New Procedures to Coordinate Various Business Commencement Steps for Vietnamese Companies

In October 2020, the Government issued the new Decree 122/2020 on the coordination between various separate procedures relating to the business commencement steps of a company in Vietnam including enterprise incorporation procedures, employee usage declaration, social insurance registration code, and registration of tax invoice. In particular,

  • Decree 122/2020 provides for a company registration application which also includes information necessary for tax and invoice registration, social insurance registration, and employee usage declaration. Previously, the company registration application only include company registration information and tax registration information; and

  • The Enterprise Registration Authority will act as the single contact point to receive the application submitted by the relevant company’s founders and will electronically transfer necessary information to the tax authority, social insurance authority, and labour authority.

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Written by Nguyen Quang Vu On In ,

A U-Turn About Preemptive Rights Of Existing Shareholders In Joint Stock Companies In Vietnam

For many M&A lawyers in Vietnam, the changes in the pre-emptive rights of existing shareholder in (at least non-public) joint stock companies (JSCs) come as a surprise. For 20 years, the Enterprise Law always provides that a shareholder has priority rights to purchase new shares issued by the JSC in proportion to its shareholding. However, under earlier versions of the Enterprise Law, the provisions on private placement of shares or public offering of shares by a JSC, where the JSC may issue new share to third party investors, do not require a waiver of preemptive rights by existing shareholders. Therefore, it becomes a market practice that private place of shares or public offering of shares (or convertible equities) do not require waiver of (or compliance with) preemptive rights by existing shareholders (see further discussions here and here).

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Written by Nguyen Quang Vu On In ,

Merger filling requirement arising from enforcement of security over shares or capital contribution under Vietnamese Competition Law

Under Competition Law 2018, in general, any economic concentration transaction (i.e., any M&A transaction) triggering the filing thresholds prescribed in Decree 35/2020 must be notified to National Competition Committee (NCC). Accordingly, enforcement of security over shares or capital contribution by a lender, which result in a change of control of the borrower, may be considered as an economic concentration and subject to merger filing requirements under Competition Law 2018. This could pose a serious timing problem for the lender (e.g., a Vietnamese bank or a foreign lender) (the secured creditors) in enforcing mortgaged/pledged shares or capital contribution in practice.

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Written by Nguyen Quang Vu On In , ,

New Criteria Of Anti-Competitive Agreements In Vietnam Under The Competition Law 2018

The Competition Law 2018 defines an anti-competitive agreement to mean: (a) an act of agreement between parties in any form, and (b) which causes or has the ability to cause a competition-restraining impact. Under Article 3.3. of the Competition Law 2018, a competition-restraining impact means an impact, which removes, reduces, distorts or hinders competition in the market. The definition of anti-competitive agreement is a new provision under the Competitive Law 2018 which the Competition Law 2004 does not have.

The Competition Law 2018 continues to provide a list of specific agreements which may be considered as an anti-competitive agreement which is similar to that of the Competition Law 2004. However, due to the new definition under the Competition Law 2018, logically, an anti-competitive agreement must now satisfy two tests:

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Written by Nguyen Quang Vu On In ,