From a legal perspective, M&A is a complex investment activity, involving many different issues such as securities law, enterprise law, competition law, etc. M&A activities in Vietnam and international commitments related to M&A, this article gives managers, investors and businesses a more general view of this activity, thereby, contributing to promoting M&A activities. promote the development of the M&A market in Vietnam.
Legal regulations applicable to M&A activities in Vietnam
The law in M&A activities is understood as a synthesis of legal norms in many different legal fields, regulating social relations arising in the process of parties conducting M&A activities. Accordingly, the law on corporate M&A (enterprise) is specified in a number of legal documents as follows:
M&A in accordance with the Enterprise Law
The Enterprise Law was passed by the National Assembly at the 8th session (term XIII) on November 26, 2014 and took effect from July 1, 2015. The Law on Enterprises provides the concept and sequence of procedures for mergers, consolidation, and enterprises. The 2015 Law on Enterprises also considers M&A as a form of enterprise reorganization stemming from the needs of enterprises themselves. Although, there is not a clear definition of M&A of enterprises, but the Law on Enterprises has specific provisions on M&A for each type of enterprise, specifically:
– Chapter 2, Article 18 (Rights to establish, contribute capital, purchase shares, purchase capital contributions and manage enterprises) clearly states that organizations and individuals have the right to contribute capital, purchase shares, and purchase capital contributions to the enterprise. joint-stock companies, limited companies, partnerships, except for the following cases: State agencies, units of the people’s armed forces use state assets to contribute capital to enterprises to make private profits for agencies and units. themselves; Subjects are not allowed to contribute capital to enterprises in accordance with the law on cadres and civil servants.
– Chapter 3, for limited companies, Article 52 (Acquisition of contributed capital) and Article 53 (Transfer of contributed capital) specifically provide for a number of issues related to the transfer of capital contributions of members. limited company member.
– Chapter 5, for joint-stock companies, Article 125 (Selling of shares) and Article 126 (transfer of shares) clearly indicate that the Board of Directors decides the time, method and price of selling shares. The selling price of shares must not be lower than the market price at the time of offering, or the value recorded in the books of the shares at the latest time, except in special cases. Article 126 (Transfer of shares) also clearly states that shares of joint-stock enterprises are freely transferable. The transfer is done by contract in the usual way or through trading on the stock market (stock market).
– Chapter 9 also specifies a number of issues such as: division of enterprises (Article 192), separation of enterprises (Article 193), consolidation (Article 194), procedures, dossiers, and order of registration of enterprises receiving merger (Article 195).
M&A of enterprises in accordance with the Law on Investment
The Investment Law was approved by the National Assembly at the 8th session (term XIII) on November 26, 2014, and took effect from July 1, 2015. The Investment Law 2015 recognizes two forms of M&A, namely merger and acquisition of enterprises. Enterprise M&A is considered one of the forms of direct investment. The acquisition of enterprises can be done in the form of partial or total acquisition of enterprises or branches. Accordingly, investors have the right to contribute capital, purchase shares and capital contributions to economic organizations (Article 24); Foreign investors can invest in the form of capital contribution, purchase of shares or capital contribution to economic organizations (Articles 25 and 26).
M&A of enterprises in accordance with the provisions of the Competition Law
The Competition Law passed by the National Assembly at the 5th session (term XIV) on June 12, 2018, effective from July 1, 2019, stipulates forms of economic concentration including: Merger of enterprises; Enterprise consolidation; Acquisition of enterprises; Joint ventures between enterprises; Other forms of economic concentration as prescribed by law. In which, enterprise merger is when one or several enterprises transfer all their assets, rights, obligations and legitimate interests to another enterprise, and at the same time terminate business activities or existence of the affected enterprise. merger. Enterprise consolidation means the transfer of all assets, rights, obligations and legitimate interests by two or more enterprises to form a new enterprise; at the same time, terminate the business activities or existence of the consolidated enterprises.