Private placement of shares and pre-emption rights of existing shareholders under Enterprise Law 2020

Under Article 125.2(b) of the Enterprise Law 2020, except for the cases of merger and consolidation of companies, when a non-public joint stock company (a target company) plans to conduct a private placement of shares, the existing shareholders must be offered to purchase such shares first. Only after the existing shareholders do not subscribe for new shares, the target company could conduct a private placement of shares. While the new regulations clarify an unclear point before the Enterprise Law 2020, they could increase the risks that a target company may not be able to successfully issue shares to a desirable investor via a private placement. Below are some potential mechanism to mitigate such risks.

Unofficial clarifications by Vietnam Competition Authority on merger filing

On 14 January 2021, the Competition Management and Consumer Right Protection Authority (VCA) organized a seminar on “M&A regulation under Vietnamese Competition Law”. During the Q&A sections, the head of the merger filing division responded to various questions raised by lawyers from Venture North Law and other law firm. The official from the VCA has given some notable clarification as follows:

· Internal restructuring. Internal restructuring transactions within companies under the control of the same ultimate parent company is subject to the notification requirement. However, since the parties to the transactions in this case belong to the same group companies, the market share report of each party in this case will include market share information of the individual entity which is the party to the internal restructuring but not the whole company group. It is not clear on what legal basis, the official from VCA gave this explanation.

Venture North Law's Legal Guide To Merger Control In Vietnam

This guidance provides an overview of “merger control” regulations in Vietnam. It will cover regulatory framework and authority, relevant trigger events and thresholds, notification requirements, procedures and timetable, substantive test, remedies, penalties, and appeals. Many of the questions in Venture North Law’s merger control guide follow the standard questions in the International Comparative Legal Guide to Merger Control published by Global Legal Group annually.

This guidance is written by Nguyen Quang Vu, Le Minh Thuy, Ha Thanh Phuc, and Trinh Phuong Thao. The simplified version is arranged and edited by Tran Kim Chi.

A simplified version of the Venture North Law's Legal Guide To Merger Control In Vietnam could be downloaded here.

A full version with all legal citation of the guide could be downloaded here.

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New Draft Decree Implementing the Investment Law 2020

In October 2020, the Ministry of Planning and Investment (MPI) published a draft decree implementing the Investment Law 2020 (Investment Decree). The Investment Decree will replace Decree 118/2015 implementing Investment Law 2014. Some major changes provided in the Investment Decree are discussed below:

· Government guarantee - The Investment Decree clarifies that the investment assurance under Article 11.2 of the Investment Law 2020 may include (1) guarantee on foreign exchange availability, and (2) guarantee on contractual performance by Government authorities or State-owned enterprises. The clarification seems to revert to the provisions under Investment Law 2014 on government guarantees, which are removed in the Investment Law 2020.

However, it is not clear if the Government can issue such clarification in form of a government Decree since the Investment Law 2020 does not allow Government authorities to provide investment incentives to investors which are not provided in the Investment Law 2020 without the National Assembly’s approval. Guarantees on foreign exchange availability and contractual performance could also be viewed as a type of investment incentives.

Vietnam Business Law