Vietnam’s M&A Market: Opportunities for Foreign Investors – Regulations and Documentations

M&A Regulations

In Vietnam, there is no single law that governs M&A activities and investors should take note of the different laws and decrees that governs such issues. The laws and regulations include:

  • The 2014 Investment Law and Law on Enterprises – These laws set out the general legal framework and investment rules and procedures. Enforcing authorities include the local People’s Committee, Ministry of Planning and Investment (MPI), and Ministry of Industry and Trade (MoIT);
  • 2006 Securities Law – This Law regulates the acquisition of shares in a public company in Vietnam. Enforcing authorities include the State Securities Commission (SSC), Vietnam Securities Depository Centre, and MPI;
  • 2005 Competition Law – The Vietnam Competition Authority (VCA) enforces this law;
  • Other specific regulations exist for Vietnamese companies in highly regulated sectors such as banking, finance, insurance, and so on.

M&A Documentation

A letter of intent is the common preliminary agreement that is drafted, outlining the buyer and seller intentions in a transaction. It includes the main terms of a transaction and other details such as exclusivity and confidentiality. In addition, it also mentions the predicted timeline for completing the transaction process.

After a letter of intent is drafted, there are several other documents required depending on the type of transaction. In case of a share purchase, a share purchase agreement or share subscription agreement is required. A shareholder’s agreement could be needed if less than 100 percent of shares are purchased. Depending on the type of transactions, corporate approvals or disclosure letters may also be required. In most cases, the buyer prepares the first draft of all the documents.

An acquisition agreement covers the type of transaction (shares/assets) as well as the transaction mechanism. Other clauses include buying price, payment methods, warranties and indemnities, cancellation procedures, conditions precedent, and governing laws and jurisdiction.

According to the Law on E-transactions, digital signatures are binding in nature and are enforceable in Vietnam, subject to conditions.

 

This text is part of a more complete analysis available for free.

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