apply to amend its education operation licence within 30 business days of completion of the equity transfer.
- Notification of change in investors: the school must notify the competent education authorities (ie People's Committee and/ or Department of Education and Training) of the change in its investors within 14 business days of completion of the equity transfer.
These educational licensing procedures also apply retrospectively to transfers completed before 15 March 2026, with the relevant deadlines running from that date. As there is no clear retrospective cut-off, historical transfers may need to be revisited, particularly where prior foreign investment has not yet been reflected in the school’s licence.
New campus post M&A transaction
If a local school becomes a foreign-invested school after acquisition, any new campus established after completion by the same OpCo (which is already a foreign invested enterprise) may be treated as a foreign-invested school, and require the full suite of licences, including an IRC, a school establishment decision and an education operation licence.
Key due diligence issues
Below are some issues commonly encountered during legal due diligence regarding schools in Vietnam.
Verification of school ownership
Except for schools with an IRC that records ownership, details of school ownership are generally not reflected in the school’s establishment decision or education operation licence. In most cases, verification relies solely on the school’s internal shareholders’ register.
Zoning and land-use compliance
Schools often operate in commercial buildings or residential houses that do not strictly comply with education zoning plans or land-use requirements. Landowners typically lack an incentive to convert high-value commercial or residential land to educational use, especially leased premises. Non-compliance can also limit campus upgrades, as renovation permits may be denied.
Current urban planning policies in major cities such as Hanoi and Ho Chi Minh City require universities to relocate from central business districts, to address broader social concerns—eg traffic congestion, and the need for sufficient space for student study and supporting facilities. This appears to reflect a longer-term policy direction of both the central government and local authorities.
However, in December 2025, the National Assembly issued Resolution No. 248/2025/QH15 introducing special policies to support education development. In particular, it permits the use of commercial/ service land (and certain other non-education land types) for education purposes without requiring alignment with land use planning.
This suggests that projects may be able to continue using non-education land for education purposes without land use conversion or alignment with land use planning. That position is also broadly consistent with the 2024 Land Law, under which the use of commercial/service land for education purposes may not require land use conversion approval or an update to the Land Use Rights Certificate. More broadly, there appears to be growing market acceptance of the use of non-education land for education purposes, particularly given constraints on education land availability.
That said, there is currently no detailed implementing guidance on this non-conversion approach. Investors may still require confirmation from the relevant land authorities that the approach is acceptable, and early engagement with the school and relevant authorities will often be needed to assess whether that confirmation can be obtained.
BCC model for school establishment
Schools are increasingly established under a Business Cooperation Contract (BCC), rather than a traditional ownership structure. The BCC model offers greater flexibility for cooperation between one party that holds land/real estate, and another party that provides funding and management expertise—without creating a new legal entity or transferring land into such an entity.
However, this structure can present legal challenges that must be carefully assessed, such as the legal basis for the landlord to contribute the right to use premises to the BCC, and the necessary arrangements to ensure the school's ongoing operation in the case of BCC termination.
Education programs
Both local and foreign-invested schools may deliver the Vietnamese standard curriculum to Vietnamese students. There is also a growing trend to offer integrated programs that combine the Vietnamese curriculum with international curricula (such as those of Cambridge or Oxford), as well as extracurricular activities developed by international organisations.
It is important to confirm that schools have obtained all necessary licences or registrations from both local authorities and relevant program licensors for the education programs they offer.
Vietnamese student intake requirements
Foreign-invested schools in Vietnam may enrol both Vietnamese and foreign students, and offer foreign curricula. However, Vietnamese students enrolled in a foreign curriculum must account for less than 50% of total enrolment. It is unclear whether this cap applies per class level or across the entire school.
This cap limits the number of Vietnamese students—typically the main target group—and poses a significant challenge for foreign-invested schools. One practical solution is to shift Vietnamese students to integrated programs, which combine national and foreign curricula, to remain compliant while maintaining enrolment levels.
Teaching staff qualifications and student-to-teacher ratios requirements
Both local and foreign-invested schools must comply with regulatory requirements for teaching staff qualifications, although the specific standards may differ. Verifying compliance with these standards often requires dedicated due diligence focused on the school’s operational practices.
Tuition fee increase cap
Private schools may set their own tuition fees and prices for education and training services (except those set by the state) to ensure cost recovery. However, annual tuition increases are capped—at 15% for universities and 10% for K-12 schools. Although it's not entirely clear under the law, this cap is generally applied to each level’s tuition fee per school year compared with the previous year. Eg first-grade tuition for 2025–2026 cannot increase by more than 15% over first-grade tuition for 2024–2025.
Next steps
Education remains one of the most attractive sectors for investment in Vietnam. But the regulatory framework is still evolving, and successful transactions require careful due diligence and thoughtful structuring to navigate the evolving legal landscape and ensure long-term value.
If you would like to discuss any aspect of investing in Vietnam’s education sector, please reach out to the Allens team.