5. What are the key means of effecting the acquisition of a publicly traded company?

In Vietnam, the term public company refers to a joint stock company that meets one of the following conditions:

1. a) The company has a contributed charter capital of at least VND 30 billion and at least 10% of the voting shares are being held by at least 100 non-major shareholders; or
2. b) The company has successfully made its IPO by registration with SSC.

The most common means of obtaining control over a public company are as follows:

• The acquisition of shares/charter capital through:
• buying shares/charter capital from the existing shareholders of the company;
• buying shares/charter capital of a listed company on the stock exchange; and
• public share purchase offer.
• Through a merger. The 2020 Law on Enterprises sets out the procedures for company mergers by way of a transfer of all lawful assets, rights, obligations and interests to the merged company, and for the simultaneous termination of the merging companies.
• Through the acquisition of assets.

There are restrictions on the purchase of shares/charter capital of local companies by foreign investors in certain sensitive sectors. In addition, the law is silent on merger or assets acquisition (for example, business spin-off) transactions where a foreign investor is a party. Regarding other assets acquisition transactions, if the asset is a real property, foreign ownership right will be restricted according to real estate laws.

Securities of public companies must be registered and deposited at the Vietnam Securities Depository Centre before being traded.

Depending on the numbers of shares purchased, an investor can become a controlling shareholder. Under the Vietnam Law on Securities, a shareholder that directly or indirectly owns 5% or more of the voting shares of an issuing organisation is a major shareholder.

6. What information relating to a target company will be publicly available and to what extent is a target company obliged to disclose diligence related information to a potential acquirer?

In case a target company is a public company, it must publicly announce the following information:

• Annual financial statements audited by an approved auditing firm;
• Information on annual General Meeting of Shareholders;
• Report on the status of company governance;
• Abnormal information of public companies on the stock market;
• Information related to the last registration date to exercise rights for existing shareholders;
• Information on audit opinions, review conclusions, and results of retroactive adjustments to financial statements;
• Information on change of auditing term;
• Information on offering, issuance, listing, trading registration activities and report on capital use;
• Information on the maximum foreign ownership ratio of the company and changes related to such ownership ratio;
• Information on buying back the company’s own shares or selling treasury stocks.

Companies other than public listed companies are not subject to the above information publication requirements.

Author: Dr. Oliver Massmann

Email: omassmann @duanemorris.com