Requirements for consolidation, merger, full or partial division of enterprises in Vietnam

Requirements for consolidation, merger, full or partial division of enterprises in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Right to consolidation, merger, full or partial division of enterprises in Vietnam

Right to consolidation, merger, full or partial division of enterprises in Vietnam according to Article 13 of Decree 23/2022/ND-CP is as follows:

(1) Consolidation of wholly state-owned enterprises:

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.

(2) Merger of wholly state-owned enterprises:

One or some wholly state-owned enterprises (hereinafter referred to as “acquired companies”) may be merged with another wholly state-owned enterprise (hereinafter referred to as “acquiring company”) by transfer all of the acquired companies’ assets, rights, obligations and lawful interests to the acquiring company, after which the acquired companies shall cease to exist.

(3) Full division of wholly state-owned enterprises:

A wholly state-owned enterprise (hereinafter referred to as “divided company”) divides its assets, rights and obligations to establish two or more new wholly state-owned enterprises, after which the divided company shall cease to exist.

(4) Partial division of wholly state-owned enterprises:

A wholly state-owned enterprise (hereinafter referred to as “divided company”) may be partially divided by transfer of part of its assets, rights and obligations to establish one or some new wholly state-owned enterprises without ceasing the existence of the divided company.

2. Requirements for consolidation, merger, full or partial division of enterprises in Vietnam

According to Article 14 of Decree 23/2022/ND-CP, a wholly state-owned enterprise may be consolidated, merged, or fully or partially divided when all of the following requirements are satisfied:

- 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.

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

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

3. Authority to decide consolidation, merger, full or partial division of enterprises in Vietnam

Authority to decide consolidation, merger, full or partial division of enterprises in Vietnam according to Article 15 of Decree 23/2022/ND-CP is as follows:

- In case of consolidation, merger, full or partial division of enterprises which are established under 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, merger, full or partial division of such enterprises.

- In case of merger of enterprises which are established by different establishment decision-making authorities, the establishment decision-making authority of the acquiring company shall issue merger decision on the basis of written consents obtained from establishment decision-making authorities of the acquired companies.

In case either the acquiring company or the acquired company is established under the Prime Minister’s decision, the Prime Minister shall issue the merger decision.

- In case of consolidation of enterprises which are established by different establishment decision-making authorities, the authority assigned by the Prime Minister to perform 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.

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