It is our understanding that you intend to directly or in-directly acquire an enterprise in Vietnam, we can provide you a general introduction of M&A in Vietnam for your kind reference.
In Vietnam, there is no single law governing M&A. However, since the enactment of the Law on Enterprises and the Law on Investments in 2005, regulation on M&A in Vietnam have step by step clarified and modernized.
Up to now, M&A transactions are still relatively new in Vietnam, and the legal framework remains fairly restrictive and under-development, with the overwhelming majority of acquisitions occurring privately.
In general, all M&A transactions are subject to the same rules set out in the Law on Enterprises and its implementing and guiding regulations, although sector-specific regulations may apply to different companies.
Particularly, capital contribution in a limited liability company may only be sold once each of the capital owner’s share of capital has been fully paid.
Meanwhile, sales of shares of the initial founding shareholders of a joint stock company are restricted for a period of three years, unless the General Meeting of Shareholders consents to their sale.
In case M&A transaction involves with a public company, it will be also subjected to the Law on Securities and its implementing and guiding regulations.
With the respect to the Foreign Purchaser, under VietnamLaw on Investment 2005, foreign investors to invest in Vietnamese companies by way of “a capital contribution, the purchase of shares, or a merger”.
Nonetheless, a number of restrictions and specific procedures remain applicable to foreign investors in Vietnam.
Accordingly, the aggregate cap on the participation of foreign investors (which include Vietnamese organizations where the capital contributed by foreign parties in such Vietnamese organization exceeds 49%) in any public company may not exceed 49% of the total number of issued shares.
Furthermore, foreign ownership restriction under Vietnam’s WTO Commitments is also applied to several specific sectors such as advertisement, logistic, education and telecommunication, etc.
