Are foreign investors allowed to buy a wholly state owned enterprise in Vietnam?
Are foreign investors allowed to buy a wholly state owned enterprise in Vietnam?
Pursuant to Article 23 of Decree 23/2022/ND-CP of Vietnam stipulating entities ineligible to buy a wholly state-owned enterprise as follows:
Entities ineligible to buy a wholly state-owned enterprise
1. Persons who lack legal capacity, are incapacitated or have limited legal capacity, have difficulty in controlling their behaviors, or persons who are unable to control their behaviors at the date of application for participation in auction.
2. Financial intermediaries or audit organizations that take charge of business valuation of the enterprise, and employees of these organizations who directly carry out appraisal, valuation or audit of the enterprise; parents, spouse, children, and siblings of persons who directly carry out appraisal, valuation or audit of the enterprise.
The organization conducting the auction of the enterprise and its employees who directly take charge of the auction; parents, spouse, children, and siblings of the auctioneer who manages the auction.
3. The person who is authorized by the owner’s representative agency to take charge of the sale of the enterprise; the person competent to decide the sale of enterprise, and the person who signs the auction service contract;
4. Parents, spouse, children, and siblings of the persons mentioned in Clause 3 of this Article;
5. Persons who do not have the right to establish and manage enterprises as prescribed by law.
6. Foreign investors as prescribed in the Law on investment in respect of conditions concerning market access, assurance of national defense and security to be satisfied by foreign investors, and the Land Law.
Thus, foreign investors are not allowed to buy a wholly state owned enterprise in Vietnam.
Are foreign investors allowed to buy a wholly state owned enterprise in Vietnam?
What are the contents of a contract for the sale and purchase of the entire enterprise?
According to the provisions of Clause 3, Article 29 of Decree 23/2022/ND-CP of Vietnam on this content as follows:
Approval for enterprise selling results, contract conclusion, transfer, payment, notification of completion of sale of entire enterprise
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3. Within 10 working days from the day on which the decision to approve the enterprise selling results, the owner’s representative agency or the entity authorized in writing by the owner’s representative agency and the auction winner shall conclude the contract for sale and purchase of the entire enterprise. The contract for sale and purchase of the entire enterprise shall, inter alia, include the following contents:
a) Name, address and account number of the sold enterprise;
b) Name, address and account number (if any) of the auction winner;
c) The enterprise selling price;
d) Commitments of the auction winner and the enterprise seller;
dd) Time limit for payment of enterprise purchasing price; method and time limit for transfer of the enterprise to the buyer;
e) Settlement of relevant issues and contract disputes.
The contract shall be enclosed with the list of assets and debts (if any) as agreed upon between the auction winner and the enterprise seller.
Thus, the contract for sale and purchase of the entire enterprise shall, inter alia, include the following contents:
- Name, address and account number of the sold enterprise;
- Name, address and account number (if any) of the auction winner;
- The enterprise selling price;
- Commitments of the auction winner and the enterprise seller;
- Time limit for payment of enterprise purchasing price; method and time limit for transfer of the enterprise to the buyer;
- Settlement of relevant issues and contract dispute.
The contract shall be enclosed with the list of assets and debts (if any) as agreed upon between the auction winner and the enterprise seller.
What are the procedures for selling an entire wholly state owned enterprise in Vietnam?
According to the provisions of Article 25 of Decree 23/2022/ND-CP of Vietnam as follows:
(1) Develop the plan for selling the entire enterprise. To be specific:
- Prepare documents, including: legal documents about the enterprise establishment; legal documents about assets, capital sources and debts; financial statements, tax declarations till the time of enterprise valuation;
The plan for use of land under the enterprise’s management which is made in accordance with the Land Law, and regulations on rearrangement and settlement of house and land under state ownership in each period and has been approved by a competent authority; the labour rearrangement plan; estimate of costs incurred from the sale of the entire enterprise; method and time of enterprise valuation, and other relevant documents (if any);
- Organize listing and settlement of financial issues, and organize enterprise valuation;
- Decide and disclose the enterprise value;
- Complete and submit the plan for selling the entire enterprise to competent authorities for approval. The plan for selling the entire enterprise shall, inter alia, have the following contents:
+ Current status of the enterprise at the time of enterprise valuation; enterprise valuation results;
+ Determination of selling price and selling method, estimated costs;
+ Plan for land use approved by competent authorities;
+ Plan for use of current employees and settlement of benefits for redundant employees.
(2) Organize the implementation of the plan for selling the entire enterprise by means of auction.
(3) Complete the sale of the entire enterprise: make statements of costs incurred and proceeds from the sale of the entire enterprise; make payments; transfer assets, records/books and other relevant documents to the auction winner; publish the completion of the entire enterprise.
Nguyễn Thị Hồng Nhung
