New amendments to the Law on Credit Institutions 2010 in Vietnam

In November 2017, the National Assembly passed various amendments to the Law on Credit Institutions 2010 (LCI Amendments). About two-thirds of the LCI Amendments focus on restructuring, rescue, and liquidation of a credit institution. This probably explains the relatively short period between the issuance of the LCI Amendment and its effective date. The LCI Amendments will take effect from 15 January 2018, less than two months after issuance. The National Assembly usually give a new law six months to one year to take effect. This seems to indicate a sense of urgency by the State Bank of Vietnam (SBV) in dealing with various banks which have been rescued by the SBV for the last couple of years.

In addition to the provisions on restructuring, rescue, and liquidation of a credit institution, the LCI Amendments contain a host of other amendments which aim to improve the governance and operation of a credit institution. These amendments include:

New requirements on strategic investors investing during the equitisation of a State-owned enterprise

Decree 126/2017 replacing Decree 59/2011 on equitisation of State-owned enterprises  introduces various new requirements for a strategic investor who invests during the equitisation of a State-owned enterprise (equitised SOE). These new requirements (especially the pricing requirement) are more difficult for a strategic investor to satisfy. In particular,

  • The equitized SOE must decide to select the strategic investor and the strategic investor must commit to invest before publication of the public offering document for the public auction. Under Decree 59/2011, the strategic investor may decide to invest either before or after the public auction;
  • Despite being required to commit to invest before the public auction, in most cases, the strategic investor must pay a price not lower than the average bidding price at the public auction. Under Decree 59/2011, there is no such requirement and the minimum price is the lowest successful bidding price. This requirement under Decree 126/201 seems to repeat the mistake under Decree 109/2007. There is unlikely any sensible investor who will commit to invest without knowing the price that it has to pay first;

The Sabeco – ThaiBev transaction – "Official" confirmation of a common deal structure

The Sabeco – ThaiBev transaction announced on Monday is no doubt the biggest equity deal in Vietnam so far. The deal structure (see below) as reported by newspaper involves Vietnam Beverage acquiring 53.59% shares in Sabeco. Vietnam Beverage is wholly owned by Vietnam F&B Alliance Investment. Thai Bev, in turn, owns 49% of Vietnam F&B Alliance Investment. From the look of it, it appears that ThaiBev is investing in Sabeco by setting up a “non-foreign” investor through various corporate layering.

OVERVIEW ON LABOUR CONTRACT IN VIETNAM

Under the Labour Code 2012,  a labour contract means an agreement between an employee and an employer on a paid job, working conditions, and rights and obligations of each party to the labour relationship. A labour contract between an employer and its employee can fall into one of the following types:

  • Seasonal Contract: a seasonal contract (or contract for a specific job) is a labour contract with the duration of less than 12 months;
  • Definite Term Contract: a definite term contract means a labour contract with the duration of between 12 months and 36 months. The term of a definite term contract can be extended one time only. Thereafter, the employer must enter into an Indefinite Term Contract (see below); and
  • Indefinite Term Contract: an indefinite term contract means a labour contract in which the two parties do not fix the term nor the time of termination of the contract.