Vietnam: What are the conditions for the consolidation of wholly state-owned enterprises?

Main Content

• What are the conditions for the consolidation of wholly state-owned enterprises in Vietnam?
• What does the application for consolidation of wholly state-owned enterprises in Vietnam include?
• Which agency has the authority to issue decisions on the consolidation of enterprises in Vietnam?

What are the conditions for the consolidation of wholly state-owned enterprises in Vietnam?

According to the provisions of Clause 1, Article 13 of Decree 23/2022/ND-CP stipulating the consolidation of wholly state-owned enterprises as follows:

Two or more wholly state-owned enterprises (hereinafter referred to as “consolidating companies”) may be consolidated into a new wholly state-owned enterprise (hereinafter referred to as “consolidated company”), after which the consolidating companies shall cease to exist.

According to the provisions of Article 14 of Decree 23/2022/ND-CP on this content as follows:

Conditions for consolidation, merger, full or partial division of enterprises

A wholly state-owned enterprise may be consolidated, merged, or fully or partially divided when all of the following requirements are satisfied:

1. The consolidation, merger, full or partial division of enterprise must be conformable with the documents on enterprise organization or innovation approved by the Prime Minister. If an enterprise is not a regulated entity of these documents, the owner’s representative agency shall submit the case to the Prime Minister for consideration.

2. New enterprises established after full or partial division must satisfy the requirements for enterprise establishment set out in Article 4 of this Decree.

3. Consolidation and merger of enterprises must comply with the Law on Competition in respect of consolidation and merger of enterprises.

Thus, the conditions for the consolidation of wholly state-owned enterprises in Vietnam are:

- The consolidation of enterprise must be conformable with the documents on enterprise organization or innovation approved by the Prime Minister. If an enterprise is not a regulated entity of these documents, the owner’s representative agency shall submit the case to the Prime Minister for consideration.

- The consolidation of enterprises must comply with the Law on Competition in respect of consolidation of enterprises.

What does the application for consolidation of wholly state-owned enterprises in Vietnam include?

According to the provisions of Clause 1 Article 16 of Decree 23/2022/ND-CP as follows:

Application for consolidation, merger, full or partial division of enterprises

1. An application for consolidation, merger, full or partial division of enterprises shall include:

a) The application form for consolidation, merger, full or partial division of enterprises;

b) The scheme for consolidation, merger, full or partial division of enterprises;

c) The enterprise’s audited financial statements of the previous year and the financial statements of the latest quarter before the date of consolidation, merger, full or partial division;

d) The draft Charter of the new enterprise established after consolidation, merger, full or partial division;

dd) The draft consolidation or merger contract which is prepared according to Article 200 and Article 201 of the Law on enterprises in case of consolidation or merger of enterprises;

e) Other documents concerning the consolidation, merger, full or partial division of enterprises (if any).

Thus, the application for consolidation of wholly state-owned enterprises in Vietnam includes:

- The application form for consolidation of enterprises;

- The scheme for consolidation of enterprises;

- The enterprise’s audited financial statements of the previous year and the financial statements of the latest quarter before the date of consolidation;

- The draft Charter of the new enterprise established after consolidation;

- The draft consolidation contract which is prepared according to Article 200 and Article 201 of the Law on enterprises in case of consolidation of enterprises;

- Other documents concerning the consolidation of enterprises (if any).

Where:

The scheme for the consolidation of enterprises shall include the following contents:

- Name and address of the enterprise before and after the consolidation;

- The necessity of the consolidation; the conformity of such consolidation with the socio-economic development strategies and plans, and national sector planning;

- The enterprise’s charter capital after consolidation;

- The labor arrangement and use plan;

- The plan for the financial settlement, transfer of capital and assets, and settlement of the enterprise’s rights and obligations in connection with the consolidation;

- The time limit for completing the consolidation;

Which agency has the authority to issue decisions on the consolidation of enterprises in Vietnam?

According to the provisions of Article 15 of Decree 23/2022/ND-CP on the competence to make decisions on consolidation, merger, full or partial division of enterprises as follows:

- In case of consolidation of enterprises that are established under a decision issued by the same person or authority or which are managed by the same person or authority (hereinafter referred to as “establishment decision-making authority”), the establishment decision-making authority shall consider issuing decisions on consolidation of such enterprises.

- In case of consolidation of enterprises that are established by different establishment decision-making authorities, the authority assigned by the Prime Minister to perform the rights and obligations of the owner’s representative in the consolidated enterprises shall issue the consolidation decision. In case of consolidation of enterprises established under the Prime Minister’s decision, the Prime Minister shall issue the consolidation decision.