Mergers and acquisitions

Mergers and acquisitions (M&A) is an activity that takes control of a business through owning part or all of that business. This is the term for a merger, consolidation or acquisition between two or more businesses together. In Vietnam, the system of legal documents does not have the concept of mergers and acquisitions, this is the commercial term. In legal terms, this term is understood to include activities of consolidation, merger and acquisition of enterprises, specifically:

Merger of an enterprise is the transfer of all of its lawful assets, rights, obligations and interests to another enterprise and at the same time terminating its business or its existence. The acquirer company still exists and inherits all assets, rights and obligations of the acquired companies.

Consolidation of enterprises means that two or more enterprises transfer their entire properties, rights, obligations and lawful interests to a new enterprise and at the same time, consolidating companies shall cease to exist.

Acquisition of an enterprise is a activity that an enterprise directly or indirectly acquires all or part of the capital and assets of another enterprise sufficient to control and dominate the enterprise or a business line of the acquired enterprise. Acquired enterprise still exist, only changing the enterprise structure.

M&A always requires strict legal compliance with both acquired and acquirer enterprise. Under Vietnamese law, merger, consolidation and acquisition are one of the forms of economic concentration. Recently, economic concentration is the legal acts which have been implemented quite popular in Vietnam. Along with the positive effects, this activity also has the potential to affect competition in the market. Therefore, the merger activity is not only governed by the Enterprise Law but also regulated by the Competition Law. The current Competition Law has amended and prohibited businesses to implement economic concentration that has an impact or is likely to cause significant anti-competitive effects on the Vietnamese market.

On the economic side, the economic concentration will reduce competition (because competitors cooperate with each other and the market access becomes difficult) and distort the market leading to damage to consumers. Stemming from the need to control economic concentration activities to avoid the formation of large enterprises with the power to control the market and unfair competition, create conditions for new businesses to join in market, Competition Law creates a legal corridor that allows state management agencies to control economic concentration activities, and accordingly adjust M&A activities.

Each M & A form has governed by its own legal provisions. Therefore, before conducting any M&A activity, investors need to carefully understand the provisions of the law to best protect their rights and interests in accordance with the provisions of law.

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Temporary residence card for foreigner

After appropriate entry into Vietnam, if the investor, the employee needs to reside in Vietnam to be able to facilitate the implementation of investment, labor, the investor and the employee needs to apply Temporary residence card in accordance with the purpose of his/her residence.

Temporary residence card is a document issued by an immigration authority or a competent authority of the Ministry of Foreign Affairs to a foreigner who is permitted to reside for a limited period of time in Vietnam and is valid for visa replacement. When a temporary residence card is available, the investor or foreign worker will present a temporary residence card instead of a visa when entering / leaving Vietnam and legally residing in Vietnam.

To avoid administrative fines or deportation for violations of the law on residence in Vietnam, foreign investors and employees need to follow procedures for applying for a temporary residence card suitable for the purpose of entry (symbol visa). Investors, employees who have appropriate entry visas (DT or LD visa) will be considered by the Immigration Authority to grant a temporary residence card.

For the application for a temporary residence card that requires the investor, the employee needs to have all business documents, proving that it is eligible to sponsor a foreigner and enter the country for the right purpose. Request a Certification of exemption from a work permit / work permit, entry visa for the right purpose, legal residence address in Vietnam.

When all of the above conditions are met, investors and employees shall carry out the procedures for applying for temporary residence cards in Vietnam so that they can reside, leave and enter in accordance with law. The duration of the temporary residence card is issued pursuant to the purpose of entry and the proposal of agencies, organizations and individuals. The temporary residence card is from 1 to 5 years but shorter than the passport duration by at least 30 days, specifically:

- Temporary residence cards with symbols NG3, LV1, LV2, ĐT and DH are valid for no more than 05 years.

- Temporary residence cards with symbols NN1, NN2, TT are valid for not more than 03 years.

- Temporary residence cards with the symbol LD and PV1 are valid for no more than 02 years.

When the temporary residence card expires, the foreign individual will be considered for a new card.

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Work permit

According to the labour law in Vietnam, enterprises that need to employ employees working in their organizations must fully meet the provisions on using foreign workers in the Labor Code 2012. Specifically, enterprises are only allowed to recruit foreign citizens to work as managers, executives, experts and technical workers that Vietnamese workers have not yet met the production and business needs. Before recruiting foreign citizens to work in the territory of Vietnam, enterprises must explain their employment needs and be approved in writing by competent state agencies. Therefore, enterprises wishing to recruit foreign workers to work in their company, need approval of competent state agencies, in particular, Department of Labor, War Invalids and Social Affairs in the province / city where the business is located ("DOLISA")

With DOLISA's approval, enterprises need to prove that the recruitment of foreign workers for the required job position is consistent with the needs of the business, the situation of Vietnamese labor recruitment for those positions, the benefits achieved for businesses when recruiting foreign workers instead of Vietnamese employees.

After approval of the demand for foreign labor from DOLISA, the enterprise shall follow the procedures for applying for a work permit for foreigners in accordance with DOLISA's approval. Foreigners who work in Vietnam without a work permit will be expelled from the territory of Vietnam according to the regulations of the Government and employers, who use foreign citizens without a work permit, will be handled in accordance with the law, specifically the administrative fine from VND 30,000,000 to VND 75,000,000 shall be imposed on employers depending on the seriousness of their violations (Article 22 of the Decree 95/2013/ND-CP). Therefore, employers and employees need to comply with the work permit when working in Vietnam or employing foreign workers to work in Vietnam.

For foreign workers, in order to be eligible for a work permit, the following specific conditions are required: (i) Having full civil act capacity as prescribed by law; (ii) Be physically fit to the job requirements; (iii) Be a manager, executive director, specialist or technical worker; (iv) Not be a criminal or subject to criminal prosecution in accordance with the laws of Vietnam and foreign laws; (v) Approved in writing by a competent state authority on the employment of foreign workers.

These are necessary conditions before an employee applies for a work permit in Vietnam. Documents proving the fulfillment of the conditions for granting a work permit, if issued by foreign countries, must be consular legalized and translated into Vietnamese when submitted in Vietnam.

The issuance of a work permit must be made at least 15 days in advance from the date the employee is expected to work in Vietnam.

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The note when housing transfer formed in the future?

Houses formed in the future are those in the process of construction investment and have not been tested and put into use. According to Clause 2, Article 105 of the Civil Code 2015, future-formed housing is an asset and the transfer of property must comply with civil law and relevant laws. One of them is the regulation related to taxes and fees when transferring property ownership.

For housing transfer formed in the future, the financial obligations under the law include: registration fee and personal income tax. For each of these taxes and fees, there are specific legal documents regulating.

Firstly, for registration fee: According to Decree 140/2016 / ND-CP, the house is one of the subjects liable to registration fee, with a fee of 0.5% of the registration fee calculation price. In particular, the price to calculate the registration fee for a house is the price promulgated by the People's Committee of the province or city directly under the Central Government in accordance with the law on construction at the time of registration fee declaration.

Secondly, for personal income tax: According to Article 24 of the 2007 Law on personal income tax, for non-resident individuals, the tax rate applicable to real estate transfer is 2%. However, in some special cases, this personal income tax and registration fee may be waived. Specifically, according to Clause 1, Article 4 of the 2007 Personal Income Tax Law, income from real estate transfer between husband and wife; natural father and mother with natural children; adoptive father and adoptive mother with adopted children; father-in-law, mother-in-law and daughter-in-law; father-in-law, mother-in-law and son-in-law; grandfather, grandmother with grandson; grandfather, grandmother with grandchildren; Siblings are income exempt from personal income tax.

In addition, the seller may be subject to some additional items such as cadastral fee, metering fee, notarization of transfer contract unless the parties have agreed that the buyer will incur this fee or the parties have other deal.

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