|Ha Hoang Loc||Truong Huu Ngu|
Several months after the new Investment and Enterprise Law came into effect, the Vietnamese government continues to demonstrate the spirit of administrative reform by adopting guidance on the implementation of the legislation.
Decree 78/2015 marks the first positive development. This removes proof of payment of the purchase price from the list of compulsory documents required during the registration of a share acquisition. This means that if the investors do not want to submit the proof of payment, they can submit the share purchase agreement instead.
In an attempt to end the long-lasting debate around whether an investment registration certificate is required for a foreign acquisition, decree 118/2015 states that the target company does not need to obtain an investment registration certificate in respect of investment projects implemented before the acquisition. Although it is not entirely clear, this new stipulation gives companies whose shares have been acquired by foreign investors more room to challenge licensing authorities if these authorities insist on such certificate as a kind of governmental endorsement of the acquisition.
Another plus point introduced by this decree is that acquisition by a new foreign investor of shares from an existing foreign shareholder no longer requires prior approval from the local licensing authority. This is the case even if the seller currently holds 51% or more of shares of the target company, unless the target company is engaged in a conditional business sector.
Circular 20/2015, issued by the ministry of planning and investment, introduces another change. It clarifies that the meeting minutes of the general shareholders are only necessary for the post-closing notification of foreign ownership in cases where a foreign founding shareholder transfers its ordinary shares to a non-founding shareholder before the third anniversary of the company's establishment. Before the issuance of this circular, decree 78/2015 generally provided that the notice of a change in foreign investor shareholder to be filed with the licensing authority must be accompanied by the meeting minutes of the general shareholders verifying the change. This created a procedural burden on companies that have large number of shareholders.
These positive changes introduced by recent laws will definitely simplify the investment procedure for foreign investors, saving both time and paperwork for buyers and sellers.
Ha Hoang Loc and Truong Huu Ngu
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