MERGERS AND ACQUISITIONS IN VIETNAM

Business mergers and acquisitions are legal acts that are quite common in Vietnam in recent times. The legal system governing mergers and acquisitions includes many different types of legal regulations. However, society's understanding of this issue is still limited. The article provides information to contribute to unifying the awareness of the concept and legal nature of business mergers and acquisitions. In this article, Doanh Tri Law Firm will shed light on this issue.

I. Legal basis

- Law on Enterprises 2020

II. General provisions

Mergers and acquisitions (M&A) are positive activities for both buyers and sellers. Compared to establishing a subsidiary to expand the scale, merging a suitable business minimizes costs and time. The buyer will not lose the cost of finding a project, doing administrative procedures, especially the availability of local markets and human resources when performing M&A. With the seller when merging with another business equal or larger, the value and reputation will both increase. Just like a new company, no one knows about them until their company stands on the shoulders of some giant and suddenly becomes famous.

Conditions and forms of business merger and acquisition:

- Under current law, only a private company has the right to sell the entire business.

- For joint-stock companies, the form of company acquisition is done by the method of transferring shares.

- For a limited liability company, the form of company acquisition is done by the method of transferring contributed capital.

III. Bussiness selling procedures

Private company

Pursuant to Article 192 of the Enterprise Law 2020:

The private company’s owner is entitled to sell his/her company to another person.

After selling the company, the private company’s owner is still responsible for the company’s debts and other liabilities which are incurred before the handover date, unless otherwise agreed among the buyer, the seller, and the creditors.

The buyer and seller shall comply with regulations of law on labor.

The buyer shall register a change of the private company’s owner in accordance with Law on enterprises 2020.

Business selling documents include:

- Notice of change of sole proprietorship (signed by seller and buyer);

- Notarized copy of the new owner's identity card of the business;

- Contract of sale of private company and documents proving the completion of the transfer.

- Business registration dossiers shall be submitted at the provincial-level Business Registration Office where the enterprise is headquartered.

Limited liability company

The purchase and sale of a limited liability company are carried out through the transfer of contributed capital in the company.

Joint-stock company:

Related parties sign and perform share transfer contract:

- Make minutes to confirm that the procedures for transferring shares have been completed.

- Hold a General Meeting of Shareholders to approve the transfer of shares.

- Edit and supplement information in the register of shareholders of the company.

- Register to change shareholders according to regulations.

IV. Business merger procedures

Conditions for business merger:

- In case of a merger in which the merged company has a combined market share of between 30% and 50% in the relevant market, the legal representative of the company shall notify the competition authority before conducting the merger. import, unless otherwise provided by the Competition Law.

- The merger of companies in which the merged company has a market share of more than 50% in the relevant market is prohibited, unless otherwise provided for by the Competition Law.

Business merger procedures

The related companies prepare the merger contract and draft the charter of the merging company. The merger contract must contain the following contents:

- Name and head office address of the merging company; name and head office address of the merged company

- Procedures and conditions for merger

- Methods, procedures, deadlines, and conditions for converting assets, converting capital contributions, shares, and bonds of the merged company into contributed capital, shares, and bonds of the merging company

- Members, company owners, or shareholders of related companies shall approve the merger contract and the charter of the merging company. The merger contract must be sent to all creditors and notified to employees within 15 days from the date of approval.

The above information is about the ‘Merger and Acquisition in Vietnam.' For more information and advice on this issue, please contact Doanh Tri Law Firm directly via:

Hotline: (+84) 911.233.955 - (024) 6293 8326

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