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SUMMARY OF REQUIREMENTS FOR THE PAYMENT PROCESS OF M&A TRANSACTIONS IN VIETNAM
Summary of requirements FOR THE payment Process OF M&A transactions in Vietnam[i] | ||||||||
Account to transfer the PURCHASE PRICE | Account to receive the PURCHASE PRICE | Currency | ||||||
IICA[ii] | Current Account[iii] | DICA[iv] | IICA | Current Account[v] | VND | Foreign Currency | ||
A - Sale and purchase of shares / equity capital | ||||||||
A.1. Targets being FDI Enterprises[vi] | ||||||||
Buyer | Seller | |||||||
Offshore | Offshore | √[vii] | √ | √ | ||||
Offshore | Onshore | √ | √ | √ | ||||
Onshore | Offshore | √ | √ | √ | ||||
Onshore | Onshore | √ | √ | √ | ||||
A.2. Targets being Non-FDI Enterprises[viii] | ||||||||
Buyer | Seller | |||||||
Offshore | Offshore | √ | √ | √ | ||||
Offshore | Onshore | √ | √ | √ | ||||
Onshore | Offshore | √ | √ | √ | ||||
Onshore | Onshore | √ | √ | √ | ||||
B - Subscription of shares / contribution of additional equity capital | ||||||||
B.1. Targets being FDI Enterprises | ||||||||
Offshore investor | √ | √ | √[ix] | √ | ||||
Onshore investor | √ | √ | √ | √[x] | ||||
B.2. Targets being Non-FDI Enterprises | ||||||||
Offshore investor | √ | √ | √ | |||||
Onshore investor | √ | √ | √ |
[i] While we have tried to capture as many deal structures as possible, in practice there can be variations due to various elements involved which may not yet covered in this summary. Therefore, while this summary can be used as a quick reference guide, consideration should be taken on a case-by-case basis. This summary does not cover the sale and purchase of securities on the stock market. [ii] “IICA” means Indirect Investment Capital Account, which is defined as “a payment account in Vietnam Dong opened by a foreign investor in a licensed bank for implementation of permitted receipt and expense transactions relating to foreign indirect activities in Vietnam” under Article 3.4 Circular No. 05/2014/TT-NHNN issued by the State Bank of Vietnam on 12 March 2014 providing guidance on the open and usage of indirect investment capital account to implement foreign indirect investment in Vietnam, as amended from time to time (“Circular 05”). [iii] Offshore buyers will use their current accounts from offshore; onshore buyers/targets will use their current accounts from onshore, subject to further discussion in Footnote (vii) below. [iv] “DICA” means Direct Investment Capital Account, which is defined as a “… foreign currency or Vietnamese Dong demand accounts opened by foreign invested enterprises and foreign investors at authorized banks to perform transactions regarding the foreign direct investment in Vietnam…” under Article 3.5 Circular No. 06/2019/TT-NHNN issued by the State Bank of Vietnam on 26 June 2019 implementing the foreign exchange control regimes for foreign direct investment activities in Vietnam (“Circular No. 06”). [v] Offshore sellers will use their current accounts from offshore; onshore sellers/targets will use their current accounts from onshore, subject to further discussion in Footnote (vii) below. [vi] “FDI Enterprises” means Foreign Direct Invested Enterprises as defined under Article 3.2 Circular No. 06 which includes the following:
- Any enterprise established in the form of investment of establishing a business organization whose members or shareholders are foreign investors and granted the investment registration certificate in accordance with the law on investment;
- Any enterprises other than those prescribed in point (a) above and at least 51% of charter capital of which is owned by foreign investors, including:
- Any enterprises at least 51% of charter capital of which is held by foreign investors through capital contribution or purchase of shares or equity capital;
- Enterprises derived from division, acquisition, consolidation whose 51% of charter capital is owned by foreign investors after such events;
- New enterprises established in accordance with relevant laws; and
- Project enterprises established by foreign investors to implement PPP projects in accordance with law on investment.