Vietnam – Merges & Acquisitions

1. What is the current status of the M&A market in your jurisdiction?

 

Vietnam has remained an attractive destination for foreign investors. In 2019, the total FDI capital to Vietnam was USD38 billion, the highest figure in the last ten years. Investment in the form of capital contribution and share purchase increased sharply and accounts for an increasing proportion of the total FDI, that is, 40.7%. Foreign investors contributed capital to domestic enterprises mainly in the field of processing technology and manufacturing, with 45.8% of the total value of these markets 17.8% of the total value of real estate businesses.

Main investors still come from Japan, Korea, Singapore, and China. The retail, consumer goods, and industrial goods are also very active, and investors tend to focus on leading companies as they have a big market share and strong brand value.

The main drivers of Vietnam’s M&A market are:

• Privatisation of state-owned enterprises (SOE). According to Resolution No. 01/NQ-CP issued by the government in 2019, one of the key tasks in 2019 was to continue strengthening the restructuring, equitisation and divestment of SOEs. The government also aims to publicise equitised enterprises which are eligible but are not listed nor registered for trading on the stock market.
• Trade liberalisation as a result of CPTPP, EU- Vietnam FTA, and so on.
• Resolution No. 42 on pilot program of handling bad debts of credit institutions is also the main driving force of M&A in real estate sector as bad debts in real estate sectors accounts for a high percentage of the total bad debts in Vietnam’s market.

Major deals:

• SK Group paid USD1 billion for ownership of 6.15% of VinGroup in May 2019
• KEB Hana became a major shareholder of Vietnam Development Bank (BIDV) by acquiring 603.3 million shares, equivalent to 15% of BIDV’s capital, in November 2019
• Samsung SDS became the largest shareholder of CMC, paying VND850 billion. to buy shares of the latter.
• In April 2019, Gelex Electrical Equipment Co., Ltd, a subsidiary of Vietnam Electrical Equipment Corporation (Gelex), completed the purchase of 27 million shares in Viglacera, divested by the Ministry of Construction.
• In November 2019, Thai WHA Utility and Power Company purchased 34% of equity in Duong River Surface Water JSC.
• Mitsui & Co. (Japan) bought 35.1% of Minh Phu Seafood Corporation’s capital.
• In April 2019, DHG Pharma officially became a subsidiary of Taisho after this Japanese unit raised its holdings to 50.78% of total shares.

Question Body:

2. What are the main means of obtaining control of a public company?

Answer Body

In Vietnam, the term public company refers to a joint stock company whose shares meet one of the following criteria:

• They have been put up for a public offer.
• They are listed on the stock exchange or a securities trading centre.
• They are owned by at least 100 investors (excluding professional securities investors) and the company’s paid-up charter capital is VND10 billion or more.

A joint stock company is a company whose paid-up charter capital is divided into equal parts called shares. Only joint stock companies can be listed on the stock exchange.

The most common means of obtaining control over a public company are as follows:

• The acquisition of shares/charter capital through:
• buying shares/charter capital from the existing shareholders of the company;
• buying shares/charter capital of a listed company on the stock exchange; and
• public share purchase offer.
• Through a merger. The 2014 Law on Enterprises sets out the procedures for company mergers by way of a transfer of all lawful assets, rights, obligations and interests to the merged company, and for the simultaneous termination of the merging companies.
• Through the acquisition of assets.

There are restrictions on the purchase of shares/charter capital of local companies by foreign investors in certain sensitive sectors. In addition, the law is silent on merger or assets acquisition (for example, business spin-off) transactions where a foreign investor is a party. Regarding other assets acquisition transactions, if the asset is a real property, foreign ownership right will be restricted according to real estate laws.

Securities of public companies must be registered and deposited at the Vietnam Securities Depository Centre before being traded.

Depending on the numbers of shares purchased, an investor can become a controlling shareholder. Under the Vietnam Law on Securities, a shareholder that directly or indirectly owns 5% or more of the voting shares of an issuing organisation is a major shareholder. Any transactions that result in more than 10% ownership of the paid-up charter capital of the securities company must seek approval of the State Securities Commission (SSC).

Question Set:

Hostile bids

Question Body:

3. Are hostile bids allowed? If so, are they common?

Answer Body

Hostile bids are neither defined nor regulated under Vietnamese law. There is also no express prohibition on this type of transaction. Recommended bids often outnumber hostile bids due to limited publicly available information about the target and reluctance to disclose information.

However, the number of hostile bids in Vietnam has been increasing since 2011, for example:

• Singapore-based Platinum Victory Ptl Ltd became Refrigeration Electrical Engineering Corp (REE)’s largest shareholder, accumulating a 10.2% interest in the company.
• Chile’s CFR International Spa acquired a 46% stake in healthcare equipment company Domesco Medical Import-Export Co (DMC), making it the first foreign deal in the pharma sector.

During 2010 and 2011, there were two takeover deals in Vietnam:

• The acquisition of Ha Tay Pharmacy in 2010.
• The acquisition of Descon, a construction company, in 2011. Binh Thien An Company acquired a 35% shareholding in Descon, officially took over Descon and made significant changes to its management body.

The Government’s Decree No. 60/2015/ND-CP lifted the foreign equity cap regarding public companies, with some exceptions (a 49% cap was previously in force). Specifically, the rules on foreign ownership in a listed company can be generally classified into the three following groups:

• If Vietnamese law, including international treaties, provides for a specific ownership cap, the maximum foreign ownership (MFO) must not exceed such a cap (group 1).
• If Vietnamese law treats a business activity as conditional on foreign investment (pursuant to the list of conditional sectors under the Investment Law) but does not yet provide any ownership limit, MFO must not exceed 49% (group 2).
• In cases that do not fall within group 1 and group 2, MFO can be up to 100% (group 3).

This lift of the foreign equity cap can be seen as a starting point for more hostile bids in Vietnam.

Question Set:

Regulation and regulatory bodies

Question Body:

4. How are public takeovers and mergers regulated, and by whom?

Answer Body

There is no single document regulating M&A activities in Vietnam. The relevant rules are contained in several laws and regulations governing general corporate and investment issues. These laws and regulations include:

• Investment Law No. 67/2014/QH13 and Enterprise Law No. 68/2014/QH13 issued by the National Assembly on 26 November 2014, and their guiding documents, namely Decree No. 78/2015/ND-CP and Decree No. 118/2015/ND-CP. These laws set out the general legal framework, conditional sectors and investment procedures. The authorities responsible for enforcing these laws are the:
• Prime Minister;
• local People’s Committee;
• Ministry of Planning and Investment;
• Ministry of Industry and Trade;
• Ministry of Health; and
• Other ministries depending on the business activities of the target companies.
• Law on Securities No. 70/2006/QH11 issued by the National Assembly on 29 June 2006, as amended by Law No. 62/2010/QH12, and its implementing documents, in particular Decree No. 58/2012/ND-CP issued by the Government on 20 July 2012, amended by Decree No. 60/2015/ND-CP by the Government on 26 June 2015. This Law regulates the acquisition of shares in a public company in Vietnam, including public tender offers. The authorities responsible for enforcing the Law include the:
• State Securities Commission (SSC);
• Vietnam Securities Depository Centre; and
• Ministry of Planning and Investment.
• Competition Law No. 23/2018/QH14 issued by the National Assembly on 12 June 2018, which is enforced by the Vietnam Competition Authority (VCA). Under this Law, any M&A transaction that causes or may likely cause substantial anti-competitive effects on the Vietnamese market will be prohibited.
• Foreign exchange regulations. An investment capital account in Vietnamese dong is a condition, among others, for capital contribution/share purchase or subscription. These regulations are enforced by banks and the State Bank of Vietnam.
• Vietnam’s WTO Schedule of Specific Commitments on Services. This sets outs the ratio of shares that can be owned by foreign investors in various specific sectors.
• Other specific regulations for the acquisition of shares in Vietnamese companies operating in special sectors, such as banking and finance, insurance, and so on. These sectors are highly regulated by the relevant authorities.

Question Set:

Pre-bid

Due diligence

Question Body:

5. What due diligence enquiries does a bidder generally make before making a recommended bid and a hostile bid? What information is in the public domain?

Answer Body

Recommended bid

Before officially contacting the potential target, the bidder conducts a preliminary assessment based on publicly available information. The bidder then contacts the target, expresses its intention of buying shares/subscribing for its shares and the parties sign a confidentiality agreement before the due diligence process. The confidentiality agreement basically includes confidentiality obligations in performing the transaction. The enforcement of confidentiality agreements by courts in Vietnam remains untested.

A bidder’s legal due diligence usually covers the following matters:

• Corporate details of the target and its subsidiaries, affiliates and other companies that form part of the target.
• Contingent liabilities (from past or pending litigation).
• Employment matters.
• Contractual agreements of the target.
• Statutory approvals and permits regarding the business activities of the target.
• Insurance, tax, intellectual property, debts, and land-related issues.
• Anti-trust, corruption and other regulatory issues.

Hostile bid

Vietnam laws do not draw a distinction between recommended bids and hostile bids (see Question 3).

Public domain

Information on local companies available in the public domain includes:

• Financial statement (including information on the company’s assets, debts, owner’s capital, financial status, business results, and so on).
• Prospectus of securities companies (including corporate details, commitments of the company, basic rights of the bidders, information on share issuance, business prospects, and so on).
• Business registration certificate (including information on the name, address, legal representative/members, and charter capital of the company).
• Other information from online sources or newspapers.

Secrecy

Question Body:

6. Are there any rules on maintaining secrecy until the bid is made?

Answer Body

There is no legal requirement that a bidder keep information about the bid secret until the bid is made. However, this can be considered a contractual violation if the parties to the transaction have committed to secrecy in writing. However, leaking information before the finalisation of the bid can lead to:

• An increase of the target’s shares price.
• Difficulties in negotiating the terms of the transaction.
• Competition in the market.

Agreements with shareholders

Question Body:

7. Is it common to obtain a memorandum of understanding or undertaking from key shareholders to sell their shares? If so, are there any disclosure requirements or other restrictions on the nature or terms of the agreement?

Answer Body

A preliminary agreement, such as a memorandum of understanding or letter of intent, is a starting document used to limit the expectations of both parties and make them familiar with M&A concepts. Therefore, such agreements are quite common in Vietnam. Contractual negotiations can be long or short, tense or smooth, depending on the details of the agreement. There is no requirement of disclosure of the agreement.

Founding shareholders can only transfer their shares to other founding shareholders of the company within three years from the issuance of the Enterprise Registration Certificate. After then, the shares can be transferred freely. An internal approval of the general meeting of shareholders is always required if:

• The company increases its capital by issuing new shares.
• There is any share transfer of the founding shareholders within the above three-year period.

If the sale and purchase is a direct agreement between the company and the seller in relation to an issuance of shares, the selling price must be lower than the market price at the time of selling, or in the absence of a market price, the book value of the shares at the time of the approval plan to sell the shares. In addition, the selling price to foreign and domestic buyers must be the same.

Stakebuilding

Question Body:

8. If the bidder decides to build a stake in the target (either through a direct shareholding or by using derivatives) before announcing the bid, what disclosure requirements, restrictions or timetables apply?

Answer Body

Shares can be bought before the bid announcement provided that the number of shares sold does not exceed the thresholds requiring a tender offer. A tender offer is required in the following cases:

• Purchase of a company’s circulating shares that results in a purchaser, with no shareholding or less than a 25% shareholding, acquiring a 25% shareholding or more.
• Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% or more shareholding, acquiring a further 10% or more of circulating shares of the company.
• Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% shareholding or more, acquiring a further 5% up to 10% of currently circulating shares of the company within less than one year from the date of completion of a previous offer.

There is no guidance on building a stake by using derivatives. In addition, the bidder cannot purchase shares or share purchase rights outside the offer process during the tender offer period.

The bidder must publicly announce the tender offer in three consecutive editions of one electronic newspaper or one written newspaper and (for a listed company only) on the relevant stock exchange within seven days from the receipt of the State Securities Commission’s (SSC’s) opinion regarding the registration of the tender offer. The tender offer can only be implemented after the SSC has provided its opinion, and following the public announcement by the bidder.

Agreements in recommended bids

Question Body:

9. If the board of the target company recommends a bid, is it common to have a formal agreement between the bidder and target? If so, what are the main issues that are likely to be covered in the agreement? To what extent can a target board agree not to solicit or recommend other offers?

Answer Body

It is necessary to obtain the approval of the general meeting of shareholders to carry out a tender offer if the acquisition is conducted by way of a transfer of shares from an existing shareholder and results in a 25% ownership or more of the voting shares in a public company (see Question 8). Such approval is also required when there is a share transfer of a founding shareholder of a joint stock company within three years from the issuance of the Enterprise Registration Certificate. The approval normally includes the:

• Number of shares offered.
• Price of the offer.
• Conditions of the offer.

There is no statutory requirement that prohibits a target board from soliciting or recommending other offers before completion of a transaction. However, in practice, the parties can agree on such restrictions.

Break fees

Question Body:

10. Is it common on a recommended bid for the target, or the bidder, to agree to pay a break fee if the bid is not successful?

Answer Body

There is no provision on break fees under Vietnam laws. In practice, both parties can agree on break fees, which do not normally exceed 8% of the transaction value. When the transaction is between affiliated entities, transfer pricing issues can be triggered. If the transaction involves a foreign party, fees paid by such a party will also raise foreign exchange issues.

Committed funding

Question Body:

11. Is committed funding required before announcing an offer?

Answer Body

If an offer contains cash elements, the bidder must include in its offer announcement a financial statement that there are satisfactory financial resources available to carry out the offer in full in cash.

Question Set:

Announcing and making the offer

Making the bid public

Question Body:

12. How (and when) is a bid made public? Is the timetable altered if there is a competing bid?

Answer Body

The offer timetable is as follows:

• The bidder prepares registration documents for its public bid to purchase shares.
• The bidder sends the bid registration documents to the State Securities Commission (SSC) for approval and, at the same time, sends the registration documents to the target.
• The SSC reviews the tender documents within seven days.
• The board of the target must send its opinions regarding the offer to the SSC and the shareholders of the target within 14 days from receipt of the tender documents.
• The bid is announced in the mass media (although this is not a legal requirement).
• The length of the offer period is between 30 and 60 days.
• The bidder reports the results of the tender to the SSC within 10 days of completion.

Companies operating in specific sectors (such as banking, insurance, and so on) can be subject to a different timetable.

Offer conditions

Question Body:

13. What conditions are usually attached to a takeover offer? Can an offer be made subject to the satisfaction of pre-conditions (and, if so, are there any restrictions on the content of these pre-conditions)?

Answer Body

A takeover offer usually contains the following conditions:

• The terms and conditions of the offer apply equally to all shareholders of the target.
• The relevant parties are allowed full access to the tender information.
• The shareholders have full rights to sell the shares.
• Applicable laws are fully respected.

An offer can also be subject to conditions precedent. Conditions precedent are set out in the share sale and purchase agreement or the capital contribution transfer agreement. There is no specific restriction on conditions precedent other than the requirement that they cannot be contrary to law and conflict with social ethics (although the legal definition of social ethics is unclear). The most common conditions precedent are:

• Amendments to the charter/relevant licence of the target.
• Obtaining necessary approvals to conduct the transaction.
• Changes to the target’s management body.

Payment of the contract price will only be made after the conditions precedent are met.

Bid documents

Question Body:

14. What documents do the target’s shareholders receive on a recommended and hostile bid?

Answer Body

The bidder must send public offer documents to the target and the State Securities Commission (SSC), which include:

• An application for registration of the public purchase offer.
• Name and address of the bidder (organisation or individual).
• Types and number of shares subject to the bid.
• The bid duration, price and conditions.
• Latest audited financial statements if the bidder is a legal entity, or a bank statement confirming financial liability in the case of an individual bidder.
• A written agreement with the target’s major shareholders whose shares are subject to the offer.

Employee consultation

Question Body:

15. Are there any requirements for a target’s board to inform or consult its employees about the offer?

Answer Body

There is no requirement under Vietnamese law that the employees must be consulted about the offer. However, if a layoff is to be conducted, the employer must:

• Prepare a labour usage plan.
• Consult with the employee representative.
• Notify the competent labour authority on the implementation of the labour usage plan.

Mandatory offers

Question Body:

16. Is there a requirement to make a mandatory offer?

Answer Body

A tender offer is required in the following cases:

• Purchase of a company’s circulating shares that results in a purchaser, with no shareholding, or less than a 25% shareholding, acquiring a 25% shareholding.
• Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% or more shareholding, acquiring a further 10% or more of circulating shares of the company.
• Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% shareholding or more, acquiring a further 5% up to 10% of currently circulating shares of the company within less than one year from the date of completion of the previous offer.

Question Set:

Consideration

Question Body:

17. What form of consideration is commonly offered on a public takeover?

Answer Body

Under Vietnamese law, shares can be purchased by offering cash, gold, land use rights, intellectual property rights, technology, technical know-how or other assets. In practice, acquisitions are most commonly made for cash consideration.

Question Body:

18. Are there any regulations that provide for a minimum level of consideration?

Answer Body

In cases of full acquisition of state-owned enterprises, the first payment for the share purchase must not be less than 70% of the value of such shares, with the remaining amount being paid within 12 months.

In transactions involving auctions of shares by state-owned enterprises, the purchaser must make a deposit of 10% of the value of the shares registered for subscription based on the reserve price at least five working days before the auction date included in the target company’s rule. Additionally, the purchaser must transfer the entire consideration for the shares into the bank account of the body conducting the auction within ten working days of the announcement of the auction results.

In the case of a public tender offer, the payment and transfer of shares via a securities agent company appointed to act as an agent for the public tender offer must comply with Decree 58/2012/ND-CP.

Question Body:

19. Are there additional restrictions or requirements on the consideration that a foreign bidder can offer to shareholders?

Answer Body

There are no additional restrictions or requirements on the consideration that a foreign bidder can offer to shareholders.

Question Set:

Post-bid

Compulsory purchase of minority shareholdings

Question Body:

20. Can a bidder compulsorily purchase the shares of remaining minority shareholders?

Answer Body

If the bidder acquires 80% or more of the shares of a public company, it must buy the remaining shares of the same type of other shareholders (if they so request) at the bid price within 30 days. However, there are no “squeeze-out” rights that can force the remaining shareholders to sell their shares.

Restrictions on new offers

Question Body:

21. If a bidder fails to obtain control of the target, are there any restrictions on it launching a new offer or buying shares in the target?

Answer Body

The bidder is not prohibited from making a new offer or buying shares in the target if its initial offer fails.

De-listing

Question Body:

22. What action is required to de-list a company?

Answer Body

If a company seeks voluntarily de-listing, it must submit an application for de-listing that includes the following documents:

• A request for de-listing.
• For a joint stock company:
• the shareholders’ general meeting approval of de-listing of the stock;
• the board of directors’ approval of de-listing of bonds; and
• the shareholders’ general meeting approval of de-listing of convertible bonds.
• The members’ council (for a multi-member limited liability company) or the company’s owner (for a single member limited liability company) approval of de-listing of bonds.
• For a securities investment fund, the investors’ congress approval of de-listing of the fund’s certificate.
• For a public securities investment company, the shareholders’ general meeting approval of stock de-listing.

A listed company can only de-list its securities if de-listing is approved by a decision of the general meeting of shareholders passed by more than 50% of the voting shareholders who are not major shareholders.

If a company voluntarily de-lists from the Hanoi Stock Exchange or Ho Chi Minh Stock Exchange, the application for de-listing must also include a plan to deal with the interests of shareholders and investors. The Hanoi Stock Exchange or Ho Chi Minh Stock Exchange must consider the request for de-listing within ten and 15 days from the receipt of a valid application, respectively.

Question Set:

Target’s response

Question Body:

23. What actions can a target’s board take to defend a hostile bid (pre- and post-bid)?

Answer Body

There are no provisions regulating hostile bids under Vietnamese law (see Question 3).

Question Set:

Tax

Question Body:

24. Are any transfer duties payable on the sale of shares in a company that is incorporated and/or listed in the jurisdiction? Can payment of transfer duties be avoided?

Answer Body

Depending on whether the seller is an individual or a corporate entity, the following taxes will apply:

• Capital gains tax. Capital gains tax is a form of income tax that is payable on any premium on the original investor’s actual contribution to capital or its costs to purchase such capital. Foreign companies and local corporate entities are subject to a corporate income tax of 20%. However, if the assets transferred are securities, a foreign corporate seller is subject to corporate income tax of 0.1% on the gross transfer price.
• Personal income tax. If the seller is an individual resident, personal income tax will be imposed at the rate of 20% of the gains made, and 0.1% on the sales price if the transferred assets are securities. An individual tax resident is defined as a person who:
• stays in Vietnam for 183 days or longer within a calendar year;
• stays in Vietnam for a period of 12 consecutive months from his arrival in Vietnam;
• has a registered permanent residence in Vietnam; or
• rents a house in Vietnam under a lease contract of a term of at least 90 days in a tax year.

If the seller is an individual non-resident, he is subject to personal income tax at 0.1% on the gross transfer price, regardless of whether there is any capital gain.

Payment of the above transfer taxes is mandatory in Vietnam.

Question Set:

Other regulatory restrictions

Question Body:

25. Are any other regulatory approvals required, such as merger control and banking? If so, what is the effect of obtaining these approvals on the public offer timetable?

Answer Body

The investor will need to register the capital contribution and purchase of shares if either:

• The target is operating in one of the 267 conditional sectors referred to in the 2015 Investment Law.
• The capital contribution and purchase of shares results in foreign investors owning 51% or more of the target’s charter capital (in particular, from below 51% to more than 51% and from 51% to above 51%).

The local Department of Planning and Investment where the target is located must issue its final approval within 15 days from the receipt of a valid registration application. However, in practice, this procedure can take several months due to the workload of certain central authorities and the lack of clear guidance documents. Therefore, the registration requirement can cause substantial delays to the whole M&A process.

In other cases, the target company only needs to register a change of membership/shareholders at the Business Registration Division.

Question Body:

26. Are there restrictions on the foreign ownership of shares (generally and/or in specific sectors)? If so, what approvals are required for foreign ownership and from whom are they obtained?

Answer Body

For foreign ownership restrictions in listed companies, see Question 3.

Foreign ownership restrictions in specific industries/sectors are as follows:

• Advertising: 99% or more foreign ownership is allowed provided that the foreign investor is in a joint venture with a domestic entity.
• Services incidental to agriculture, hunting and forestry: foreign investors must be in a joint venture or business co-operation contract with a local entity. Foreign capital contributions cannot exceed 51% of the legal capital of the joint venture.
• Audio-visual services: foreign investors must have a business co-operation contract or joint venture with Vietnamese partners that are authorised to provide these services in Vietnam. Foreign capital contributions cannot exceed 51% of the legal capital of the joint venture.
• Telecommunications:
• Facilities-based (that is, development of infrastructure plus services): the state must be the majority shareholder (51%);
• Non-facilities-based services: for facilities-based services, foreign ownership cannot exceed 49% (for basic services) and 50% (for value-added services); for non-facilities-based services, foreign ownership cannot exceed 65%.

There is no requirement to apply for approval of foreign ownership if it is within the regulatory requirement. However, in exceptional cases, foreign investors that wish to go beyond ownership restrictions must seek the written approval of the Prime Minister. Except where Vietnam has made WTO commitments in certain sectors, market access is subject to the discretion of the relevant authorities.

In addition, foreign ownership of shares requires the approval of the:

• Ministry of Industry and Trade, for distribution services.
• State Bank of Vietnam, for M&A transactions involving credit institutions.
• Ministry of Finance, for any transfer of shares involving 10% or more of the charter capital of an insurance company or insurance brokerage company.

Question Body:

27. Are there any restrictions on repatriation of profits or exchange control rules for foreign companies?

Answer Body

If the target company in Vietnam already has an investment registration certificate, it must open a direct investment capital account at a licensed bank in Vietnam. Payment for a share purchase by a foreign investor must be conducted through this account. The account can be denominated in Vietnamese dong or a foreign currency. In addition, if the foreign investor is an offshore investor, it will also need to open a capital account at a commercial bank operating in Vietnam to carry out the payment on the seller’s account and receive profits.

If the target company in Vietnam does not have an investment registration certificate, the foreign investor will need to open an indirect investment capital account for payment to the seller and remittance of profits.

Question Body:

28. Following the announcement of the offer, are there any restrictions or disclosure requirements imposed on persons (whether or not parties to the bid or their associates) who deal in securities of the parties to the bid?

Answer Body

There are no such restrictions or disclosure requirements (see Question 6).

Question Set:

Reform

Question Body:

29. Are there any proposals for the reform of takeover regulation in your jurisdiction?

Answer Body

The 2014 Investment Law is the first law that regulates M&A transactions and clearly provides that such transactions do not require an investment registration certificate. The implementing document for the law is Decree No. 118/2015/ND-CP, which was issued on 12 November 2015 and takes effect from 27 December 2015. It has introduced clearer M&A regulations and acts as an incentive for growth of the M&A market in the future. This change has ended years of uncertainty and frustration faced by foreign investors seeking entry into the Vietnam market, or expansion through M&A transactions.

Question Set:

Stakebuilding

1. This information in this table will set out the stakebuilding requirements for your jurisdiction. This will be included separately from this Q&A chapter with the responses from the other jurisdictions. The word limit is 100 words.

Jurisdiction        When must disclosure be made?             When must a mandatory offer be made?         When can minority shareholders be squeezed out?

Vietnam             The bidder must publicly announce the tender

offer within seven days from receipt of the State Securities

Commission’s opinion regarding the registration of the tender offer.

A tender offer is required in the following cases:

• Purchase of a company’s circulating shares that results in a purchaser, with no shareholding, or less than a 25% shareholding, acquiring a 25% shareholding or more.
• Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% or more shareholding, acquiring a further 10% or more of circulating shares of the company.
• Purchase of a company’s circulating shares that results in a purchaser (and affiliated persons of the purchaser), with a 25% shareholding or more, acquiring a further 5% up to 10% of currently circulating shares of the company within less than one year from the date of completion of the previous offer.

If the bidder acquires 80% or more of the shares of a public company, it must buy the remaining shares of the same class of other shareholders (if they so request) at the bid price within 30 days.

However, there are no “squeeze-out” rights that can force the remaining shareholders to sell their shares.

 

 

 

Online resources

Ministry of Justice

W http://moj.gov.vn/pages/vbpq.aspx

Description. This website provides access to original Vietnamese legislation. Unofficial translations of selected documents are available at http://moj.gov.vn/vbpq/en/pages/vbpq.aspx.

Official English translations of legislation referred to in this article and other Vietnamese legislation require a subscription.

 

Contributor profile

Dr. Oliver Massmann, Partner and General Director

Duane Morris Vietnam LLC

T +84 169 249 5833

F +84 4 3946 1311

E [email protected]

W  www.duanemorris.com

Professional qualifications. Germany, Admitted to the Berlin Bar Association; Vietnam, licensed foreign lawyer

Areas of practice. Commercial law.

Non-professional qualifications. Law degree (first state exam), Bochum Law University, 1994; Second state exam, Ministry of Justice, Düsseldorf, Germany, 1997; LLM degree in international taxation, St. Thomas University, Florida, US; PhD with Major in International Business Law from the European Global School in Paris.

Recent transactions.

• Assisted an international shipyard group in purchasing shares of Song Cam Ben Kien and worked on the establishment of two 100% foreign invested companies. Advised the group on expanding its Asia-wide investment project related to mergers and acquisitions, offshore loans, financing and restructuring, labour issues, the purchase of a shipyard, the opening of a central warehouse and establishing multiple joint ventures.
• Advising one of the leading multi-channel operators and movie companies in the United States, with investment in Vietnam with the purchase of shares in a Vietnamese media company to form a joint venture in the move/TV sectors. This is the first-ever media joint venture deal for Vietnam’s media sector, with broad cooperation business lines after Vietnam’s accession to the WTO.
• Advising an international group in one of the biggest M&A transaction in pharmaceutical sector in Vietnam in 2017 in terms of deal values;
• Advising an international group on all related legal aspects of Merger and Antitrust laws in Vietnam for worldwide merger of largest agriculture companies on earth.
• Advise and assist a Singapore–based company to unify and re-shape the market of luxurious watches and clocks in Vietnam. We help them to achieve this objective via a series of M&A and asset acquisition transaction.
• Acted as legal counsel for an industrial insurance business in connection with the shareholding ratio of PVN in PVI. Advised on the restructuring of the largest joint venture in Vietnam’s insurance industry.
• Advised TKIS AG, the German parent company of TKIS Vietnam, in connection with Vietnamese law aspects of its global group restructuring plan.
• Assisted TKIS AG and TKIS Vietnam on the elaboration of the restructuring and capitalisation plans, from both practical and legal perspectives.
• Advised and assisted a Swiss medical market expansion services provider in the expanse of its business in Vietnam in the sector of wholesale medical equipment and materials via the acquisition of a local company.

Languages. German (native), English, French, Vietnamese, Burmese

Professional associations/memberships.

• Member of the Board of Management, German Business Association.
• Member of the Supervisory Board, Petro Vietnam Insurance Corporation.

Publications.

• “New Investment and Enterprise Laws – Meaning Reform or Minor Fiddling?”, Vietnam Investment Review.
• “Do you expect a final solution for the EU-VN free trade consultations soon?” and “Impacts of the Asean Economic Community on Vietnam’s economy and especially international companies in Vietnam”, International Magazine, Germany.
• “Mining Industry of Vietnam”, The ASIA Miner, Australia.