🔎 Part 3: Key Issues for Corporate Part (Series: Key Notes on LDD over RE Energy Projects in Vietnam) 🚀
After sharing key insights on Inspection Report and FiT Issues (you can find them on my LinkedIn or my blog (https://lnkd.in/gbuWk2jx) , I’m diving into corporate due diligence for RE projects in Vietnam. Besides common concerns like restricted business scope and location impacts (https://lnkd.in/gQyGHr3E), two critical corporate issues should be carefully reviewed: (i) investment incentives and (ii) historical share transfers.
LEGAL SHARING
Nguyễn Thị Lang Giang
2/9/20251 min read
1. 💰 Investment Incentives – A Double-Edged Sword?
Investment incentives significantly impact the financial feasibility of RE projects, with benefits like tax exemptions, land use incentives, and import duty waivers. However, ensuring these incentives are legally sound after the M&A is very crucial. LDD must verify that incentives are granted under valid legal instruments (e.g., investment certificates, government approvals) and that the company fully complies with all conditions. Given Vietnam’s evolving regulatory landscape, incentives may be withdrawn if conditions are not met or if policies change. Understanding these risks is essential for protecting long-term financial benefits. Additionally, the LDD and tax DD should together evaluate whether the targets will still be eligible for such incentives or not.
2. 📜 Historical Share Transfers – Ensuring a Clean Title
Normally most law firms will limit the review to the latest share transfer (if any) and verify the current title over the shares, but from my pratical experience some legal issues may arise from the past share transfers. In Vietnam, improperly documented or unregistered share transfers, incorrect registration, or incompletion of tax obligations can lead to serious ownership disputes and non compliance and therefore potentially invalidating transactions, which will not easily mitigated by reps and warranties I believe :) (you can find some disputes which are available online). If the investors would like to cover this review in the LDD, the investors should clearly request this scope of work with the law firm.
💡 What are your thoughts on these corporate challenges in due diligence for RE projects and other projects?
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