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Preliminary agreements

What preliminary agreements are commonly drafted?

A letter of intent is a common preliminary agreement that usually:

  • covers the main terms of a transaction and other provisions such as exclusivity and confidentiality; and
  • outlines the envisaged timeline.

Principal documentation

What documents are required?

The required documents depend on the type of transaction. In a share purchase transaction, a share purchase agreement or share subscription agreement is key. If less than 100% of the shares are purchased, a shareholders’ agreement may also be necessary. In a merger transaction, a merger agreement is key. In addition, corporate approvals, disclosure letters or other ancillary documentation may be required depending on the particularities of transactions.

Which side normally prepares the first drafts?

Normally, the buyer prepares the first drafts.

What are the substantive clauses that comprise an acquisition agreement?

An acquisition agreement typically comprises the following substantive clauses:

  • the object of the transaction (ie, shares or assets);
  • the transaction mechanism;
  • the purchase price, adjustment mechanism and payment terms;
  • the representations, warranties and indemnities;
  • the conditions precedent to the transaction’s completion;
  • the requirements until the transaction’s completion;
  • the transaction’s cancellation;
  • the governing law and jurisdiction; and
  • boilerplate clauses.

What provisions are made for deal protection?

Provisions made for deal protection include confidentiality, exclusivity, non-solicitation and break fees. Under Vietnamese law, there are no provisions regulating break fees specifically. In practice, break fees can be included in the relevant share purchase or share subscription agreement.

Closing documentation

What documents are normally executed at signing and closing?

At signing, parties execute the relevant share purchase agreement, share subscription agreement or merger contract and shareholders’ agreement (if any). Documents evidencing the satisfaction of conditions precedent to signing are usually executed and delivered between signing and closing, or at closing.

Are there formalities for the execution of documents by foreign companies?

Vietnamese law does not provide for separate formalities for the execution of documents by foreign companies. The execution would rather be conducted in the same manner applicable to domestic companies. Specifically, the documents must be signed by the authorised representative of each party and affixed with the seal of each party (if any).

Are digital signatures binding and enforceable?

Digital signatures are binding and enforceable subject to the conditions required for digital signatures as set out in the Law on E-transactions (51/2005/QH11) passed by the National Assembly on 29 November 2005.

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