Tag: m&a

1. Welche einschlägigen Vorschriften und Gesetze sind für M&A zentral und welche sind die wichtigsten Regulierungsbehörden?

2. Wie ist die aktuelle Marktsituation?

Vietnam ist nach wie vor ein attraktives Ziel für ausländische Investoren: Im Jahr 2021 belief sich der registrierte Gesamtbetrag der ausländischen Direktinvestitionen (FDI) auf 31,15 Milliarden USD, was einem Anstieg von 9,2% gegenüber dem Jahr 2020 entspricht. Dieser Anstieg erfolgte trotz mehrerer Wellen verschiedener Covid-19 Varianten. Die Investitionen in Form von Kapitalerhöhungen sind im Vergleich zu 2020 drastisch um 40,5% gestiegen, was die anhaltende Zufriedenheit der derzeitigen ausländischen Investoren, die in Vietnam geschäftlich tätig sind, nahelegt. Kapitalbeiträge ausländischer Investoren an inländische Unternehmen erfolgten primär in den Bereichen der Verarbeitungstechnik und Fertigung (18 Milliarden USD), zudem im Wasser- und Energiesektor (5,7 Milliarden USD), Immobiliensektor (2,6 Milliarden USD) sowie im Einzel- und Großhandel (1,4 Milliarden USD). Die größten Investoren kommen nach wie vor aus Japan, Korea, Singapur und China.
Die wichtigsten Treiber des vietnamesischen M&A- Marktes sind:
• Die Privatisierung von staatseigenen Betrieben (SOE). Gemäß des Regierungsbeschlusses Nr. 01/NQ-CP aus 2021 war es eine der Hauptaufgaben in diesem Jahr, die Umstrukturierung, Equitisation und Desinvestition von Staatsunternehmen weiter anzutreiben. Zudem strebt die Regierung die Veröffentlichung von verselbstständigten Unternehmen an, die dafür in Frage kommen, aber weder börsennotiert noch für den Handel an der Börse registriert sind.
• Die Handelsliberalisierung unter anderem infolge des Transpazifischen Freihandelsabkommen (CPTPP) und des Freihandelsabkommens zwischen der EU und Vietnam.
• Die Resolution Nr. 42 über das Pilotprogramm zur Behandlung von Forderungsausfällen von Kreditinstituten ist zudem die Hauptantriebskraft für M&A im Immobiliensektor, da Forderungsausfälle in diesem Bereich einen hohen Prozentsatz der gesamten Forderungsausfälle auf dem vietnamesischen Markt ausmachen.
Bedeutende Geschäfte:
• Am 28. Oktober 2021 kaufte die Sumimoto Mitsui Group (Japan) 49% der Anteile an FE Credit, einer Tochtergesellschaft der VPBank.
• Im Juni 2021 investierten Alibaba und Baring Private Equity Asia 400 Millionen USD in The CrownX und erwarben dadurch 5,5% der Anteile.
• Am 9. Oktober 2021 erwarb die Thaco Group (Vietnam) 100% der Anteile an der vietnamesischen Supermarktkette Emart von der Emart Gruppe (Korea).

3. Welche Marktbereiche waren in letzter Zeit besonders aktiv?

4. Welche sind, Ihrer Meinung nach, die drei wichtigsten Faktoren, welch die M&A- Aktivitäten in den kommenden zwei Jahren beeinflussen werden?

Die stärkere und umfassendere Integration des Landes in die Weltwirtschaft bietet neue Möglichkeiten für M&A- Vorgänge.
Ein weiterer Faktor ist der hohe Druck, dem die Regierung ausgesetzt ist, staatliche Unternehmen zu privatisieren, um die Anforderungen der unterzeichneten Handelsabkommen zu erfüllen, insbesondere des Freihandelsabkommens zwischen der EU und Vietnam, das am 1. August 2020 in Kraft getreten ist.
Zu den vielversprechenden Anzeichen für ausländische Investitionen zählen:
• Reformierte politische Maßnahmen, um ausländischen Investoren einen breiteren Zugang zu ermöglichen.
• die ASEAN- Wirtschaftsgemeinschaft als einheitlicher Markt und Produktionsbasis.
• der Abschluss von Freihandelsabkommen, einschließlich des Freihandelsabkommens zwischen der EU und Vietnam und des Transpazifischen Freihandelsabkommens (CPTPP).
• Vietnams Bevölkerungsgruppe der Superreichen wächst schneller als anderswo und ist auf dem besten Weg, auch im nächsten Jahrzehnt das Wachstum anzuführen.
• Die Equitisation von Staatsunternehmen wird sich beschleunigen.
Das Investitionsgesetz, das Unternehmensgesetz, die Resolution Nr. 42 über die Behandlung von Forderungsausfällen sowie andere Gesetze und Maßnahmen haben ein transparentes rechtliches Umfeld für Investitionen und den Handel im Allgemeinen sowie den M&A- Markt im Besonderen geschaffen. Allerdings haben die folgenden Faktoren ebenfalls Auswirkungen auf M&A- Transaktionen:
• Divergierende Auslegungen und Umsetzungen von internationalen Verträgen durch lokale Genehmigungsbehörden, wie beispielsweise Vietnams WTO- Verpflichtungen.

• Unterschiedliche Genehmigungsverfahren für verschiedene Arten von Transaktionen (beispielsweise für Unternehmen mit ausländischem Investitionskapital und inländischen Unternehmen, öffentliche Unternehmen und private Unternehmen sowie für den Erwerb von staatlichen oder privaten Anteilen).
Obwohl rechtliche und ordnungspolitische Hindernisse zusammen mit makroökonomischer Instabilität und der mangelnden Markttransparenz immer noch die größten Bedenken der Investoren darstellen, wird davon ausgegangen, dass M&A- Vorgänge immer noch eine der wichtigsten und effektivsten Kanäle für den Markteintritt sind.
Zu den wesentlichen erwarteten Trends auf dem vietnamesischen M&A- Markt gehören:
• Bankenumstrukturierungen.
• Akquisitionen und Anti-Akquisitionen, insbesondere im Immobiliensektor.
• Steigende koreanische, japanische und thailändische Investitionen in Vietnam durch M&A- Transaktionen.
• Reform der staatseigenen Unternehmen (SoEs).

5. Wie kann der Erwerb eines börsennotierten Unternehmens bewirkt werden?

6. Welche Informationen über ein Zielunternehmen werden öffentlich zugänglich und in welchem Umfang ist ein Zielunternehmen verpflichtet, einem potenziellen Erwerber prüfungsrelevante Informationen offen zu legen?

Es gibt keine rechtliche Verpflichtung des Bieters, Informationen über das Angebot bis zu dem Zeitpunkt der Angebotsabgabe geheim zu halten. Allerdings kann eine Vertragsverletzung vorliegen, wenn sich die Parteien schriftlich zur Verschwiegenheit verpflichtet haben. Die Offenlegung von Informationen vor der Finalisierung des Angebots kann zu Folgendem führen:
• Einer Erhöhung des Aktienkurses des Zielunternehmens.
• Schwierigkeiten bei der Aushandlung der Bedingungen der Transaktion.
• Wettbewerb auf dem Markt.

7. Wie detailliert wird die Due- Diligence- Prüfung üblicherweise durchgeführt?

Vor der offiziellen Kontaktaufnahme mit dem potenziellen Zielunternehmen führt der Bieter eine vorläufige Bewertung auf der Grundlage öffentlich zugänglicher Informationen durch. Der Bieter nimmt in weiterer Folge Kontakt mit dem Zielunternehmen auf, äußert seine Absicht, Aktien zu kaufen bzw. Aktien zu zeichnen. Die Parteien unterzeichnen vor der Due-Diligence-Prüfung eine Vertraulichkeitsvereinbarung. Die Vereinbarung enthält im Wesentlichen Geheimhaltungsverpflichtungen bei der Durchführung der Transaktion. Die Durchsetzung von Vertraulichkeitsvereinbarungen durch Gerichte in Vietnam ist noch nicht erprobt.
Die rechtliche Due- Diligence- Prüfung eines Bieters umfasst in der Regel die folgenden Punkte:
• Geschäftsdaten des Zielunternehmens und seiner Tochterunternehmen, verbundenen Unternehmen und anderen Unternehmen, die Teil des Zielunternehmens sind.
• Eventualverbindlichkeiten (aus vergangenen oder anhängigen Rechtsstreitigkeiten).
• Beschäftigungsangelegenheiten
• Vertragliche Vereinbarungen des Zielunternehmens.
• Gesetzliche Zulassungen und Genehmigungen für die Geschäftstätigkeiten.
• Versicherungen, Steuern, geistiges Eigentum, Schulden und landbezogene Themen.
• Kartell-, Korruptions- und andere regulatorische Fragen.

8. Welche sind die wichtigsten Entscheidungsorgane einer Zielgesellschaft und welche Zustimmungsrechte haben die Aktionäre?

Für die Abgabe eines Übernahmeangebots ist die Zustimmung der Generalversammlung der Aktionäre erforderlich, wenn der Erwerb darin besteht, dass ein bestehender Aktionär seine Aktien überträgt und in Folge 25% oder mehr der stimmberechtigten Aktien einer Aktiengesellschaft hält. Diese Genehmigung ist auch erforderlich, wenn der Gründungsaktionär einer Aktiengesellschaft seine Beteiligungen innerhalb von drei Jahren nach Ausstellung der Unternehmensregistrierungsbescheinigung überträgt. Die Genehmigung umfasst in der Regel:
• die Anzahl der angebotenen Aktien.
• den Preis des Angebots
• die Bedingungen des Angebots.
Es gibt keine gesetzliche Vorgabe, die einer Zielgesellschaft verbietet, vor Abschluss der Transaktion andere Angebote einzuholen oder solche zu empfehlen. In der Praxis können Parteien jedoch derartige Beschränkungen vereinbaren.

9. Welche Pflichten treffen die Vorstände und beherrschenden Aktionäre einer Zielgesellschaft:

Die Aktionäre einer Aktiengesellschaft sollen:
a) das Recht auf Gleichbehandlung haben;
b) den gesetzlich vorgeschriebenen Zugang zu den von der Gesellschaft in periodischen Abständen und unregelmäßig veröffentlichten Informationen bekommen;
c) in ihren Rechten und Interessen geschützt werden; das Recht haben, die Aussetzung oder Aufhebung eines Beschlusses oder einer Entscheidung der Generalversammlung oder des Vorstandes zu verlangen, in Übereinstimmung mit dem Unternehmensgesetz;
d) nicht die Stellung des Großaktionärs ausnutzen, um die Rechte und Interessen der Gesellschaft und anderer Aktionäre, wie durch das Gesetz und die Satzung vorgeschrieben, zu beeinflussen; Informationen offenlegen, wie gesetzlich vorgeschrieben;
e) nur jene Rechte und Pflichten haben, die gesetzlich und in der Satzung vorgeschrieben sind.

10. Haben Arbeitnehmer bzw. Aktionäre besondere Zustimmungs-, Konsultations- oder sonstige Rechte?

Nach vietnamesischem Recht ist es nicht vorgeschrieben, dass die Arbeitnehmer zu dem Angebot konsultiert werden müssen. Wenn jedoch Arbeitnehmer entlassen werden sollen, muss der Arbeitgeber:
• einen Arbeitseinsatzplan erstellen.
• sich mit der Arbeitnehmervertretung beraten.
• die zuständige Arbeitsbehörde über die Umsetzung des Arbeitseinsatzplans unterrichten.

11. Inwieweit ist die Bedingtheit von Übernahmen ein akzeptiertes Marktmerkmal?

12. Welche Maßnahmen kann ein Erwerber eines Zielunternehmens ergreifen, um sich die Exklusivität eines Geschäfts zu sichern?

Der Erwerber kann eine Exklusivitätsvereinbarung, ein Terms Sheet, Letter of Intent oder Memorandum of Understanding abschließen, die eine rechtlich verbindliche Exklusivitätsklausel enthalten. Überdies kann der Erwerber auch auf Mechanismen zur Absicherung von Deals zurückgreifen, wie beispielsweise:
• No- Shop- Klausel: ist in einer Vereinbarung zwischen dem Verkäufer und dem Käufer enthalten, die letzteren daran hindert, Kaufangebote von Dritten innerhalb eines bestimmten Zeitraums nach Unterzeichnung des Letter of Intent einzuholen
• Kündigungs- oder Auflösungsgebühren: Wenn der Verkäufer ein Angebot von einem Dritten annimmt, muss er dem ursprünglichen Käufer eine Gebühr in Höhe der Auflösungsgebühr zahlen.
• Lock- ups: Der Verkäufer erhält Teile der Aktien oder wichtige Vermögenswerte des Zielunternehmens.
• Aktienoptionen: erlauben dem Käufer, eine bestimmte Anzahl von Aktien der Zielgesellschaft zu erwerben, wenn ein bestimmtes, im Voraus vereinbartes, Ereignis eintritt

13. Welche anderen Mechanismen zur Absicherung von Geschäften und zur Kostendeckung werden von Erwerbern am häufigsten eingesetzt?

14. Welche Arten der Gegenleistung werden bei einer Übernahme üblicherweise angeboten?

Nach vietnamesischem Recht können Anteile durch das Angebot von Bargeld, Gold, Landnutzungsrechten, geistigen Eigentumsrechten, Technologie, technischem Know-how oder anderen Vermögenswerte erworben werden. In der Praxis werden Übernahmen am häufigsten gegen Bargeld getätigt.

15. Ab welcher Beteiligung ist eine Offenlegung erforderlich (gleichgültig, ob ein Unternehmen als Ganzes oder eine Minderheitsbeteiligung erworben wird)?

16. In welchem Stadium der Verhandlung ist eine öffentliche Bekanntmachung erforderlich oder gebräuchlich?

Der Bieter muss das Übernahmeangebot innerhalb von sieben Tagen nach Erhalt der Stellungnahme der staatlichen Wertpapierkommission zu der Registrierung des Angebots öffentlich bekanntgeben.

17. Gibt es einen maximalen Zeitraum für Verhandlungen oder die Due-Diligence-Prüfung?

18. Kann ein Mindestpreis für die Anteile an einer Zielgesellschaft festgelegt sein?

Nach vietnamesischem Recht bestehen keine allgemeinen Vorschriften, die einen bestimmten Mindestpreis für Anteile an einer Zielgesellschaft vorschreiben.

19. Ist es möglich, dass Zielunternehmen finanzielle Unterstützung gewähren?

20. Welches Recht kommt bei Übernahmen üblicherweise zur Anwendung?

Käufer und Verkäufer können frei entscheiden, welches Recht auf die Transaktionsvereinbarungen anzuwenden ist. Dennoch kommt bei Geschäften, die eine vietnamesische Zielgesellschaft betreffen, üblicherweise vietnamesische Recht zur Anwendung.

21. Welche öffentliche Dokumentation muss ein Käufer im Zusammenhang mit dem Erwerb eines einer börsennotierten Unternehmens vorlegen?

22. Welche Formalitäten müssen eingehalten werden, um eine Übertragung von Aktien zu dokumentieren, einschließlich etwaiger örtlicher Übertragungssteuern oder Abgaben?

Je nachdem, ob es sich bei dem Verkauf um eine natürliche oder eine juristische Person handelt, fallen die folgenden Steuern an:
• Kapitalertragssteuer. Die Kapitalertragssteuer ist eine Form der Einkommenssteuer, die auf jedes Agio auf die Kapitaleinlage des ursprünglichen Investors oder seine Kosten für den Erwerb dieses Kapitals zu zahlen ist. Ausländische Gesellschaften und örtliche Körperschaften unterliegen einer Körperschaftssteuer von 20%. Handelt es sich bei den übertragenen Vermögenswerten jedoch um Wertpapiere, so unterliegt ein ausländischer Verkäufer einer Körperschaftssteuer von 0,1% auf den Bruttotransferpreis.
• Persönliche Einkommenssteuer. Handelt es sich bei dem Verkäufer um eine natürliche Person, wird eine Einkommenssteuer in Höhe von 20% des erzielten Gewinns erhoben. Die Steuer beträgt 0,1% auf den Verkaufspreis, wenn es sich bei den übertragenen Vermögenswerten um Wertpapiere handelt. Eine steuerlich ansässige Person wird definiert als eine Person, die:

o sich innerhalb eines Kalenderjahres 183 Tage oder länger in Vietnam aufhält;
o sich während eines Zeitraums von 12 aufeinanderfolgenden Monaten nach ihrer Ankunft in Vietnam aufhält;
o einen eingetragenen ständigen Wohnsitz in Vietnam hat; oder
o ein Haus in Vietnam im Rahmen eines Mietvertrages mit einer Laufzeit von mindestens 90 Tagen in einem Steuerjahr mietet.
Ist der Verkäufer eine natürliche Person, die nicht in Vietnam ansässig ist, unterliegt er einer persönlichen Einkommenssteuer von 0,1% auf den Bruttotransferpreis, unabhängig davon, ob ein Kapitalgewinn erzielt wird.
Die Zahlung der oben genannten Transfersteuern ist in Vietnam verpflichtend.

23. Sind feindliche Übernahmen häufig?

Feindliche Übernahmeangebote sind nach vietnamesischem Recht weder definiert noch reguliert. Es gibt auch kein ausdrückliches Verbot für diese Art von Transaktionen. Empfohlene Angebote übertreffen zahlenmäßig oft die feindlichen Angebote, da nur begrenzt Informationen öffentlich über Zielunternehmen zugänglich sind, und aufgrund der mangelnden Bereitschaft, Informationen offenzulegen.
Dennoch hat die Zahl der feindlichen Angebote in Vietnam seit 2011 zugenommen, zum Beispiel:
• Die in Singapur ansässige Platinum Victory Ptl Ltd wurde der größte Aktionär der Refrigeration Electrical Engineering Corp (REE) und erwarb einen Anteil von 10,2% an der Gesellschaft.
• Das chilenische CFR International Spa erwarb einen Anteil von 46% an der Gesundheitsausrüstungsgesellschaft Domesco Medical Import-Export Co (DMC), was den ersten Auslandsdeal im Pharmasektor darstellte.
In den Jahren 2010 und 2011 gab es zwei Akquisitionen in Vietnam:
• Die Übernahme der Ha Tay Pharmacy im Jahr 2010.
• Die Übernahme der Baugesellschaft Descon im Jahr 2011. Binh Thien An Company erwarb eine 35- prozentige Beteiligung an Descon, übernahm die Gesellschaft offiziell und nahm erhebliche Veränderungen in der Geschäftsführung vor.
Der Regierungserlass Nr. 155/2020/ND-CP hob die Obergrenze für ausländische Beteiligungen an Aktiengesellschaften mit einigen Ausnahmen auf (zuvor galt eine Obergrenze von 49%). Die Regeln für ausländische Beteiligungen an Aktiengesellschaften lassen sich grundsätzlich in fünf Gruppen einteilen:
• Falls das vietnamesische Recht, einschließlich internationaler Übereinkommen, eine bestimmte Obergrenze für den Anteilsbesitz vorsieht, darf der maximale ausländische Anteilsbesitz (MFO) eine solche Obergrenze nicht überschreiten (1. Gruppe).
• Falls das vietnamesische Recht eine Geschäftstätigkeit als durch Auslandsinvestitionen bedingt betrachtet (entsprechend der Liste der bedingten Sektoren gemäß dem Investitionsgesetz), aber kein Limit des Anteilsbesitzes vorsieht, darf der maximale ausländische Anteilsbesitz (MFO) 50% nicht überschreiten (2. Gruppe).
• In den Fällen, die nicht unter die 1. Oder 2. Gruppe fallen, kann der ausländische Anteilsbesitz (MFO) bis zu 100% ausmachen (3. Gruppe).
• Falls eine Aktiengesellschaft in mehreren Bereichen tätig ist, für die unterschiedliche Bestimmungen gelten, darf die ausländische Beteiligung den niedrigsten Wert in den jeweiligen Branchen und Wirtschaftszweigen mit festgelegten ausländischen Beteiligungsquoten, nicht überschreiten (4. Gruppe).
• Entscheidet sich ein Aktiengesellschaft für eine maximale Auslandsbeteiligungsquote, die unter der oben angegebenen Quote liegt, muss die spezifische Quote von der Generalversammlung der Aktionäre genehmigt und in die Satzung der Gesellschaft aufgenommen werden.
Die Aufhebung der Obergrenze für ausländische Beteiligungen kann zu mehr feindlichen Übernahmen in Vietnam führen.

24. Welchen Schutz genießen die Geschäftsführer eines Zielunternehmens gegen eine feindliche Übernahme?

25. Unter welchen Umständen muss ein Käufer dem Zielunternehmen ein Pflichtangebot unterbreiten?

Ein Übernahmeangebot ist in folgenden Fällen erforderlich:
• Erwerb von im Umlauf befindlichen Aktien einer Gesellschaft mit dem Ergebnis, dass ein Käufer, der keine oder weniger als 25% der Aktien hält, einen Anteil von 25% erwirbt.
• Erwerb von im Umlauf befindlichen Aktien einer Gesellschaft mit dem Ergebnis, dass ein Erwerber (und mit ihm verbundene Personen) mit einer Beteiligung von mindestens 25% weitere mindestens 10% der im Umlauf befindlichen Aktien der Gesellschaft erwirbt.
• Erwerb von im Umlauf befindlichen Aktien einer Gesellschaft, der dazu führt, dass ein Erwerber (und mit ihm verbundene Personen) mit einer Beteiligung von mindestens 25% innerhalb von weniger als einem Jahr nach dem Abschluss des vorherigen Angebots weitere 5% bis 10% der derzeit im Umlauf befindlichen Aktien der Gesellschaft erwirbt.

26. Welche Rechte haben Minderheitsaktionäre, wenn ein Erwerber nicht die vollständige Kontrolle über ein Zielunternehmen erlangt?

27. Gibt es ein Verfahren zum zwangsweisen Erwerb von Minderheitsbeteiligungen?

Erwirbt der Bieter 80% oder mehr der Anteile eines börsennotierten Unternehmens, muss er die verbleibenden Aktien der gleichen Art von anderen Aktionären kaufen (wenn diese dies wünschen). Es gibt jedoch keine „Squeeze-out“- Rechte, die die verbleibenden Aktionäre zwingen können, ihre Aktien zu verkaufen.

1. What are the key rules/laws relevant to M&A and who are the key regulatory authorities?
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. 61/2020/QH14 and Enterprise Law No. 59/2020/QH14 issued by the National Assembly on 17 June 2020, and their guiding documents, namely Decree No. 01/2021/ND-CP and Decree No. 01/2021/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. 54/2019/QH14 issued by the National Assembly on 26 November 2019, and its implementing documents, in particular Decree No. 155/2020/ND-CP issued by the Government on 31 December 2020. This Law regulates the acquisition of shares in public and private companies 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.

2. What is the current state of the market?
Vietnam has remained an attractive destination for foreign investors: In 2021, the total registered FDI capital to Vietnam was USD31,15 billion, an increase of 9,2% compared to 2020 despite continuous waves of different Covid-19 variants. Investment in the form of capital increasement is increased dramatically by 40,5% compared to 2020, suggesting the continuing satisfaction of current foreign investors who have been doing business in Vietnam. Foreign investors contributed capital to domestic enterprises mainly in the field of processing technology and manufacturing (USD 18,q billion) as well as water and energy sector (USD 5,7 billion), real estate (USD 2,6 billion), retail and wholesale (USD 1,4 billion). Main investors still come from Japan, Korea, Singapore, and China.
The main drivers of Vietnam’s M&A market are:
• Privatization of state-owned enterprises (SOE). According to Resolution No. 01/NQ-CP issued by the Government in 2021, one of the key tasks in 2021 was to continue strengthening the restructuring, equitisation and divestment of SOEs. The government also aims to publicize equitized enterprises that are eligible but are not listed nor registered for trading on the stock market.
• Trade liberalization 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:
• On 28 October 2021, Sumimoto Mitsui group (Japan) bought 49% shares in FE Credit, a subsidiary of VPBank.
• In June 2021, Alibaba and Baring Private Equity Asia invested USD400 millions into The CrownX, acquiring 5,5% stake.
• On 9 October 2021, Thaco Group (Vietnam) acquired 100% stake in Emart supermarket chain in Vietnam of Emart Group (Korea)

3. Which market sectors have been particularly active recently?
• Processing technology and manufacturing
• Renewable energy
• Water and waste treatment
• Pharmaceuticals
• Consumer retails
• Real estate

4. What do you believe will be the three most significant factors influencing M&A activity over the next 2 years?
The country’s deeper and wider integration into the world’s economy is offering new opportunities for M&A activities.
Another factor includes the high pressure faced by the government to privatise state-owned enterprises to meet requirements under signed trade pacts, especially the EU – Vietnam Free Trade Agreement, which came into force on 1 August 2020.
Encouraging signs for foreign investment include:
• Reformed policies to allow wider access to foreign investors.
• ASEAN Economic Community single market and production base.
• The conclusion of free trade agreements (FTAs), including the EU – Vietnam FTA and The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
• Vietnam’s super rich population is growing faster than anywhere else and is on track to continue leading the growth in the next decade.
• Equitization of state-owned enterprises will speed up.
Investment Law, Enterprise Law, Resolution No. 42 on handling bad debts and other laws and policies have created a transparent legal environment for investment and trade in general, and the M&A market in particular. However, the following factors also affect M&A transactions:
• Divergent interpretations and implementations by local licensing authorities of international treaties such as Vietnam’s WTO Commitments.
• Different licensing procedures applied to different types of transactions (for example, for foreign invested companies and domestic companies, public companies and private companies, and for buying state-owned shares or private shares).
Although legal and governance barriers, along with macro instability and the lack of market transparency are still the greatest concerns for investors, M&A deals in Vietnam are still expected to be one of the key, effective channels for market entry.
The major expected trends in the Vietnam M&A market include:
• Bank restructurings.
• Acquisitions and anti-acquisitions, particularly in the real estate sector.
• Growing Korean, Japanese and Thai investment in Vietnam through M&A transactions.
• Reform of SoEs.

5. What are the key means of effecting the acquisition of a publicly traded company?
In Vietnam, the term public company refers to a joint stock company that meets one of the following conditions:
a) The company has a contributed charter capital of at least VND 30 billion and at least 10% of the voting shares are being held by at least 100 non-major shareholders; or
b) The company has successfully made its IPO by registration with SSC.

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 2020 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).

6. What information relating to a target company will be publicly available and to what extent is a target company obliged to disclose diligence related information to a potential acquirer?
There is no legal requirement that a bidder must keep information about the bid a 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. 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.
7. To what level of detail is due diligence customarily undertaken?
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.

8. What are the key decision-making organs of a target company and what approval rights do shareholders have?
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. 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.

9. What are the duties of the directors and controlling shareholders of a target company?
Shareholders of a public company shall:
a) Have the right to equal treatment;
b) Have accessibility to information periodically and irregularly published by the company as prescribed by law;
c) Have their the lawful rights and interests protected; have the right to request suspension or cancellation of a Resolution or decision of the General Meeting of Shareholders or Board of Directors as prescribed by the Law on Enterprises;
d) Not take advantage of the major shareholder’s status to influence rights and interests of the company and other shareholders as prescribed by law and the company’s charter; disclose information as prescribed by law;
dd) Have other rights and obligations prescribed by law and the company’s charter.

10. Do employees/other stakeholders have any specific approval, consultation or other rights?
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.

11. To what degree is conditionality an accepted market feature on acquisitions?
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.

12. What steps can an acquirer of a target company take to secure deal exclusivity?
The acquirer can enter into an exclusivity agreement, terms sheet or letter of intent or MOU that includes a legally binding exclusivity clause. The acquirer can also make use of deal protection mechanisms such as:
• No Shop Provision: included in an agreement between the seller and the buyer that prevents the latter from seeking purchase proposals from third parties in a time frame after the signing of the Letter of Intent
• Termination or Breakup Fees: if the seller accepts a bid from a third party, then they will have to pay the original buyer a fee equivalent to the breakup fee
• Lock-ups: seller is given part-ownership of stock or important assets in the target company
• Stock options: allow the buyer to purchase a number of shares in the target company if a particular pre-agreed event occurs

13. What other deal protection and costs coverage mechanisms are most frequently used by acquirers?
Besides the aforementioned, a deal protection mechanism an acquirer can make use of is matching or topping rights where the seller has to notify the bidder of any third party proposal, and the seller is entitled to match or better such a proposal.
Cost coverage mechanisms include:
• Locked Box mechanism: where the seller and buyer agree on a net purchase price upfront in the Sales Purchase Agreement and this price remains effective until the financial closing/completion date of the transaction – recommended for fast-growing target companies
• Completion Account mechanism: base purchase price, plus cash, less debt, plus excess or less shortfall in working capital

14. Which forms of consideration are most commonly used?
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.

15. At what ownership levels by an acquiror is public disclosure required (whether acquiring a target company as a whole or a minority stake)?
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 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
• 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.

16. At what stage of negotiation is public disclosure required or customary?
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

17. Is there any maximum time period for negotiations or due diligence?
There are no limitations (maximum or minimum) under Vietnam law on the time period in which the parties are required to conduct negotiations and/or due diligence.

18. Are there any circumstances where a minimum price may be set for the shares in a target company?
There are no general requirements under Vietnam law that set certain minimum price for shares in a target company.

19. Is it possible for target companies to provide financial assistance?
There is no general prohibition under Vietnam law on target companies providing financial assistance to acquirers. However, such provision of financial assistance to acquirers may result in breach of fiduciary duties of directors of the target company. In this regard, the directors of the target company should be mindful of their duties to the target company because, providing financial assistance to an acquirer may be considered to be harming the target company while benefiting the majority shareholders of the target company or the acquirer, depending on the nature of such assistance.

20. Which governing law is customarily used on acquisitions?
Buyer and sellers are free to decide on the governing law of the transaction agreements. Nevertheless, in deals that involve a Vietnamese target company, the governing law is customarily Vietnam laws.

21. What public-facing documentation must a buyer produce in connection with the acquisition of a listed company?
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 result 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.

22. What formalities are required in order to document a transfer of shares, including any local transfer taxes or duties?
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.

23. Are hostile acquisitions a common feature?
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. 155/2020/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 five 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 50% (group 2).
• In cases that do not fall within group 1 and group 2, MFO can be up to 100% (group 3).
• In case a public company operates in multiple industries and trades with different regulations on the foreign ownership rate, the foreign ownership rate must not exceed the lowest level in the industries and trades with determined foreign ownership rates (group 4).
• Where a public company decides on the maximum foreign ownership ratio lower than the rate specified above, the specific rate must be approved by the General Meeting of Shareholders and included in the company’s charter.
This lift of the foreign equity cap can introduce more hostile bids in Vietnam.

24. What protections do directors of a target company have against a hostile approach?
There are no provisions regulating hostile bids under Vietnamese law.

25. Are there circumstances where a buyer may have to make a mandatory or compulsory offer for a target company?
A tender offer is required in the following cases:
• Purchase of a company’s circulating shares that result 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.

26. If an acquirer does not obtain full control of a target company, what rights do minority shareholders enjoy?
Minority shareholders continue to enjoy full rights as shareholders, such as voting rights and rights to receive distributions of dividends. However, as shareholders may only participate in the management of a company indirectly through a shareholders’ resolution, minority shareholders have limited right to affect the management of the company.
Under Enterprise Law 2020, a shareholder or group of shareholders that holds at least 5% of the ordinary shares (or a smaller ratio specified in the company’s charter) shall have the rights to:
a) Access, extract the minutes of meetings, resolutions and decisions of the Board of Directors, mid-year and annual financial statements, reports of the Board of Controllers, contracts and transactions subject to approval by the Board of Directors and other documents except those that involve the company’s business secrets;
b) Demand that a GMS be convened in case
• the Board of Directors seriously violates the shareholders’ rights, obligations of executives or issues decisions ultra vires;
• other cases prescribed by the company’s charter.

c) Request the Board of Controllers to investigate into specific matters relevant to the company’s administration where necessary

27. Is a mechanism available to compulsorily acquire minority stakes?
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.

If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the general director of Duane Morris Vietnam LLC.

1. What are the key rules/laws relevant to M&A and who are the key regulatory authorities?
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. 61/2020/QH14 and Enterprise Law No. 59/2020/QH14 issued by the National Assembly on 17 June 2020, and their guiding documents, namely Decree No. 01/2021/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. 54/2019/QH14 issued by the National Assembly on 26 November 2019, and its implementing documents, in particular Decree No. 155/2020/ND-CP issued by the Government on 31 December 2020. This Law regulates the acquisition of shares in public and private companies 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.

2. What is the current state of the market?
Vietnam has remained an attractive destination for foreign investors: In 2020, the total FDI capital to Vietnam was USD28,53 billion. Investment in the form of capital increasement is the only increasing proportion of the total FDI that grew by 10,6%. Foreign investors contributed capital to domestic enterprises mainly in the field of processing technology and manufacturing (USD 13,6 billion) as well as water and energy sector (USD 5,1 billion).
Main investors still come from Japan, Korea, Singapore, and China. The retail, consumer goods, and real estate 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:
· Privatization of state-owned enterprises (SOE). According to Resolution No. 01/NQ-CP issued by the Government in 2021, one of the key tasks in 2021 was to continue strengthening the restructuring, equitisation and divestment of SOEs. The government also aims to publicize equitized enterprises that are eligible but are not listed nor registered for trading on the stock market.
· Trade liberalization 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:
· In the middle of June 2020, according to VinGroup, a group of investors led by KKR, including Temasek, spent VND 15,100 billion VND (USD 650 million) to buy more than 200 million shares of VHM, equivalent to 6 % shares of VinHomes (a subsidiary of VinGroup).
· On 9 April 2020, FWD Group announced its acquisition of Vietcombank Cardif Life Insurance Company (VCLI), a joint venture between Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and BNP Paribas Cardif.
· At the end of June 2020, after approval by the State Bank, Orient Commercial Joint Stock Bank (OCB) successfully issued 86.68 million shares to Aozora Bank from Japan, through which Aozora officially became to become a foreign shareholder owning 15% of the capital. The estimated value is more than VND 3,100 billion.
OCB also officially increased its charter capital from VND 8,767 billion to VND 10,959 billion in October 2020.
· 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
· Bao Viet Group has completed the private issuance of more than 41 million shares, approximately 6% capital, for Sumitomo Life Insurance Company (Sumitomo Life), a strategic shareholder from Japan.
· In early April 2020, Stark Corporation (Thailand) bought 100% of the shares (USD 240 billion) of Thinh Phat Electrical Cable Joint Stock Company (Thipha Cables) and JSC Non-ferrous Metal and Copper Plastic JSC. Vietnam (Dovina).
· 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.

3. Which market sectors have been particularly active recently?
· Processing technology and manufacturing
· Renewable energy
· Water and waste treatment
· Pharmaceuticals
· Consumer retails

4. What do you believe will be the three most significant factors influencing M&A activity over the next 2 years?
The country’s deeper and wider integration into the world’s economy is offering new opportunities for M&A activities.
Another factor includes the high pressure faced by the government to privatise state-owned enterprises to meet requirements under signed trade pacts, especially the EU – Vietnam Free Trade Agreement, which came into force on 1 August 2020.
Encouraging signs for foreign investment include:
· Reformed policies to allow wider access to foreign investors.
· ASEAN Economic Community single market and production base.
· The conclusion of free trade agreements (FTAs), including the EU – Vietnam FTA and The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
· Vietnam’s super rich population is growing faster than anywhere else and is on track to continue leading the growth in the next decade.
· Equitization of state-owned enterprises will speed up.
The introduction of the new Investment Law, Enterprise Law, Resolution No. 42 on handling bad debts and other laws and policies are creating an improved legal environment for investment and trade in general, and the M&A market in particular. However, the following factors also affect M&A transactions:
· Divergent interpretations and implementations by local licensing authorities of international treaties such as Vietnam’s WTO Commitments.
· Different licensing procedures applied to different types of transactions (for example, for foreign invested companies and domestic companies, public companies and private companies, and for buying state-owned shares or private shares).
Although legal and governance barriers, along with macro instability and the lack of market transparency are still the greatest concerns for investors, M&A deals in Vietnam are still expected to be one of the key, effective channels for market entry.
The major expected trends in the Vietnam M&A market include:
· Bank restructurings.
· Acquisitions and anti-acquisitions, particularly in the real estate sector.
· Growing Korean, Japanese and Thai investment in Vietnam through M&A transactions.
· Reform of SoEs.

5. What are the key means of effecting the acquisition of a publicly traded company?
In Vietnam, the term public company refers to a joint stock company that meets one of the following conditions:
a) The company has a contributed charter capital of at least 30 billion VND and at least 10% of the voting shares are being held by at least 100 non-major shareholders; or
b) The company has successfully made its IPO by registration with SSC.
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 2020 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).

6. What information relating to a target company will be publicly available and to what extent is a target company obliged to disclose diligence related information to a potential acquirer?
There is no legal requirement that a bidder must keep information about the bid a 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. 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.

7. To what level of detail is due diligence customarily undertaken?
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.

8. What are the key decision-making organs of a target company and what approval rights do shareholders have?
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. 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.

9. What are the duties of the directors and controlling shareholders of a target company?
Shareholders of a public company shall:
a) Have the right to equal treatment;
b) Have accessibility to information periodically and irregularly published by the company as prescribed by law;
c) Have their the lawful rights and interests protected; have the right to request suspension or cancellation of a Resolution or decision of the General Meeting of Shareholders or Board of Directors as prescribed by the Law on Enterprises;
d) Not take advantage of the major shareholder’s status to influence rights and interests of the company and other shareholders as prescribed by law and the company’s charter; disclose information as prescribed by law;
dd) Have other rights and obligations prescribed by law and the company’s charter.

10. Do employees/other stakeholders have any specific approval, consultation or other rights?
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.

11. To what degree is conditionality an accepted market feature on acquisitions?
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.

12. What steps can an acquirer of a target company take to secure deal exclusivity?
The acquirer can enter into an exclusivity agreement, terms sheet or letter of intent or MOU that includes a legally binding exclusivity clause. The acquirer can also make use of deal protection mechanisms such as:
· No Shop Provision: included in an agreement between the seller and the buyer that prevents the latter from seeking purchase proposals from third parties in a time frame after the signing of the Letter of Intent
· Termination or Breakup Fees: if the seller accepts a bid from a third party, then they will have to pay the original buyer a fee equivalent to the breakup fee
· Lock-ups: seller is given part-ownership of stock or important assets in the target company
· Stock options: allow the buyer to purchase a number of shares in the target company if a particular pre-agreed event occurs

13. What other deal protection and costs coverage mechanisms are most frequently used by acquirers?
Besides the aforementioned, a deal protection mechanism an acquirer can make use of is matching or topping rights where the seller has to notify the bidder of any third party proposal, and the seller is entitled to match or better such a proposal.
Cost coverage mechanisms include:
· Locked Box mechanism: where the seller and buyer agree on a net purchase price upfront in the Sales Purchase Agreement and this price remains effective until the financial closing/completion date of the transaction – recommended for fast-growing target companies
· Completion Account mechanism: base purchase price, plus cash, less debt, plus excess or less shortfall in working capital

14. Which forms of consideration are most commonly used?
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.

15. At what ownership levels by an acquiror is public disclosure required (whether acquiring a target company as a whole or a minority stake)?
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 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
· 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.

16. At what stage of negotiation is public disclosure required or customary?
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

17. Is there any maximum time period for negotiations or due diligence?
There are no limitations (maximum or minimum) under Vietnam law on the time period in which the parties are required to conduct negotiations and/or due diligence.

18. Are there any circumstances where a minimum price may be set for the shares in a target company?
There are no general requirements under Vietnam law that set certain minimum price for shares in a target company.

19. Is it possible for target companies to provide financial assistance?
There is no general prohibition under Vietnam law on target companies providing financial assistance to acquirers. However, such provision of financial assistance to acquirers may result in breach of fiduciary duties of directors of the target company. In this regard, the directors of the target company should be mindful of their duties to the target company because, providing financial assistance to an acquirer may be considered to be harming the target company while benefiting the majority shareholders of the target company or the acquirer, depending on the nature of such assistance.

20. Which governing law is customarily used on acquisitions?
Buyer and sellers are free to decide on the governing law of the transaction agreements. Nevertheless, in deals that involve a Vietnamese target company, the governing law is customarily Vietnam laws.

21. What public-facing documentation must a buyer produce in connection with the acquisition of a listed company?
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 result 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.

22. What formalities are required in order to document a transfer of shares, including any local transfer taxes or duties?
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.

23. Are hostile acquisitions a common feature?
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. 155/2020/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 five 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 50% (group 2).
· In cases that do not fall within group 1 and group 2, MFO can be up to 100% (group 3).
· In case a public company operates in multiple industries and trades with different regulations on the foreign ownership rate, the foreign ownership rate must not exceed the lowest level in the industries and trades with determined foreign ownership rates (group 4).
· Where a public company decides on the maximum foreign ownership ratio lower than the rate specified above, the specific rate must be approved by the General Meeting of Shareholders and included in the company’s charter.
This lift of the foreign equity cap can introduce more hostile bids in Vietnam.

24. What protections do directors of a target company have against a hostile approach?
There are no provisions regulating hostile bids under Vietnamese law.

25. Are there circumstances where a buyer may have to make a mandatory or compulsory offer for a target company?
A tender offer is required in the following cases:
· Purchase of a company’s circulating shares that result 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.

26. If an acquirer does not obtain full control of a target company, what rights do minority shareholders enjoy?
Minority shareholders continue to enjoy full rights as shareholders, such as voting rights and rights to receive distributions of dividends. However, as shareholders may only participate in the management of a company indirectly through a shareholders’ resolution, minority shareholders have limited right to affect the management of the company.
Under Enterprise Law 2020, a shareholder or group of shareholders that holds at least 5% of the ordinary shares (or a smaller ratio specified in the company’s charter) shall have the rights to:
a) Access, extract the minutes of meetings, resolutions and decisions of the Board of Directors, mid-year and annual financial statements, reports of the Board of Controllers, contracts and transactions subject to approval by the Board of Directors and other documents except those that involve the company’s business secrets;
b) Demand that a GMS be convened in case
· the Board of Directors seriously violates the shareholders’ rights, obligations of executives or issues decisions ultra vires;
· other cases prescribed by the company’s charter.
c) Request the Board of Controllers to investigate into specific matters relevant to the company’s administration where necessary

27. Is a mechanism available to compulsorily acquire minority stakes?
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.

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For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.

1. What is your assessment of the M&A market in Vietnam?

Covid-19 has significantly reduced M&A activities both globally and locally in our country. With the extraordinary pandemic control, Vietnam is still emerging as a safe, attractive destination for foreign investors.

Remarkable M&A deals during the Covid-19 outbreak include the merger of VinCommerce into Masan, the acquisition of 15% of BIDV’s charter capital worth USD 878 million by KEB Hana Bank (Korea), or the acquisition of Vinhomes’ shares worth USD 650 million by KKR and Temasek.

The main industries attracting M&A deals in Vietnam from June 2019 to October 2020 are real estate, banking and finance, logistics, pharmaceutical and healthcare, and construction.

M&A activities did slow down due to the pandemic but is expected to resume its activeness in the first quarter of 2021 at earliest.

2. What is the main driver of growth of M&A activities in Vietnam, especially during the Covid-19 period?

(i) Vietnam has entered into many free trade agreements (FTAs), which help to attract investment waves from abroad. FTAs such as the CPTPP, EVFTA, EVIPA and most recently RCEP will open up more opportunities to draw in investment in the form of M&A in various sectors, especially those that require the application of high-technology such as waste-to-power energy or water treatment.

(ii) The implementation of the new Securities Law, Investment Law and Enterprise Law 2020 are also identified as an important milestone, contributing to the simplification and synchronization of relevant administrative and legal procedures. For instance, under the new Investment Law taking effect on 1 January 2021, the foreign investor threshold is lowered from 51 percent to 50 percent. In addition, the law removes the need for approval if the M&A transaction does not increase the foreign investor’s ownership ratio in the target company.

(ii) The new Government administration in Vietnam is expected to comprise of younger people with more political willingness to integrate Vietnam to the world.

3. Which are difficulties that The M&A market of Vietnam has to face in the Covid-19 pandemic?

_ Review of the purchase target: if key customers and suppliers of the target company negatively affected, potential purchaser may question the efficiency of the business model
_ Adjustment on purchase price: price agreed before the pandemic occurs are most likely based on historically high evaluations and maybe reduced upon further examination of Covid-19’s effect on the target’s operation
_ Purchase is delayed due to reduced to none site travel: For many deals, site inspection is essential for potential partners to verify information and conclude their purchase
_ Increased risk of technology fraud: e-signature can be faked, confidential information is leaked (e.g. via Zoom)
_ Dramatic reduction in stock market prices have left investors with uncertainties regarding capital market transactions

4. There is a saying that SMEs will have more benefits than a big enterprise. What do you think about that?

I think the benefits are distributed in different ways for SMEs and for large corporates. However, when looking at the Covid-19 instance, I’d say large enterprises have more benefits.

Large enterprises last against the economic downturn longer due to larger capital reserve and brand presence while we see a lot of SMEs shutting down. However, higher number of human resources also means higher expenses for large corporates. The Covid-19 outbreak, in some ways, can be said to allow large corporates and multinational companies to relocate their business operation to provinces/countries that prove to handle extraneous factors well. For example, we have seen a lot of companies relocating their production plants from China to Vietnam during the corona crisis.

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For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.