When is an acquisition of assets considered a gain of control of another company?

Under the Competition Law 2018, an acquisition by purchase of assets sufficient to enable the acquiring company to gain control of either the acquired company or one business of such company is considered a form of economic concentration, and could be subject to merger filing requirement (if certain thresholds are met).

Article 2.1(b) of Decree 35/2020 further clarifies, among other thing, that “controlling or dominating a company or one business of a company” includes the case where “the acquiring company gains the ownership or the right to use more than 50% of the assets of the acquired company in all businesses or one business of such company”. It is unclear as to whether this provision should be interpreted as:

·        Interpretation 1: the acquiring company gains the ownership or the right to use more than 50% of the total assets of the acquired company which are used for all businesses or one business of such company; or

·        Interpretation 2: the acquiring company gains the ownership or the right to use more than 50% of the assets of either all businesses or one business of the acquired company.

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Written by Nguyen Quang Vu On In

NEW DECREE ON SECURITY INTERESTS REGISTRATION – PART I

On 30 November 2022, the Government issued Decree 99 on security interest registration (Decree 99/2022) to replace Decree 102/2017 (Decree 102/2017) on the same subject matter. Decree 99/2022 will take effect from 15 January 2023.

·         Decree 99/2022 introduces several measures which, if applied correctly, could substantially reduce the burden of obtaining a registration for a security interest under Vietnamese law. In particular, the declaration of the content to be registered incorrectly in accordance with the law is no longer basis for the registrar to refuse the registration of security interest.

·         The registrar must not introduce or require procedures which are different from those provided in Decree 99/2022. Decree 99/2022 prohibits the registrar from requesting the submission of additional documents or information not specifically required by this Decree, or requesting the amendment of the name or the terms of the security agreement. The registrar must bear responsibilities if breaching this principle. Under Decree 102/2017, the registrar may request for this amendment if there is an error arising from the applicant’s declaration mistake.

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Written by Nguyen Quang Vu On In ,

Can an investment project be mortgaged under Vietnamese law?

The answer is a qualified “yes”. It is possible to mortgage an investment project under Vietnamese law because:

·         The Investment Law 2020 allows an investor to assign (chuyển nhượng) an investment project in whole and in part. And Decree 31/2021 implementing the Investment Law 2020 expressly provides for the procedures when an investment project is assigned as a result of the enforcement of a security interest including a mortgage.

·         Decree 21/2021 on secured transactions expressly provides the investor of an investment project can mortgage an investment project to the extent such investment project is not prohibited from assignment by the investment regulations. Decree 99/2022 on registration of secured transactions also provide for specific procedures to register a mortgage over investment projects which use land such as residential housing, other construction works, agriculture and forestry development.

·         In practice, it appears that it is common for banks to take mortgage over investment projects.

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Written by Nguyen Quang Vu On In ,

ISSUING L/C BY "CPTPP" BANKS TO RESIDENTS IN VIETNAM

Scenario: An institutional resident in Vietnam intends to open an at sight L/C at a Japanese bank (Offshore L/C Issuer) to import equipment into Vietnam. Can the Offshore L/C Issuer issue the Offshore L/C to the Vietnamese client under Vietnamese laws?

Short answer: Yes, subject to our discussions at 1.2 and 1.3 below.

1.1.         The Offshore L/C Issuer should be able to issue a L/C to a resident in Vietnam if the Offshore L/C Issuer is not regarded as regularly conducting banking business in Vietnam (see 1.2). This is because:

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Written by Lawyers VNLaw On In