Article 13 of Decree 35/2020 sets out two different sets of merger filing threshold. In particular, the one provided under Article 13.2 (Special Threshold) applies to transactions involving regulated companies such as credit institutions, insurance companies, and securities companies (Special Company), whereas the remaining one under Article 13.1 (Regular Threshold) applies to transactions involving remaining types of companies (Regular Company). The two sets of different merger filing thresholds give rise to various uncertainties for a M&A transaction involving a Special Company.

First, in the case of a transaction involving a Special Company and a Regular Company, it is not clear if a merger filing must be made when:

Situation 1: The Regular Company does not trigger the Regular Threshold but the Special Company triggers the Special Threshold; or
Situation 2: The Regular Company triggers the Regular Threshold and the Special Company triggers the Special Threshold; or
Situation 3: The Regular Company triggers the Regular Threshold but the Special Company does not trigger the Special Threshold.

An official from the Competition Management and Consumer Right Protection Authority (VCA) has confirmed in a seminar that both sets of merger filing thresholds are applicable in the case of a transaction involving a Special Company and a Regular Company. This interpretation means that a merger filing is required for all three situations as described above.

However, this interpretation seems to be unreasonable for Situation 3. This is because this interpretation would render the Special Threshold which is of a much higher value than the Regular Threshold, irrelevant. In addition, Article 13 of Decree 35/2020 also clearly exempts a Special Company from making a merger filing if the Special Company does not trigger the Special Threshold.

Second, if a Regular Company belongs to a group of companies which includes a Special Company then it is not clear if the Regular Company will be subject to Regular Threshold or Special Threshold. This is because Decree 35/2020 requires all merger filing thresholds to be determined on the basis of a group of companies. Logically, the Special Threshold should apply since the purpose of the Special Threshold is to take into account the nature of Special Companies and to facilitate its M&A activities. However, literally, in this case, the Regular Company is still subject to Regular Threshold.

This post is written by Nguyen Thuc Anh and Nguyen Quang Vu.

Vietnam Business Law