When is an acquisition of assets considered a gain of control of another company?

Under the Competition Law 2018, an acquisition by purchase of assets sufficient to enable the acquiring company to gain control of either the acquired company or one business of such company is considered a form of economic concentration, and could be subject to merger filing requirement (if certain thresholds are met).

Article 2.1(b) of Decree 35/2020 further clarifies, among other thing, that “controlling or dominating a company or one business of a company” includes the case where “the acquiring company gains the ownership or the right to use more than 50% of the assets of the acquired company in all businesses or one business of such company”. It is unclear as to whether this provision should be interpreted as:

·        Interpretation 1: the acquiring company gains the ownership or the right to use more than 50% of the total assets of the acquired company which are used for all businesses or one business of such company; or

·        Interpretation 2: the acquiring company gains the ownership or the right to use more than 50% of the assets of either all businesses or one business of the acquired company.

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Written by Nguyen Quang Vu On In

The completion time of a de-merger of a Vietnamese company

In case of a de-merger of a company, the Enterprise Law 2020 does not make clear when will the de-merger of the new company from a de-merged company (or existing company) be considered as legally competed. However, it appears that a de-merger could be considered completed when (1) a new enterprise registration certificate of the new company is issued, and (2) assets and liabilities of the existing company are transferred to the new company in accordance with the de-merger decision of the owners/shareholders of the existing company. This is because the Enterprise Law 2020 provides that:

  • after registration of the enterprise, the new company and the existing company are jointly liable for the obligations and liabilities of the existing company; and

  • the new company will automatically inherit all rights and obligations allocated to it in accordance with the de-merging decision of the owners/shareholders of the existing company.

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Written by Nguyen Quang Vu On In ,

Is the list of related persons of a Vietnamese joint stock company expanded?

When determining who is a related person of a non-public joint stock company (JSC), as a routine, one would turn to Article 4.23 of the Enterprise Law 2020. Article 4.23 lists out the related persons of a company. However, Article 167.1 of the Enterprise Law 2020 on related party transactions (RPTs) applicable to JSCs suggests that the list of related persons under Article 4.23 might not be exhaustive.

Article 167.1 reads that: the General Meeting of Shareholders or the Board of Directors approve contract and transactions between the JSC and “the following related persons”:

(a) shareholders, authorized representatives of shareholders holding more than 10% ordinary shares and their related persons;

(b) members of the Board of directors, (general) director and their related persons; and

(c) enterprises that the members of the Board of directors, supervisory committee, (general) directors, and other managers of the company have an interests and must report to the JSC in accordance with Article 164.2 of the Enterprise Law 2020.

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Written by Nguyen Quang Vu On In ,

Is M&A Approval Required For A Foreign Investor Buying Secondary Shares In A Vietnamese Securities Company?

The Securities Law 2019 removes the requirement for an approval by the State Securities Commission (SSC) for transactions involving 10% or more of the Charter Capital of a securities company. Instead, only a private placement of shares by a securities company is subject to SSC’s approval. Accordingly, it is not clear if an M&A Approval is required if a foreign investor acquires secondary shares from existing shareholders in a Vietnamese securities company.

A foreign investor purchasing shares in a company doing businesses sectors which are subject to market access conditions applicable to foreign investors will have to obtain an M&A Approval under the Investment Law 2020 from the relevant Department of Planning and Investment (DPI). Businesses carried on by a securities company are conditional businesses. However, Article 4.3(e) of the Investment Law 2020 provides that if the provisions of the Investment Law 2020 and other laws promulgated before the 1 January 2021 differ on (i) investment processes or procedures, or (ii) investment guarantee, except that the authority, processes, procedures, investment conditions, securities and securities market activities will follow the Securities Law 2019.

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Written by Nguyen Quang Vu On In ,