Nowadays, the development of the economy has attracted many foreign investors to invest in Vietnam. When deciding to invest in Viet Nam, many foreign investors choose the merger as the form of investment because of its benefit. Besides that, when merging a foreign-invested business in Vietnam, investors shall comply with the provision of Vietnamese Laws, especially in compliance with the procedure for a foreign-invested companies merger. The article below by Apolo Lawyers (Hotline: (+84) 903.419.479) will let clients know about the procedure for a foreign-invested companies merger.

Mergers occur when two (or more) companies agree to go on to form an entirely new company without maintaining ownership and operations of the component companies. The securities of the component companies will be deleted and the company after the merger will issue new securities. Concurrently, the assets and liabilities will be taken over by the new company.

1. The condition for foreign-invested company merger

When conducting a merger of a foreign-invested company, the investor must comply with the following conditions:

• In case of a merger of companies where the merged company accounts for between 30% and 50% of the market share of the relevant market; the legal representative of the merging company with foreign investment is required to notify the Competition Authority before conducting the merger; unless otherwise provided for in the Competition Law.
• Prohibit mergers; in which the merged company accounts for more than 50% of the market share of the relevant market; unless otherwise provided for in the Competition Law.

2. The dossier for foreign-invested company merger

A dossier of mergers of a foreign-invested company includes:

• Application for adjustment of investment certificate signed by the director;
• Resolution of the Board of Directors of the joint venture enterprise; or the agreement of the business cooperation parties; or the request of foreign investor for additional adjustment of the investment certificate.
• Report on the operation of the company;
• Application for business reorganization;
• Dossier of capital transfer (in case of capital transfer);
• New company charter (unless it is transformed into a Vietnamese enterprise);
• Explain the reorganization of the company;
• Documents related to land use;
• For company merger procedures: Attached to the company merger contract.

3. Procedures for the merger of foreign-invested companies

Procedures for merging foreign-invested companies are prescribed as follows:

Step 1

• The related companies prepare the merger contract and draft the charter of the foreign-invested merging company.
• The company merger contract must include the following main contents:
  • Name and head office address of the merging company;
  • Name and head office address of the merged company;
  • Procedures and conditions for merger; labor use plan;
  • Methods, procedures, deadlines, and conditions for property conversion; Converting contributed capital, shares and bonds of the merged company into contributed capital, shares, and bonds of the merging company;
  • Time limit for the merger of foreign-invested companies.

Step 2

Members, company owners or shareholders of related companies through merger contracts of foreign-invested companies; Charter of the merging company and conducting business registration of the merging company in accordance with the Law on Enterprises. The merger contract must be sent to all creditors; and notify employees within 15 days from the date of adoption;

Dossier and order of business registration of the merged company with foreign-owned capital must comply with the provisions of the Enterprise Law and be enclosed with copies of the following papers:

• Contract on merger of foreign-invested companies;
• Resolutions and meeting minutes approving the merger contract of the merging companies;
• Resolution and meeting minutes approving the merger contract of the merged companies, unless the merged company is a member or shareholder and owns more than 65% of the charter capital or the voting shares of the merged company. merged company.
• Certificate of business registration or other equivalent documents of the merging company and the merged companies.

After receiving the business registration application, the Business Registration Office shall issue a receipt, check the validity of the application and issue a Certificate of Business Registration, a Certificate of Change of Registration Contents. business for business.

Step 3

After the merged company registers the business; the merged company ceases to exist; the merging company enjoys lawful rights and interests; takes responsibility for obligations and unpaid debts; labor contracts and other property obligations of the merged company.

The merging companies automatically inherit all rights and obligations, and legitimate interests of the merged companies under the merger contract.

>>> Read more: Legal advice on Mergers and Acquisitions (M&A) in Vietnam

>>> Read more: Legal advice on tranfer of investment project in Vietnam

4. How can Apolo Lawyers do for our clients?

Merger activities in general and mergers of foreign-invested enterprises, in particular, both need a solid and experienced legal team to advise businesses. Recognizing the needs of customers for consulting on the procedures for merging foreign-invested enterprises, Apolo Lawyers provides consulting services on business mergers and acquisitions. Apolo Lawyers will perform the following tasks for clients:

• Collect information, verify the profile of the target company
• Assess risk and plan to deal with risk
• Completing legal documents for the merger process
• Consulting and completing business restructuring procedures after completing a merger.

Apolo Lawyers is proud to be a law firm with many years of experience in business consulting that will support clients in the M&A process. In case you need advice related to M&A, please contact us via email at contact@apolo.com.vn or Hotline - (+84) 903 419 479 for the best advice and support.

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