M&A Deals in Vietnam

The main body overseeing M&A deals in the Socialist Republic of Vietnam in the NCC; it’s also responsible for imposing fines & remedies. The main piece of legislation governing M&A transactions in Vietnam is the Competition Law. Pursuant to it, an M&A transaction in Vietnam is defined as:

• a merger of companies;
• consolidation of companies;
• acquisitions of companies;
• registration of a JV in Vietnam.

Acquiring a company in the Socialist Republic of Vietnam is defined as direct or indirect acquisition of some or all of its capital. Control is assumed to exist if one of the following conditions is met:

• buyers receive more than fifty percent of an acquired company’s authorized capital or stakes;
• buyers receive more than than fifty percent of an acquired company’s assets (in at least one of its business activities);
• buyers can make decisions on the appointment or dismissal of BoD members, changes in the AoAn & important business transactions.

Requirements

Unless it’s a credit, insurance or securities company, registering a Vietnamese company requires notification. Notification is required if one of the following criteria is met:

• the total asset value of participating companies or their subsidiaries must amount to one hundred twenty nine million dollars (in the last fiscal year);
• the gross income & turnover of participating companies or their subsidiaries must amount to one hundred twenty nine million dollars (in the last fiscal year);
• the value of economic concentration must be forty three million dollars or more;
• the aggregate market share of participating companies in a relevant market must be twenty percent or more (in the last fiscal year).

Those seeking to register a Vietnamese insurance company or obtain a banking license in  the Socialist Republic of Vietnam must comply with the following requirements:

• the total asset value of participating companies or their subsidiaries must amount to six hundred forty four million dollars or more (for insurance or securities companies); the total asset value of participating companies or their subsidiaries must account for twenty percent or more of their gross income (for credit institutions);
• the total asset value of participating companies or their subsidiaries must amount to four hundred twenty nine million dollars or more (for insurance companies) or one hundred twenty nine million dollars or more (for securities companies); the total asset value of participating companies or their subsidiaries must account for twenty percent or more of their gross income (for credit institutions);
• the value of an M&A deal in  the Socialist Republic of Vietnam must amount to one hundred twenty nine million dollars or more (for insurance or securities companies); an M&A transaction’s value must account for no less than twenty percent of the aggregate authorized capital of participating companies (for credit institutions);
• an aggregate market share of companies participating in a deal must be no less than twenty percent (in a previous fiscal year).

Those planning to establish a company in Vietnam should keep in mind that the assessment of economic concentration is done by taking into account:

• participating companies’ total market share;
• concentration degree prior to & after a deal;
• participating companies’ relationships;
• benefits to be gained due to concluding a deal;
• a newly formed company’s ability to cause an increase in prices;
• a newly formed company’s ability to stop other enterprises from entering a relevant market.

There’s 2 stages of verification:

• preliminary assessment (must be completed within a month after receipt of full information about an upcoming deal);
• formal assessment (must be completed within three months; can be extended by two months). 

A formal assessment may have the following results:

• a deal causes no problems & can be concluded;
• a deal can be approved but on certain conditions;
• a deal is prohibited.

Failure to comply with the above requirements may entail a fine of up to five percent of the violator’s total income in the previous fiscal year.