Corporate Acquisitions and Mergers in Vietnam PDF
Preview Corporate Acquisitions and Mergers in Vietnam
Corporate Acquisitions and Mergers in Vietnam Third Edition Tony Foster Bui Thanh Tien Freshfields Bruckhaus Deringer This book was originally published as a chapter in Corporate Acquisitions and Mergers. General Editor: Peter Begg 2 Published by: Kluwer Law International B.V. PO Box 316 2400 AH Alphen aan den Rijn The Netherlands E-mail: [email protected] Website: lrus.wolterskluwer.com Sold and distributed in North, Central and South America by: Wolters Kluwer Legal & Regulatory U.S. 7201 McKinney Circle Frederick, MD 21704 United States of America Email: [email protected] Sold and distributed in all other countries by: Air Business Subscriptions Rockwood House Haywards Heath West Sussex RH16 3DH United Kingdom Email: [email protected] DISCLAIMER: The material in this volume is in the nature of general comment only. It is not offered as advice on any particular matter and should not be taken as such. The editor and the contributing authors expressly disclaim all liability to any person with regard to anything done or omitted to be done, and with respect to the consequences of anything done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents of this volume. No reader should act or refrain from acting on the basis of any matter contained in this volume without first obtaining professional advice regarding the particular facts and circumstances at issue. Any and all opinions expressed herein are those of the particular author and are not necessarily those of the editor or publisher of this volume. ISBN 978-94-035-0975-4 e-Book: ISBN 978-94-035-1014-9 web-PDF: ISBN 978-94-035-1062-0 This title is available on www.kluwerlawonline.com © 2019, Kluwer Law International BV, The Netherlands All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Permission to use this content must be obtained from the copyright owner. More information can be found at: lrus.wolterskluwer.com/policies/permissions-reprints-and-licensing 3 FRESHFIELDS BRUCKHAUS DERINGER Freshfields Bruckhaus Deringer is one of the world’s largest international law firms and also one of the largest in Vietnam. The firm received office licences right after Vietnam opened to the world in 1994. With offices in Hanoi and Ho Chi Minh City, Freshfields has been at the forefront of the country’s economic transformation. The firm focuses its Vietnam practice on corporate mergers and acquisitions and has acted on many of the market’s landmark transactions in the last decade. Authors Tony Foster is the Managing Partner of Freshfields Bruckhaus Deringer’s Hanoi and HCMC offices. Tony established the firm’s Vietnam offices in 1994 and has lived and practised in Hanoi ever since, giving him an unparalleled experience and knowledge of business in Vietnam. He draws on this to assist clients in resolving the complex issues that often arise in doing business in the country, whether originating in the vagueness inherent in Vietnamese legislation or otherwise. Tony is responsible for the work of Freshfields’ Vietnamese and foreign lawyers whose legal and practical knowledge – combined with international quality standards – produces one of the best legal teams in the country. Tony and the team have acted for global companies on many of the most significant corporate, M&A and equitisation transactions in Vietnam. Tony was the first foreign lawyer to be awarded a medal by the Vietnamese Ministry of Justice, has been recognised for many years by numerous legal surveys as being at the top of the profession in Vietnam, and – in the most recent survey – is in his own separate ‘star’ category above other leading lawyers in the country. Bui Thanh Tien has been practising law in HCMC since 1998 and has been with the firm since 2001. Tien is the Head of Freshfields’ Ho Chi Minh City Office. He focuses his practice on private equity, M&A and inward investment. Tien spends substantial time acting for private equity investors and investment banks on their investments and divestments in the country. Tien either takes the lead or is involved in all of the complex corporate/M&A and private equity work in the firm’s Vietnam offices. Tien has been recognised as a top-tier Vietnam corporate lawyer by various legal publications. 4 Table of Contents Economic, Political and Cultural Background Overview of Vietnam’s Economy Economic Integration Vietnam’s Infrastructure: General Language Government and Political System Legal System Openness to Foreign Investment Current Trends Sector Trends Sourcing Deals and Obstacles to Deals Vietnam: Risks Predictability Enforcement Risks Foreign Ownership Restrictions Development Risk icensing Issues Land Use Rights Employment Law oreign Exchange Tax Import and Distribution Corruption Deal Risks: Negotiating Style Deal Risks: Inflated Valuations Deal Risks: Lack of Adequate Assistance Corporate Framework Business Vehicles Effect of Corporate Form on Acquisitions Compliance and Reporting Requirements Minimum Capital Governance Structure in a Vietnamese Company Decision-Making Decision-Making in a Multi-Member Limited Liability Company Decision-Making in a One Member Limited Liability Company Decision-Making in a Joint Stock Company Executive Authority Legal Representative Foreign Management Regulatory Framework Laws Affecting Acquisitions Principal Laws 5 Principal Variables Relevant Regulatory Authorities Government Central-Level Ministries Ministry of Planning and Investment Department of Planning and Investment State Securities Commission State Bank of Vietnam Vietnam Securities Depositary Vietnam Competition Authority Regulatory Framework Acquisition of Companies Engaged in Businesses ThatAre Subject to Conditions General Rules Conditional Businesses Acquisitions of Companies Operating in Both Conditional and Other Sectors Foreign Ownership Limits Examples of Foreign Ownership Limits Foreign Ownership Limits: Public Companies Control Majority Ownership Practice Timing of Governmental Approvals: Practical Considerations Acquisitions of Interests Through Nominees Acquisitions in the State Sector Disposals by the State: Prognosis Equitisation and State Divestment: DifferentRegulations Equitisation: Different Principles for Strategic andNormal Investors Equitisation: Strategic Investors Buying Shares as a Strategic Investor Strategic Investors Price: Strategic Investor Ownership Percentage: Strategic Investor Lock-Up Period: Strategic Investor Currency of the Purchase Equitisation: Buying in the Initial Offering State Divestment ‘State Capital’ Forms of Divestments of ‘State Capital’ Price Limits on Dispositions by the State No Sales of State Interests 65% State Ownership 50% State Ownership Public Company Acquisitions General Majority Transactions Hostile Transactions Public Tender Offer PTO Requirements 6 Cross-Border Structures Board Actions Partial Offers ‘Mandatory’ Bids Buying Shares Outside a Bid Terms of a PTO Timetable Publicity Withdrawal of Bids Announcements and Disclosure Obligations Squeeze-Outs Sanctions Transaction Process Acquisition of Listed Shares on the Exchange Acquisition of Listed Shares off the Exchange Acquisitions of Unlisted Public Companies Securities Trading Codes Disclosure Obligations Reporting Requirement for ‘Major Shareholders’ Reporting Requirements for ‘Internal Shareholders’ Target Company Commitments Due Diligence Mergers Overview Procedures Implementation of Mergers Investment Incentives and Protections General Encouraged Investment Sectors Encouraged Geographical Areas Standard Investment Incentives: Tax Standard Investment Incentives: Land Documentation of Investment Incentives Protections Against Expropriation or Nationalisation Protections Against Change in Law Financing Acquisition Financing Foreign Loans: Conditions and Registration Foreign Loans: Tax and Transfer Pricing Foreign Loans: Offshore Bank Accounts Debt Limitations Security Interests Security Interests: General Security Interests: Mortgages of Assets Security Interests: Mortgages of Equity Interests Security Interests: Guarantees Security Interests: Land Use Rights and Assets Attached to Land Security Interests: Security Over Future Assets Security Interests: Registration of Security Interests Security Interests: Foreclosure 7 Payment, Foreign Exchange and Remittance General Accounts for Acquisitions of Shares: Direct Investment Accounts for Acquisitions of Shares:Indirect Investment Currency of Payment: Indirect Investment Remitting Foreign Currency: Indirect Investment Remitting Foreign Currency: Direct Investment Remittance: Direct Investment Company Law and Securities Law Issues Shareholder Approvals Regulatory Approvals Governance Issues Governance Loyalty Inside Information Tender Offers Form of Consideration Financial Assistance Purchase of Own Shares Preference Shares Dividend Preferences Liquidation Preference Hybrid Preference Shares Shareholders’ Agreements Restrictions on Transferability of Shares Put and Call Agreements Costs and Fees Dividends Corporate Veil Bankruptcy Due Diligence Issues Due Diligence: The Vietnam Context Due Diligence: Publicly Available Information Due Diligence: Systemic Issues Corruption Criminal Code Anti-Corruption Law Gift Regulations Money-Laundering Regulations Environmental Laws Product Safety Laws Intellectual Property Rights Distributors and Agents Valuation Issues Change of Control Clauses Due Diligence of a Public Company and InsiderTrading Rules State Secrets Representations and Warranties Practical Advice Law and Dispute Resolution Governing Law Contracts Governed by Vietnamese Law Predictability 8 Unfamiliar System of Law Confidence in the Certainty of the Contractual Bargain Dispute Resolution: Vietnamese Courts Dispute Resolution: Vietnamese Arbitration Dispute Resolution: Foreign Courts Dispute Resolution: Foreign Arbitration Strategic Considerations Merger Control Background Economic Concentrations Relevant Market Merger Control Procedures and Scope of Substantive Review Jurisdiction Penalties Criminal Penalties Taxation Asset Acquisitions Tax Consequences of Asset Acquisitions Taxes Accrued Liabilities Carry-Forward Losses Depreciation Share Acquisitions Transfer of Capital Tax on Sale of Shares: Public Companies Tax on Sale of Shares: Private (Non-public) Joint Stock Companies Tax Loss Carry-Forward Rights Structuring Offshore Transactions Dividend Payments Acquisition Financing Remittance Registration Fee Consolidation Tax Treaties Risks Transfer Pricing Employment Considerations General Structuring Employee Transfers in Vietnam Statutory Transfer Resignation and Re-employment Redundancy and Re-employment Transfer on the Basis of a Tripartite Agreement(Without Resignation) Other Issues Accounting Accounting Standards Valuation Acquisition Accounting Consolidation 9 Future Developments Reform Generally Comprehensive and Progressive Agreement for Trans-Pacific Partnership European Union-Vietnam Free Trade Agreement Equitisation and Sales of State Assets/CMSC Financial Sector Consolidation Real Estate Acquisitions Energy New Laws New Competition Law New Laws in the Pipeline Law on Amendment to the Securities Law Law on PPP Law on Amendment to the Enterprise Law and the Investment Law 10
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