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 , ,

Some New Key Points of The New Vietnam Investment Law 2020

The National Assembly of Vietnam passed a new Investment Law on 17 June 2020 which will become effective on 1 January 2021 (LOI 2020) and replace the current Investment Law 2014 (LOI 2014). In this briefing, we briefly discuss some new key points of LOI 2020.

This briefing is written by Ha Thi Dung and edited by Nguyen Quang Vu with the research assistance of Tran Kim Chi.

Please download our write up here.

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Written by Nguyen Quang Vu On In , ,

Governing law of an arbitration agreement in the absence of an express choice in Vietnam

Under the law of Vietnam, in case a contract between a Vietnamese and a foreigner (i) selects Vietnamese law as its governing law for the whole contract, (ii) selects a foreign seated arbitration as the dispute resolution mechanism, but (iii) fails to specify the governing law of the arbitration agreement, it is likely that the law of the country where the arbitration is seated (not Vietnamese law) will be the governing law to such arbitration agreement. This is because:

  • Similar to the separability doctrine, which is widely accepted in the practice of international commercial arbitration, the Law on Commercial Arbitration 2010 also provides that the arbitration agreement is "completely independent" from the main contract. Accordingly, the governing law of the main contract should not automatically be the governing law of the arbitration agreement. However, the Law on Commercial Arbitration 2010 does not clarify what is the governing law of the arbitration agreement in the case illustrated above. This is different from common law position where the governing law of the contract will be considered as governing law of the arbitration agreement unless there is evidence to the contrary;

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Written by Nguyen Quang Vu On In