MERGERS AND ACQUISITIONS (M&A)

What is M&A?

M&A is an abbreviation for Mergers and Acquisitions. Currently, Vietnamese law does not provide a specific legal definition of M&A. In practice, M&A is generally understood as activities aimed at acquiring control over an enterprise through mergers or acquisitions between two or more enterprises, resulting in ownership of part or all of such enterprise.

Enterprise Merger

A merger is a form of combination in which one or more companies of the same type (the merged companies) are consolidated into another company (the surviving company) through the transfer of all assets, rights, and obligations of the merged companies to the surviving company. Upon completion of the merger, the merged companies cease to exist, while the surviving company continues to operate and inherits all assets, rights, and obligations of the merged companies.

Enterprise Acquisition

An acquisition is a transaction in which a larger enterprise (the acquiring company) purchases one or more smaller enterprises (the acquired companies). The acquiring company retains its existing legal status and lawfully obtains ownership and control over the acquired enterprises.

The Role of M&A in Modern Business

In today’s business environment, mergers and acquisitions have become a widely adopted strategy for strengthening competitiveness and achieving rapid growth. M&A involves the combination of two or more companies into a new or consolidated entity, creating significant opportunities and substantial benefits for the parties involved.

Legal Framework Governing M&A Activities

Currently, mergers and acquisitions (M&A) activities in Vietnam are governed by various laws, primarily including:

• The Law on Enterprises

• The Law on Competition

• The Law on Investment

• The Law on Credit Institutions

M&A under the Law on Enterprises

The Law on Enterprises 2020, as amended and supplemented in 2022, provides regulations on consolidation and merger as two of the five forms of enterprise reorganization (Clause 31, Article 4), arising from business needs. Although the Law does not provide a specific definition of M&A, it sets out detailed provisions governing M&A activities applicable to different types of enterprises.

M&A under the Law on Competition

Pursuant to Clauses 2, 3, and 4, Article 29 of the Law on Competition 2018:

• Enterprise merger means the transfer of all assets, rights, obligations, and lawful interests of one or more enterprises to another enterprise, accompanied by the termination of business activities or legal existence of the merged enterprises.

• Enterprise consolidation means the transfer of all assets, rights, obligations, and lawful interests of two or more enterprises to form a new enterprise, accompanied by the termination of business activities or legal existence of the consolidated enterprises.

• Enterprise acquisition means a transaction in which one enterprise directly or indirectly acquires all or part of the capital contribution or assets of another enterprise sufficient to control or dominate the acquired enterprise or a business line of such enterprise.

Note:
The Law on Competition classifies enterprise mergers, consolidations, acquisitions, and joint ventures as economic concentration activities. Accordingly, mergers, consolidations, or acquisitions are prohibited where such economic concentration results in a combined market share of the participating enterprises that causes, or is likely to cause, a significant restriction of competition in the Vietnamese market (Article 30).

M&A under the Law on Securities

Pursuant to Clause 1, Article 93 of the Law on Securities 2019, any reorganization of securities companies or fund management companies must obtain prior approval from the State Securities Commission of Vietnam before implementation.

M&A under the Law on Investment

According to Clause 8, Article 3 of the Law on Investment 2020, business investment means the investment of capital by an investor to carry out business activities. Such activities may be conducted through the establishment of an economic organization; capital contribution, purchase of shares or capital contributions in an economic organization; investment in the form of contracts; or implementation of investment projects.

Pursuant to Article 24 of the Law on Investment 2020, investors have the right to contribute capital to, purchase shares in, or acquire capital contributions of economic organizations. Foreign investors may invest in the form of capital contribution or acquisition of shares or capital contributions, subject to compliance with applicable legal conditions and requirements.

As mentioned above, M&A activities are regulated across multiple legal instruments. In addition to the laws referenced above, M&A transactions may also involve other legal issues relating to taxation, accounting, labor, and intellectual property, among others.

M&A under the Law on Credit Institutions

Pursuant to Clause 1, Article 153 of the Law on Credit Institutions 2010, as amended and supplemented in 2017, credit institutions may be reorganized in the forms of division, separation, consolidation, merger, or conversion of legal form, subject to prior written approval from the State Bank of Vietnam.

M&A – CELIGAL’s Strengths

One of our key strengths lies in our ability to adopt international standards while maintaining a deep understanding of the practical realities, business mindset, and corporate culture of Vietnamese enterprises. In M&A transactions, we are able to understand the needs and expectations of foreign investors and effectively communicate them to Vietnamese counterparties.

Whether representing the buyer or the seller, we play a critical role in advising on transaction structures, conducting legal due diligence, and negotiating the terms and conditions of contracts and transaction documents. By assisting both foreign and domestic investors in understanding each other and overcoming differences, we help facilitate the successful completion of transactions.

CELIGAL stands alongside you throughout the negotiation process, introduces potential investors, and supports you in realizing your strategic plans and business objectives. Lawyer Thanh Nha has over 13 years of experience in advising on domestic and foreign investment, corporate legal matters, real estate, and M&A. With a strong theoretical foundation and in-depth expertise in commercial and investment sectors, Lawyer Thanh Nha delivers practical and effective legal solutions.

Contact CELIGAL today using the information below to learn more about your mergers and acquisitions process and how we can support your transaction.