Foreign governing law for contracts between foreign-owned companies in Vietnam

For contracts between a foreign-owned company (i.e., companies which are owned and controlled by foreign investors) and other companies in Vietnam, the default position is that Vietnamese law is the governing law. However, there are certain arguments or mechanisms to allow the parties to choose foreign governing law (e.g., English law) for such contracts. Such arguments or mechanism may become important if the foreign-owned company plans to raise financing including non-recourse from foreign lenders based on the cash-flow generated from such contracts (e.g., a power purchase agreement with Vietnam Electricity).

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Written by Nguyen Quang Vu On In ,

Draft New Decree on Personal Data Protection in Vietnam

On 9 February 2021, the Ministry of Public Security issued a draft decree on the protection of personal data (Draft Decree). This decree, once enacted, will be the first comprehensive legislation of Vietnam on personal data. This blog will analyze some key points of the Draft Decree and compare them with the relevant provisions under the General Data Protection Regulation (GDPR). This post is written by Nguyen Thu Giang and edited by Nguyen Quang Vu. Please download the pdf version here.

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Written by Nguyen Quang Vu On In ,

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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Written by Lawyers VNLaw On In

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 ,