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Policies And Rules Of Mergers And Acquisitions Of Shares


Policies And Rules Of Mergers And Acquisitions Of Shares

After joining the WTO, merger and acquisition activities in Vietnam have taken place extremely strongly with many barriers being removed for businesses participating in business in Vietnam. Along with its strategic role, mergers and acquisitions help businesses expand market share and increase business efficiency. Promulgated policies and regulations have contributed to limiting legal risks for businesses in particular and impacts on the Vietnamese economy in general. This article will provide a general analysis of policies and rules of mergers and acquisitions of shares in Vietnam so that readers have a more diverse and in-depth perspective on this exciting merger and share trading activity.


Mergers and acquisitions can be understood as activities of gaining control of a business through merger or acquisition of one or more parts (or a number of shares) or the entire business. Accordingly, merger is understood as an association between businesses of the same scale and the birth of a new legal entity. Meanwhile, acquisition is a form in which a large business will acquire smaller and weaker enterprises and the acquiring enterprise will still retain its legal status.

In essence, merger and acquisition activities create synergistic value greater than the total current value of the two businesses when operating separately. Currently, policies and rules of mergers and acquisitions of shares are one of the issues that businesses are particularly concerned about.



Currently, there is still no specific process or unified policies and rules of mergers and acquisitions of shares so that businesses have a complete legal framework to apply. In general, based on practice, merger and acquisition of shares activities go through the following steps:

Step 1: Approaching the business

Based on surveys, assessments, and analyses of areas of operation, position, market operations capabilities, corporate governance, facilities, etc, investors decide on businesses that suit their orientation and goals.

Step 2. Reporting appraisal

After approaching the target, businesses often themselves or hire legal and financial consulting units to assess the level of compliance with policies and rules of mergers and acquisitions of shares according to the records and documents provided by the company being merged/acquiring shares. The parties will sign a non-disclosure agreement and continue with the next steps after receiving the legal and financial appraisal report.

Step 3. Negotiating and signing a merger and acquisition of shares agreement

After collecting detailed information, businesses need to decide on the appropriate form of a merger and acquisition of shares. At this stage, the parties focus on negotiating issues such as: transaction price, transaction form, rights and obligations of the parties, dispute resolution terms and a number of other issues.

Step 4. Completing legal procedures

Please note that a merger or acquisition of shares is only recognised by Vietnamese law when the parties involved complete legal procedures in accordance with regulations. Specifically, a number of issues businesses need to consider and implement such as: changing members, changing business lines, transferring shares, etc.

Step 5. Resolving problems after implementing mergers or acquisitions of shares

This is considered a challenging and difficult period for businesses when entering the Vietnamese market. Accordingly, the party merging/acquiring shares must resolve personnel inadequacies, conflicts in internal corporate management policies, differences in corporate culture, etc. This requires the party merging/acquiring shares to have enough capacity and experience to bring rights and benefits to themselves, in accordance with the general business and production situation of the business.



From a legal perspective, mergers and share acquisitions are complex activities, involving many different areas of law. As mentioned, currently Vietnamese law does not have specific definitions or procedures on policies and rules of mergers and acquisitions of shares. However, businesses can refer to some of the following regulations when conducting mergers and share acquisitions in Vietnam.

  • According to the Law on Enterprises

According to Article 4.31 of the Enterprise Law 2020, merger is considered one of the forms of business re-organisation. Business merger is a form of combining one or several companies (merged company) into another company (merger company) on the basis of transferring all assets, rights and obligations of the merged company to the merged company. The merged company ceases to exist, the merged company still exists and inherits all assets, rights and obligations of the merged company.[1] Compared to the old Law on Enterprises, Vietnamese law has removed the phrase “of the same type” in the paragraph “Two or more companies of the same type…” allowing businesses of different types to merge. Procedures for merging businesses are prescribed in Article 201 of the Enterprise Law 2020 and procedures for registering merged businesses and terminating merged businesses are specifically guided in Decree 01/2021/ND-CP dated 04 January 2021 on business registration.

Meanwhile, the acquisition of shares is a form of buying back capital contributions or issued shares of members or shareholders of the company. Different from direct capital contribution to a business, this is a form of investment that does not increase the business’s charter capital but can change the capital/share ownership structure of the business.

Organisations and individuals have the right to repurchase shares of joint stock companies according to the provisions of the Law on Enterprises, except for certain subjects.[2] Accordingly, businesses need to comply with regulations on selling shares and transferring shares in joint stock companies according to Article 126 and Article 127 of the Law on Enterprises 2020, respectively. According to these regulations, businesses must pay attention to shareholders’ rights to transfer shares, types of shares, restrictions on share transfers, share transfer methods (transfer contracts or transactions on the stock market), legal issues that may arise after acquisition, transfer of shares (tax obligations,…) and other issues.

  • According to the Competition Law

Business merger is when one or several businesses transfer all of their assets, rights, obligations and legal interests to another business and at the same time terminating the business operations or existence of the merged business.[3] The Competition Law stipulates that mergers are economic concentration acts. Therefore, mergers are prohibited in cases where the merger creates a combined market share of the businesses participating in the economic concentration, causes impact or has the ability to significantly restrict competition in the Vietnamese market.[4] The purpose of competition law is to create a legal framework for businesses to create conditions and opportunities to freely compete according to fair and healthy principles.

  • According to the Law on Securities

Securities law allows the re-organisation of securities companies and securities investment fund management companies.[5] For this specific field, businesses need to receive approval from the State Securities Commission before implementing or disclosing information to customers.

  • According to the Law on Credit Institutions

Credit institutions may re-organise their businesses in the form of merger after receiving written approval from the State Bank.[6] However, regarding policies and rules of mergers and acquisitions of shares, businesses should note that there are certain limitations specifically stipulated in Circular No. 04/2010/TT-NHNN regulating the merger of credit institutions, Circular No. 36/2015/TT-NHNN regulating the re-organisation of credit institutions issued by the Governor of the State Bank.

  • According to the Law on Investment

Business investment is when an investor invests capital to carry out business activities. Business can be done through the establishment of economic organisations; investing in capital contribution, purchasing shares, capital contributions of economic organisations; investing in the form of a contract or implement an investment project.[7] Accordingly, acquisition of shares is considered one of the forms of investment according to Article 21.2 of the Law on Investment 2020. Investors have the right to buy shares in economic organisations.[8] Foreign investors are allowed to invest in the form of capital contribution, acquisition of shares, or capital contribution to economic organisations but are required to meet regulations and conditions according to law.



Policies and rules of mergers and acquisitions of shares has its own regulations for each type of business. Therefore, before carrying out any activity, the merger/acquisition of shares party, businesses need to carefully study the legal documents of the merged business/acquisition of shares and legal regulations to determine the necessary conditions.

The above is an overview of Policies and rules of mergers and acquisitions of shares. If you have difficulties in finding a Law Firm to advise and support in the relevant legal field, please contact us. Phuoc & Partners is a professional consulting firm established in Vietnam and currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Danang. Phuoc & Partners is also rated as one of the leading consulting firms specialising in business law in Vietnam that has leading practice areas in the legal market such as Labour and Employment, Taxation, Merger and acquisition, Litigation. We are confident in providing customers with optimal and effective service.

[1] Article 201 Law on Enterprises 2020

[2] Article 17 Law on Enterprises 2020

[3] Điều 29.2 Luật Cạnh tranh 2018

[4] Điều 30 Luật Cạnh tranh 2018

[5] Điều 93.1 Luật Chứng khoán 2019

[6] Điều 153.1 Luật Các tổ chức tín dụng 2010

[7] Điều 3.8 Luật Đầu tư 2020

[8] Điều 24 Luật Đầu tư 2020