The Problems Of Joint Venture Under Vietnam Competition Law

The Competition Law 2018 defines a joint venture between enterprises (JV) as a transaction where “two or more enterprises together contributes a portion of their lawful assets, rights, obligations, and interests to form a new enterprise” (JV Definition). The Competition Law 2018 requires a JV satisfying certain notification thresholds to be notified to the competition authority for review. However, the application of the JV concept under the Competition Law 2018 is problematic because:

  • First, the JV Definition does not take into account the element of “joint control”; and

  • Second, the JV Definition does not accurately reflect the sequence of actions in the formation of a JV company under the Enterprise Law 2020.

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Written by Nguyen Quang Vu On In ,

The Institutional Representative of the State in a Vietnamese State-owned Enterprise (SOE)

Decree 47/2021 implementing the Enterprise Law 2020 and Decree 10/2019 implementing the Law on Management State Capital 2014 provide helpful clarification on (1) the entities who can act as the owner representative agency (cơ quan đại diện chủ sở hữu) of the State in a SOE, and (2) calculation of State shareholding in an enterprise. In particular,

  • Under Decree 10/2019, the Institutional Representative only include (i) the Commission for the Management of State Capital at Enterprises (CMSC); (ii) Ministries, Ministry-equivalent agencies, Governmental agencies, provincial People’s Committee; and (iii) the State Capital Investment Corporation (SCIC). Accordingly, other SOEs such as EVN or PVN are not regarded as an Institutional Representative. In the past, it is not clear an SOE can be regarded as the Institutional Representative in another SOE.

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Written by Nguyen Quang Vu On In ,

New structure to overcome tender offer requirements under Vietnam securities law

Under the Securities Law 2019, a proposed buyer (the Buyer) who wish to acquire 25% or more of total shares (the Sale Shares) of a public company (the Target) must comply with tender offer requirements (see here). However, based on the new potential exemption of tender offers available at law, there may be a potential way of not having to follow the tender offer procedures by merging the buyer and the seller’s relevant entities of as follows:

  • Step 1: The selling shareholder (the Seller) sets up a special purpose company for this sale transaction (the SPV1) by way of contributing all the Sale Shares into the SPV1. This step does not trigger a tender offer requirement since it is an intra-group transfer of the Sale Shares.

  • Step 2: The Buyer sets up another special purpose company for this transaction (the SPV2) by way of contributing to the SPV2 an amount of cash equivalent to purchase price of Sale Shares; and

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Written by Nguyen Quang Vu On In ,

No clear exemption from obtaining Investment Registration Certificate in case of acquisition of a Vietnamese company under Decree 31/2021

A change in Decree 31/2021 implementing the Investment Law 2020 has raised confusion as to the need to obtain an Investment Registration Certificate (IRC) or investment policy approval (IPA) for the existing investment project(s) after a foreign investor acquires control of an existing Vietnamese company (the Target Company).

Previously, Article 46.4 of Decree 118/2015 implements the Investment Law 2014 specifically exempts the Target Company from obtaining a new IRC or IPA or amending existing IRC or IPA for the investment project(s) of said Target Company which has already been under implementation before being acquired by a foreign investor.

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Written by Nguyen Quang Vu On In ,