Raising operating capital of a general finance company

1. At law, general finance company is defined as a finance company, which is permitted to carry out activities under the Credit Institutions Law 2010. Under the Credit Institutions Law 2010, a finance company is permitted to raise operating capital under the following forms provided that such forms of capital raising are clearly specified in the finance company’s establishment and operation license:

1.1.1. Receipt of deposits from organizations;

1.1.2. Issuance of deposit certificates (chứng chỉ tiền gửi), promissory notes (tín phiếu), debentures (kỳ phiếu) and bonds (trái phiếu) (Valuable Papers) in order to raise capital from organizations; and

1.1.3. Borrowing from both domestic and foreign credit institutions and financial institutions, and from the State Bank of Vietnam (SBV) in the form of refinancing.

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New structure to overcome tender offer requirements under Vietnam securities law

Under the Securities Law 2019, a proposed buyer (the Buyer) who wish to acquire 25% or more of total shares (the Sale Shares) of a public company (the Target) must comply with tender offer requirements (see here). However, based on the new potential exemption of tender offers available at law, there may be a potential way of not having to follow the tender offer procedures by merging the buyer and the seller’s relevant entities of as follows:

  • Step 1: The selling shareholder (the Seller) sets up a special purpose company for this sale transaction (the SPV1) by way of contributing all the Sale Shares into the SPV1. This step does not trigger a tender offer requirement since it is an intra-group transfer of the Sale Shares.

  • Step 2: The Buyer sets up another special purpose company for this transaction (the SPV2) by way of contributing to the SPV2 an amount of cash equivalent to purchase price of Sale Shares; and

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Written by Nguyen Quang Vu On In ,

The concepts of employees, employment contracts, and a worker without an employment relationship under Vietnamese labour law

The Labour Code 2019 has significantly expanded its scope of application by expanding the definition of employees (người lao động), employment contracts (hợp đồng lao động) and introducing a new concept of workers without an employment relationship (người làm việc không có quan hệ lao động). The changes could have significant impacts on many individuals including gig workers.

Employees

Under the Labour Code 2019, an employee means a person working for an employer pursuant to an agreement, who is paid wages, and who is subject to management, instruction, and supervision by the employer. On the other hand, the Labour Code 2012 defines an employee to mean a person working under an “employment contract”. Accordingly, under the Labour Code 2012, an individual working for a company under a contract which is not named “employment contract” could argue that he/she is not an employee of the company. However, such an argument may not work under the Labour Code 2019 if it can be established that there is an agreement between the company and the individual and such individual is managed, instructed and supervised by the company.

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Written by Nguyen Quang Vu On In

Regulations Governing Debt Sale And Purchase Business Activity

1. Currently, the debt sale and purchase activity of entities not being credit institutions is no longer a conditional business activity. Specifically, the Law on Investment of the National Assembly dated 17 June 2020 (Investment Law 2020) has removed the business line of “debt sale and purchase” from the list of industries and trades in which business investment is conditional. Under the explanation of the drafting committee of the Investment Law 2020, the subject of a debt sale and purchase transaction can be any business entity, the debt sale and purchase service is only a supporting service which helps to promote the debt sale and purchase transactions, and the current system of the civil and commercial law relating to the sale and purchase activities have sufficient regulations to govern the debt sale and purchase transactions as well as the transactions supporting the debt sale and purchase

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