Due diligence requirements
What due diligence is necessary for buyers?
Legal and financial due diligence is required for acquisitions in Vietnam. Technical, commercial or environmental due diligence may also be required depending on the particulars of the target and its business.
What information is available to buyers?
Sellers or target companies are not required to disclose information to a buyer and the level of disclosure will depend on the agreement between the parties prior to the due diligence process. The buyer may obtain:
- general registration information concerning the target from the national portal of enterprise registration information; and
- information that must be made publicly available by a public target company.
What information can and cannot be disclosed when dealing with a public company?
Information which can be disclosed comprises, primarily, information that must be made publicly available by a public target company, including:
- periodically disclosed information (eg, audited annual financial statements, annual reports, reports on corporate governance and resolutions of the annual shareholders’ general meeting);
- extraordinarily disclosed information (eg, information relating to the freezing of accounts, the temporary suspension of part or all of the business, the revocation of enterprise registration certificates and the redemption of shares by the public target company); and
- information disclosed at the request of the State Securities Commission or stock exchange.
In addition, a public target company may agree to disclose more information on the agreement between the parties. Inside information is prohibited from disclosure.
How is stakebuilding regulated?
The offer to purchase the shares of existing shareholders in a public or listed company will trigger a tender offer in any of the following cases:
- the purchase of circulating shares which results in a purchaser with no shareholding or less than 25% shareholding passing the 25% threshold;
- the purchase of circulating shares which results in a purchaser (and affiliated persons of the purchaser) with a 25% shareholding or more purchasing a further 10% or more of currently circulating company shares; and
- the purchase of circulating shares which results in a purchaser (and affiliated persons of the purchaser) with 25% shareholding or more purchasing a further 5% to 10% of currently circulating shares of the company within less than one year from the date of completion of the previous tranche.
A buyer is not required to make a tender offer in any of the following cases:
- the subscription of newly issued shares resulting in ownership of 25% or more of voting shares in a public company pursuant to an issuance plan approved by the company’s general shareholders’ meeting;
- the acquisition of shares by way of transfer from an existing shareholder resulting in ownership of 25% or more of the voting shares in a public company, where such transfer has been approved by the company’s general meeting of shareholders;
- the transfer of shares between companies within a group of parent-subsidiary companies;
- the donation of bequeathing shares;
- the assignment of capital pursuant to a decision of a court; and
- other cases as decided by the Ministry of Finance.
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