Will the number of preference shareholders be taken into account in determining public company status in Vietnam?

The Securities Law 2019 is not clear whether the number of preference shareholders will be taken into account when determining whether a company is a public company. Under the Securities Law 2019 a joint stock company (Company) would be considered a public company if:

  • Its paid-up charter capital is at least VND 30 billion; and

  • At least 10% voting shares (cổ phiếu có quyền biểu quyết) if the Company is held by at least 100 investors who are not major shareholders.

The first requirement is clear and intelligible. However, the second requirement is not clear whether:

(1) each and every of the 100 investors who are not major shareholders must hold ordinary shares; or

(2) only some (but not all) of the 100 investors who are not major shareholders could hold ordinary shares and the rest of these 100 investors could hold preference shares.

A literal reading of the law tends to support the first interpretation (i.e., all investors must hold ordinary shares). However, a closer look suggests that the second interpretation is more reasonable. This is because:

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Written by Nguyen Quang Vu On In

The Problems Of Joint Venture Under Vietnam Competition Law

The Competition Law 2018 defines a joint venture between enterprises (JV) as a transaction where “two or more enterprises together contributes a portion of their lawful assets, rights, obligations, and interests to form a new enterprise” (JV Definition). The Competition Law 2018 requires a JV satisfying certain notification thresholds to be notified to the competition authority for review. However, the application of the JV concept under the Competition Law 2018 is problematic because:

  • First, the JV Definition does not take into account the element of “joint control”; and

  • Second, the JV Definition does not accurately reflect the sequence of actions in the formation of a JV company under the Enterprise Law 2020.

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Written by Nguyen Quang Vu On In ,

Allocating Sea Area for Offshore Wind Power Projects In Vietnam

Applicability of Decree 11/2021

It is likely that an offshore wind power project (Offshore WPP) will need to follow the procedures under Decree 11/2021 in order to be allocated with the necessary sea area for development and operation of the Offshore WPP. This is because:

  • Under the current wind power development regime of Vietnam, an Offshore WPP is defined as a grid-connected wind power project with wind power turbines constructed and operated “from the average lowest seawater line over several years off the coast” (nằm ngoài đường mép nước biển thấp nhất trung bình trong nhiều năm ra ngoài khơi);

  • Decree 11/2021 applies to the allocation of certain sea area “from the average lowest seawater line over several years off the coast” for exploitation and use of “sea resource” (tài nguyên biển); and

  • Sea resource is defined to include biological and non-biological resource of the water mass, the [sea] bed and the soil beneath the seabed.

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Written by Nguyen Quang Vu On In , ,

The Institutional Representative of the State in a Vietnamese State-owned Enterprise (SOE)

Decree 47/2021 implementing the Enterprise Law 2020 and Decree 10/2019 implementing the Law on Management State Capital 2014 provide helpful clarification on (1) the entities who can act as the owner representative agency (cơ quan đại diện chủ sở hữu) of the State in a SOE, and (2) calculation of State shareholding in an enterprise. In particular,

  • Under Decree 10/2019, the Institutional Representative only include (i) the Commission for the Management of State Capital at Enterprises (CMSC); (ii) Ministries, Ministry-equivalent agencies, Governmental agencies, provincial People’s Committee; and (iii) the State Capital Investment Corporation (SCIC). Accordingly, other SOEs such as EVN or PVN are not regarded as an Institutional Representative. In the past, it is not clear an SOE can be regarded as the Institutional Representative in another SOE.

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Written by Nguyen Quang Vu On In ,