Practical Insights into Merger Filing for M&A Projects in Vietnam

Navigating merger filing requirements for M&A projects in Vietnam demands a clear understanding of local competition regulations and practical nuances. Drawing from recent experiences, here are some key notes to consider:

1. Determining Whether Merger Filing is Required
Under Vietnamese competition laws, a transaction is subject to merger filing if (i) it qualifies as an economic concentration (e.g., acquisition of over 50% of charter capital of a target company); and (ii) meets any notification thresholds (e.g., total asset value of seller group exceeding VND 3 trillion).

Practical Observations:
(i) The request for initial evaluation of merger filing should be included in the legal due diligence scope to ensure it becomes a condition precedent (CP) of the deal.
(ii) Acquisitions involving multiple entities under a single group with assets exceeding the threshold are subject to filing. Although the law is unclear on whether filings for multiple transactions can be combined, the combination in one application is acceptable.

2. Filing Obligations
Merger filing is a joint obligation of all parties to the transaction (sellers, buyers, and targets), ensuring clearance is obtained before executing the economic concentration.

Practical Observations:
(i) The agreement that this is a CP of sellers or a joint obligation of sellers and buyers should be clearly agreed and documented between the parties.
(ii) The initial notification forms are often jointly signed by sellers, buyers, and targets, and the supplementary documents are signed by the advisor with the POA.

3. Key Documents and Submission

The Vietnam Competition Commission (VCC) mandates obtaining merger clearance before proceeding with the economic concentration, which can be interpreted as before signing definitive agreements. Essential documents include:

(i) Notification forms;

(ii) Draft SPA, Term Sheet, or MOU;

(iii) Certificates of incorporation and audited financials (last two years);

(iv) Lists of subsidiaries/affiliates and product details;

(v) Market share and competition impact assessment reports;

(vi) POA for the advisor (if applicable).

Practical Observations:
(i) Recent practice shows flexibility, with the VCC accepting filings with executed SPAs, provided the transaction is not consummated until clearance. Often, signed in-principle agreements are submitted, clearly stating the transaction is subject to merger clearance.
(ii) Legalization and Vietnamese translation of offshore parties’ documents may delay timelines.
(iii) Affiliate lists must include all buyer-related affiliates in Vietnam, even if conducting different business activities.
(iv) Parties can request confidentiality for specific documents via a letter submitted with the application.
(v) The merger filing process often runs parallel to the M&A approval process. However, to avoid “gun-jumping,” the M&A approval application should follow merger filing submission.

4. Phased Review Process and Results

The review process involves:

(i) Preliminary Appraisal: 7 business days for validation, followed by 30 days for review, often extended to 2 months.

(ii) Official Appraisal (if needed): 30 days, extendable up to 90 days with two maximum extensions (60 days each).


Practical Observations:
By law, a transaction is cleared if no written objection is issued by the competition authority. However, the VCC consistently issues formal written clearances.

The parties should be aware of the merger filing process to well manage the project timeline. Early engagement with the VCC and staying updated on evolving practices are critical to managing regulatory risks and ensuring smooth transactions and manage the timeline

Disclaimer:

The views and experiences shared on my LinkedIn are my personal insights relating to pure legal issues and do not reflect nor represent the opinions or official stance of my current or previous employers.

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