Exemptions Of Tender Offer Under The Securities Law 2019

Under the Securities Law 2019, regarding a public joint stock company (the target company), those entities who fall into tender offer triggering circumstances do not have to conduct a tender offer in some specific circumstances. In particular:

· Circumstance 1: Purchasing of newly issued shares, which results in the ownership reaching the tender offer triggering limits, in accordance with the issuance plan approved by the target company’s General Shareholder Meeting.

· Circumstance 2: Receiving the transfer of the outstanding voting shares, which results in the ownership reaching the tender offer triggering limits, as approved by the target company’s General Shareholder Meeting. In such circumstances, the General Shareholder Meeting must clearly identify the transferor and the transferee.

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Written by Nguyen Quang Vu On In , ,

New Decree on Vietnam Competition Law Sanctions

In September 2019, the Government issued new Decree 75/2019 providing administrative sanctions regarding violation of the Vietnam new competition law. Decree 75/2019 details violation in competition including violation of (a) competition-restricting agreements, (b) abuse of a dominant market position or monopoly position; (c) economic concentration; and (d) unfair competitive practices. Set out below are some notable changes in Decree 75/2019:

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Written by Nguyen Quang Vu On In ,

Rights to claim for reflective loss under Vietnamese Enterprises Law 2014

If a director of a joint stock company (the Company) breaches his/her fiduciary duties and causes damage to the Company, under Article 161.1 of the Enterprises Law 2014, a shareholder or group of shareholders holding 1% or more ordinary shares for six consecutive months (1% Shareholder) can on its own behalf or on behalf of the Company to make a civil claim against the director. However, it is unclear whether (1) the 1% Shareholder can request the director to pay compensation directly to the 1% Shareholder or (2) the 1% Shareholder can only request the director to pay compensation to the Company. In other words, it is not clear if the 1% Shareholder can claim the director for reflective loss (e.g., the diminution of the value of such Shareholder’s shareholding in the Company).

The following arguments support the view that the 1% Shareholder cannot claim for reflective loss:

·          Under the Enterprises Law 2014, a shareholder is not allowed to withdraw capital from the Company in any form. If a claim for reflective loss is permitted then the 1% Shareholder is indirectly allowed to withdraw capital from the Company which is contrary to the principle provided by the Enterprises Law 2014;

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Written by Nguyen Quang Vu On In ,