Corporate criminal liability in the context of an M&A transaction in Vietnam

The Penal Code 2015 is silent as to whether corporate criminal liability incurred by one commercial legal person will be succeeded or extinguished if such legal person is liquidated, merged (sáp nhập), consolidated (hợp nhất) or split (chia) and ceases to exist. Under the Civil Code 2015, when a legal person is merged, consolidated or split, only “civil obligations” (nghĩa vụ dân sự) of such legal person are transferred to the relevant new (or succeeding) legal person. As such, criminal liability (trách nhiệm hình sự) of such legal person may not be transferred to the new (or succeeding) legal person. Similarly, under the Enterprise Law 2014, when an enterprise is merged, consolidated or split, only unpaid debts and property obligations (nghĩa vụ tài sản) are transferred to the relevant new (or succeeding) enterprises. It is not clear if criminal liability of the first enterprise could qualify as property obligations which can be transferred to or succeeded by the new (or succeeding) enterprise.

Under the Criminal Proceeding Code 2015, if a legal person, who has been convicted with a crime, undergoes a merger, de-merger, consolidation then the legal person succeeding the rights and obligations of the first mentioned legal person is responsible for performing penalties in form of monetary fine. This provision seems to suggest that not all criminal liabilities will be passed on the succeeding legal person. That said, in a recent seminar on corporate criminal liability, an official of the Ministry of Justice, being a member of the drafting team of the Penal Code 2015, has indicated that he is in favour of the requirement that in the context of the liquidation, merger, consolidation or split of a legal person, a new (or succeeding) legal person must inherit criminal liability of the disappearing entity.