CORPORATE CRIMINAL LIABILITY IN VIETNAM

The Penal Code 2015, which takes effect from 1 January 2018, for the first time introduces criminal liabilities to legal entities in Vietnam. Before the Penal Code 2015, only individuals may be subject to criminal liabilities in Vietnam. This is a major change to the criminal law system in Vietnam. The attached slides are summary of our discussion about corporate criminal liability regime in Vietnam in Volume 2 of Principles of Vietnam’s Enterprises Law.

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The importance of shareholding ownership ratio of a foreign investor in a Vietnamese commercial bank

It is important to determine the shareholding ownership ratio of a foreign investor in a Vietnamese commercial bank (a VN Bank), since:

there is different foreign ownership cap applicable to each type of foreign investor in a VN Bank (see here);
there are different requirements applicable to a foreign investor in a VN Bank depending on the shareholding ownership ratio of such foreign investor. For example, a foreign investor with 10% or more shareholding ownership must, among other things, have an international credit rating and must have a total assets of US$ 10 billion or more (for investors being financial institutions) or a charter capital of US$ 1 billion or more (for investors being non-financial institutions);
there are different approval procedures applicable to a foreign investor acquiring shares in a VN Bank depending on the shareholding ownership ratio that the investor intends to acquire. For example, an acquisition resulting in a less-than 5% shareholding ownership ratio by a foreign investor is not subject to approval by the State Bank of Vietnam (SBV). An acquisition resulting in a shareholding ownership ratio between 5% to less-than 10% is subject to an approval procedures different from an acquisition resulting in a a shareholding ownership ratio of more than 10% (see here); and
there are different transfer restrictions applicable to a foreign investor in a VN Bank depending on its shareholding ownership ratio. For example, a foreign investor with a less-than 5% shareholding ownership is not subject to any share transfer restriction. A foreign investor with a shareholding ownership ratio between 5% to less-than 10% may transfer shares subject to SBV’s approval for transfer shares by a major shareholder. A 10% or more foreign investor is not allowed to transfer shares for at least three years.

However, determination of the foreign ownership ratio held by a foreign investor in a VN Bank is not always straightforward since the Law on Credit Institution 2010 and Decree 1/2014 may take into account “indirect ownership” (sở hữu gián tiếp) when determining the foreign ownership ratio held by a foreign investor (see here).

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Identifying a major shareholder of a joint stock commercial bank in Vietnam

Under the Law on Credit Institution 2010,

a major shareholder of a joint stock commercial bank in Vietnam (VN Bank) is a shareholder, who owns directly or indirectly at least 5% of the total voting shares of the VN Bank. Indirect ownership is defined as an organization or individual owning the charter capital or shareholding capital of a credit institution via a related person or trust investment; and
a SBV’s approval is required for “transfer of shares by a major shareholder” or “transfer of shares resulting in a major shareholder becoming a non-major shareholder and vice versa”.

Under the definition of a “major shareholder”, a holding company (Parent Co), which indirectly owns shares in a VN Bank through one of its subsidiaries (Sub Co) could be considered as a major shareholder of the VN Bank if the aggregate shareholding is 5% or more. However, in that case, it is not clear:

whether Sub Co or Parent Co or both are considered as major shareholders of the VN Bank. And if the Parent Co only owns a part of Sub Co, then whether the indirect shareholding of the Parent Co in the VN Bank should be calculated with reference to the shareholding of the Parent Co in Sub Co; and
whether a transfer of shares in Sub Co by a Parent Co is considered as a transfer of shares in VN Bank and is subject to SBV’s approval.

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.

Vietnam Business Law