by Apra Law

Currently, M&A activity is an activity to gain control of an enterprise through the form of merger or acquisition of a portion of shares or the whole of another enterprise. The purpose of an M&A deal is not simply to own shares, but to participate in and decide on important issues that affect the business operations and governance of the merged enterprise or repurchase. From a legal perspective, M&A is a complicated process, requiring investors to have certain knowledge and understanding in this field. Regarding M&A activities, according to the provisions of current Vietnamese law, investors need to learn and understand various regulations related to specialized legal systems such as Enterprise Law, Competition Law. , Securities Law, Investment Law…

Firstly, M&A under the Enterprise Law 2020:

The Enterprise Law 2020 has introduced regulations on consolidation and merger as one of the five forms of enterprise reorganization (Clause 31, Article 4 of the Enterprise Law 2020) derived from the needs of enterprises. Although the Law on Enterprises has not provided a clear definition of M&A, there are specific regulations related to M&A activities for each type of enterprise, specifically as follows:

According to Article 17 of the Enterprise Law 2020, the right to establish, contribute capital, purchase shares, purchase contributed capital and manage enterprises. Accordingly, organizations and individuals have the right to contribute capital, purchase shares, and purchase capital contributions to joint-stock companies, limited liability companies and partnerships in accordance with the Law on Enterprises, except for the following provisions: following cases:

– State agencies and units of the people’s armed forces use state assets to contribute capital to enterprises for their own profit;

– Subjects not allowed to contribute capital to the enterprise as prescribed by the Law on Cadres and Civil Servants; Law on Public Officials and Law on Anti-Corruption.

In addition, there are regulations on company division (Article 198); separation of the company (Article 199); company consolidation (Article 200) and procedures and documents for merging companies according to Article 201 of the Law on Enterprises. In particular, a limited liability company has regulations on redemption of contributed capital (Article 51) and transfer of contributed capital according to Article 52 of the Enterprise Law 2020 and a joint-stock company has regulations on selling shares (Article 126). ) and share transfer under Article 127 of the Enterprise Law 2020.

In the Enterprise Law, it is clearly stated that the object of merger or acquisition is a company. This has helped distinguish it from private enterprises when carrying out mergers and acquisitions that take the form of selling enterprises according to Article 198 of the Enterprise Law 2020. At the same time, the Enterprise Law does not introduce the concept of acquisition. enterprise, the acquisition of an enterprise is the acquisition of part or all of the contributed capital or issued shares of a member or shareholder in the company. Although this does not increase the charter capital of the company, it may change the ownership structure of the company’s contributed capital or shares.

Secondly, M&A under the Competition Law 2018:

According to Clauses 2, 3 and 4, Article 29 of the 2018 Competition Law stipulates:

– Merger of enterprises means the transfer of all of their assets, rights, obligations and legitimate interests by one or several enterprises to another enterprise. Simultaneously terminate the business operation or existence of the merged enterprise.

– Enterprise consolidation is when two or more enterprises transfer all their assets, rights, obligations and legitimate interests to form a new enterprise. Simultaneously terminate the business or existence of the consolidated businesses.

Acquisition of an enterprise means the purchase of all or part of the contributed capital or assets of another enterprise by an enterprise directly or indirectly, sufficient to control and dominate the acquired enterprise or a line of business. .

The Competition Law stipulates that the merger of enterprises, consolidation of enterprises, acquisition of enterprises and joint ventures between enterprises are acts of economic concentration. Therefore, the merger, consolidation or acquisition of enterprises is prohibited in case this merger, consolidation or acquisition has created a combined market share of enterprises participating in the economic concentration, causing negative impacts on the economy. or potentially significantly restricting competition in the Vietnamese market (Article 30).

Third, M&A under the Securities Law 2019:

According to Clause 1, Article 93 of the Securities Law 2019, the reorganization of securities companies and securities investment fund management companies must be approved by the State Securities Commission before implementation.

Fourth, M&A under the Investment Law 2020:

According to Clause 8, Article 3 of the Law on Investment 2020, business investment is the investment by an investor to carry out business activities. Business can be done through the establishment of an economic organization; investment, capital contribution, purchase of shares and contributed capital of economic organizations; investment in the form of a contract or implementation of an investment project. According to Article 24 of the Investment Law 2020, investors have the right to buy and contribute capital, buy shares, and contribute capital to economic organizations. Foreign investors may invest in the form of capital contribution, purchase of shares or capital contribution to economic organizations, but must satisfy the provisions and conditions of law.

As mentioned above, M&A activities are regulated in many different legal documents. In addition, when performing M&A, there are other related issues such as tax, accounting, labor, intellectual property, etc…

Fifth, M&A under the 2010 Law on Credit Institutions:

According to Clause 1, Article 153 of the Law on Credit Institutions 2010, a credit institution may be reorganized in the form of division, separation, consolidation, merger, or legal transformation after obtaining approval from the State Bank. written agreement.

Due to the complex nature of M&A, the law on M&A not only regulates the issues of ownership or governance of the target business, but also deals with related issues such as: registration of change of business owner , registration of M&A procedures, tax obligations, determination of target business value, competition law to control M&A activities…

In general, current Vietnamese law recognizes the right to consolidate, merge, and acquire businesses and cooperatives of domestic and foreign investors. M&A activities will bring significant investments to Vietnam and improve the country’s ability to import technology in corporate governance and production. In the context of the financial crisis and the restructuring of business activities, M&A activities can expand Vietnamese enterprises’ opportunities to access international markets and create a solid connection for enterprises. Vietnam in the global market.

Above is an article about “Some legal provisions governing M&A activities” of Apra Law Company Limited. If you still have questions about the above issues and need to be answered, please contact the hotline for advice and support.


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