Merging enterprises is a form of corporate reorganization aimed at optimizing business operations, enhancing competitiveness, and improving operational efficiency. Below is a detailed guide on the legal regulations regarding enterprise mergers in Vietnam, including conditions, procedures, and the rights and obligations of the parties involved.
Conditions for Mergers of Enterprises
- Legal Status of Merging Enterprises:
- Legally Operating Enterprises: The merging enterprises must be legally operating under Vietnamese law.
- Not Undergoing Dissolution or Bankruptcy: The enterprises must not be in the process of dissolution or bankruptcy at the time of the merger.
- Compliance with Competition Law:
- Prohibitions of the Competition Law: The merged company must ensure it does not violate the regulations on economic concentration as stipulated by the Competition Law, avoiding the creation or maintenance of monopolistic positions or market-restricting practices.
- Procedural and Decision Conditions:
- Merger Agreement: A merger agreement must be signed by the involved parties, including the essential contents as prescribed by the Law on Enterprises and the draft Charter of the merged company.
- Merger Resolution/Decision: A resolution of the General Meeting of Shareholders (for joint-stock companies) or a decision of the Members’ Council/Owner (for limited liability companies) is required for the merger.
- Notification to Related Parties: The merger agreement must be sent to creditors and notified to employees within 15 days from the date the merger agreement is passed.
- Information Disclosure: Information about the merger transaction must be disclosed as required by the Securities Law (if applicable).
Enterprise Mergers Procedures in Vietnam
Step 1: Prepare Documents
Drafting the Merger Agreement: The merging companies need to draft the merger agreement and the Charter of the new company. The merger agreement should include basic information about the related companies, merger procedures, and conditions.
Step 2: Approve and Notify
Approval by Members/Shareholders: The members/shareholders of the merging companies must approve the merger agreement, and the new Charter, and elect/appoint the leadership of the new company.
Send the Agreement to Creditors: The merger agreement must be sent to creditors and employees notified within 15 days from the date of approval.
Step 3: Business Registration
Register the Enterprise: The new company must be registered with the business registration authority according to the regulations.
Rights and Obligations of Related Parties
Merged Company
Rights:
- Inherit all assets and legal rights of the merging companies.
- Continue the business activities and contracts of the former companies.
Obligations:
- Bear responsibility for the debts and financial obligations of the merging companies.
- Fulfill the signed labor contracts.
- Comply with laws regarding business registration, tax, and labor.
Shareholders/Contributing Members
Rights:
- Receive shares/capital contributions in the new company according to the agreed ratio.
Obligations:
- Fully contribute capital as committed.
- Comply with the Charter and regulations of the new company.
Employees
Rights:
- Receive information about changes in organization and working conditions.
- Continue working or negotiate new labor conditions.
Obligations:
- Comply with the new rules and regulations of the merged company.
Creditors
Rights:
- Request the merged company to fulfil debt obligations.
- Receive information about the merger agreement.
Obligations:
- Continue fulfilling agreements signed with the former company.
Business Partners
Rights:
- Continue implementing contracts signed with the former company.
- Renegotiate contract terms if necessary.
Obligations:
- Respect commitments signed with the former company.
State Regulatory Agencies
Rights:
- Require the merged company to comply with legal regulations.
- Inspect and supervise the merger process.
Obligations:
- Guide and support the enterprise during the merger process.
- Update business information on the business registration system.
Merging enterprises is an important and complex process in corporate management and organization. To ensure a smooth and legal merger, businesses must comply with all regulations. This includes meeting conditions, following procedures, and respecting the rights and obligations of all parties involved in Vietnam enterprise mergers.
Enterprise mergers help optimize resources and enhance operational efficiency. They also create expansion opportunities and strengthen competitive positions in the market. However, to succeed, businesses must carefully prepare documents, make informed decisions, and fulfil legal obligations. If you have any questions or need more detailed information, please contact us for consultation and support.
- Harley Miller Law Firm “HMLF”
- Address: 14th floor, HM Town Building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
- Phone: +84 937215585
- Website: hmlf.vn
- Email: miller@hmlf.vn
