MINISTRY OF EDUCATION AND TRAINING MINISTRY OF JUSTICE
HANOI LAW UNIVERSITY
TRAN THI BAO ANH
THE LAW ON ENTERPRISE ACQUISITION
IN VIETNAM
Field of Study : Economic Law
Code : 62 38 01 07
ABSTRACT OF DOCTORAL THESIS ON LAW STUDIES HANOI - 2014 Training instituation:
HANOI LAW UNIVERSITY

Supervisor: 1. Assoc. Prof. Dr. Nguyen Viet Ty
2. Dr. Phan Chi Hieu

Opponent 1: Prof. Dr. Le Hong Hanh
Opponent 2: Assoc. Prof. Duong Dang Hue

comprehensiveness. Most studies on acquisitions under narrow perspective as
business trading (not involved in researches on purchases and sales of private
enterprises, cooperatives) or studies on business trading contracts in the workshop
articles have not evaluated the overall legislation on acquisitions. For that reason,
there should be legal scientific works with more intensive research on acquisitions.
Therefore, research the law on acquisitions has suggested a topic idea for the
student to develop into the jurisprudential doctor dissertation.
Second, in view of competition, acquisition is understood as acts of
economic concentration associated with the process by which the number of
competitive-free independent businesses in the market has been reduced through
the acts of merger, consolidation, acquisition, joint-ventures, and other behaviors
of economic concentration. Karl Marx discovered a law full of paradox:
Competition leads to economic concentration but economic concentration to a
certain level destroys competition and forces the State to adjust law to economic
concentration. For that reason, there should be a jurisprudential research on
assessing the situation of law and competition law enforcement to control the
business acquisitions in order to protect competition in the market and general
welfare of the society.
For all the above-mentioned reasons, I have selected “THE LAW ON ENTERPRISE
ACQUISITION IN VIETNAM” as my doctoral thesis topic.
2. The object and scope of the dissertation research
The object of the thesis research is the present activities of acquisitions in
Vietnam.
The scope of the thesis research: As a jurisprudential doctoral thesis, it
emphasizes on the research of acquisitions in terms of legal science. The
dissertation only focuses on analyzing acquisition research without consolidation
or merger activities.
Seen from legal perspective, acquisition is a complex investment operation,
involving in many different issues such as contract law, securities law, corporate
law, competition law, labor law, land law, environment law, financial law, law on

trading activities are considered under the comparable view with the
provisions of a number of countries around the world in order to give a
richer and more systematic as well as more comprehensive view on this
activity.
- Look at the provisions of the existing laws on acquisition activity, indicating
the existence of the inadequacies of the legal system on acquisitions and
analyzing, giving comments on the experiences of regulating laws on
acquisitions in several countries. Analyze and evaluate the operating
acquisitions as the basis for proposed solutions accordingly.
- Propose measures to improve the law on acquisitions in Vietnam in the
current period.
4. The methodology and the research method of the thesis
The thesis is formed on the basis of the methodology of Marxism –
Leninism, Ho Chi Minh Ideology and the perspective of the Communist Party
about State and Law. The methodological basis of the dissertation is dialectical
materialism and historical materialism.
To solve the problems posed in the tasks of the research topic, different
research methods such as analysis, synthesis, and jurisprudential comparison are
used in combination.
5. New features and significance of the thesis
The thesis has achieved the following new findings:
- The thesis analyzes the concept of buying and selling businesses in the
world, from which builds a concept of trading businesses in Vietnam;
pointing out the basic legal characteristics of acquisitions versus asset
trading, business leasing, donating, merging, share transfer, or capital share.
- The thesis builds scientific theoretical system of laws on acquisitions in
Vietnam. It is expressed through the construction of concepts, clear

M&A Mergers & Acquisition Basics The Key Steps of Acquisition,
Divestitures, and Investments by author Michael E.S. Frankel, Knowledge
Publishing House, Hanoi (2009); Mergers and Acquisitions from A to Z by
Andrew J.Sherman, Milledge A. Hart, Knowledge Publishing House, Hanoi
(2009); Intelligent M&A: Navigating the Mergers and Acquisitions Minefield by
Scott Moeller, Chris Brady, Knowledge Publishing House, Hanoi (2009); Issues to
Consider When Embarking on M & A Transactions in Vietnam by Gregory Crovo,
Partner (Foreign Lawyer), Kelvin China Partnership; Report on Economic
Concentration in Vietnam – Current Status and Forecast (2012), Competition
Management Department, Ministry of Industry and Trade, Hanoi; Scientific
Research: A handbook for Mergers and Acquisitions in Vietnam by Vietnam
Mergers and Acquisitions Network (2009); Ministry-level scientific research
project: Mergers and Acquisitions Activity – The Rationale, international
experience, and recommended policy for Vietnam (2009), Central economic
management research Institute; Ministry-level scientific research project: The
legislations in governing mergers and acquisitions in Vietnam – scientific
workshop proceedings of laws on mergers and acquisitions: Theoretical and
practical issues organized and chaired by Ho Chi Minh Law University (2010);
Monographs: Laws on contracts in commerce and investment – The basic legal
issues, National Political Publishing House, Hanoi edited by Dr. Nguyen Thi Dung
in 2009 etc.
In different facets, the study of corporate trading activity has been
mentioned by the above authors, however, it has just stopped at each specific
content without comprehensively and deeply addressing all aspects of acquisition
activity. Therefore, an in-depth study with fuller, more comprehensive and
systematic content on acquisitions in Vietnam in the current period is absolutely
necessary.
The author evaluates legislation on acquisitions in two perspectives: (i)
acquisition is business freedom, so the thesis specifies a legal framework for
implementing acquisition procedures; (ii) acquisitions under adjustment of

Fourth, the legal forms which recognize acquisition relationships are
enterprise sale contracts, share transfer agreement, the dominant stake
(generally referred to as acquisition contracts).
Fifth, acquisition must be allowed or recognized, controlled by State
agencies under certain legal procedures.
1.1.3. Differentiate acquisition with some other legal relations.
Discriminate acquisition with business leasing, donation, leveraged buy-
out.
Acquisition is different from business leasing. In the relation of leasing
business, the lessor does not transfer the business ownership to the lessee.
The lessee only has the right of managing and operating the business under
agreement in the lease contract and regulations of the relevant law.
Acquisition is different from business donation. In the relation of
acquisition, the seller transfers the enterprise ownership to the purchaser,
and the purchaser is obliged to pay the seller (with compensation). For
business donation, the donor transfer the enterprise ownership to the done
without compensation requirements; the donee agrees to take over the
business without payment. Acquisition is different from leveraged buyouts
because acquisition means the business ownership is transferred to the
purchaser but a leveraged buyout only changes the creditor, not the owner of
the business. The exception in which a leverage buyout becomes an
acquisition happens when the creditor and the owner of the business change
the debt into the equity capital.
Distinguish acquisitions and business asset purchases
First, the objects of acquisitions and business asset purchases are different.
The object of asset purchases and sales is the assets of the target enterprise.
Buying and selling the business assets only change the ownership of some
certain assets from the seller to the purchaser. The objects of acquisition are
enterprises.
Second, the asset salesperson is different from the subject who has the right

1.2. Legislations on acquisitions
1.2.1. Legal concept on acquisitions
Acquisition is complex. It
covers all the issues of property, capital, market, brand, management structure,
personnel, culture etc. Acquisition is studied under the economic, financial, and
legal perspectives. The research contents of acquisitions are different due to the
different approaches at different angles. Acquisition law can be interpreted in
broad sense and narrow sense.
In broad terms: Acquisition law is a combination of many legal norms under
different law fields, regulates social relations arising in the process of
conducting acquisitions.
In narrow terms: Legislation on acquisition is a system of legal norms which
directly adjusts social relations arising between the buyers and the sellers of
the businesses during the acquisition contract signing process, and the
relation between the authorized state and the enterprise to register to change
the business owners or to implement State control on economic
concentration.
Legislation on acquisition in the narrow sense includes specific provisions to
directly adjust the relationship between the parties involving in acquisition
deal. Specifically, the legislation on acquisition in the narrow sense with
internal content: regulations on forms of acquisitions, regulations on subjects
as enterprise seller and buyer; regulations on acquisition contracts;
regulations on acquisition procedures; provisions on business control under
the competition law perspective.
1.2.2. Law content on acquisitions
The content of law on acquisitions is understood in a narrow sense as
described in the above subsection 1.2.1 consists of the following specific
rules: Regulations on forms of acquisitions; Provisions on subjects of
acquisitions; Legal rules on contracts – the method to implement acquisition
transactions; and legal regulations on acquisition procedures.

transferee of the stakes and shares should register to change the owner of the
business according to the regulated law. The legal basis for implementation of
entire business acquisition is prescribed in corporate law, securities law, and
investment law.
In a number of areas related to economic security, the acquisition legislation may
be different from the nature of the acquisitions in other areas, such as the State will
limit the forms of acquisitions, strictly control the procedures on the acquisition of
credit organizations etc. The reasons that the State develops legal regulations to
govern the acquisition activities in some specific areas such as acquisitions of
credit institutions are in order to stabilize the national economy in the recession
time or to restrict the negative impacts of the market economy on the social
economy.
2.1.2. Partial business acquisition
Partial business acquisition means the owner of the enterprise transfer the
ownership of a part of the business to the buyer so that the buyer can control the
target enterprise. This form includes: members and shareholders of the company
transfer the stakes and dominant shares (generally called as the dominant stakes) to
the assignee so that the person can take control of the operations of the target
business. The proportion of the dominant stakes is regulated in law or prescribed in
the business charter. The buyer now becomes the co-owners of the business and
must perform registration procedures to change the ownership as prescribed by
law. The legal basis for implementation of partial business acquisition is prescribed
in corporate law, securities law, and investment law.
Purchasing branches or the dependent accounting unit of the enterprise is not
acquisition because: (i) the dependent accounting units, the subordinate units of the
enterprise do not have the legal status, is not an independent legal entity, not a
business; (ii) On the balance sheet of the business, the subsidiaries and the
dependent accounting units are not shown as assets of the business.
Partial business purchases can be considered as acquisition in some cases depends
on the legal form of the business department.

from buying businesses, therefore, they still have the right to buy businesses with
the argument that they purchase the business without further operating it.
The concept of foreign investors in the legal document of Vietnam is not unified.
The foreign investors are limited to owning shares in a number of business areas
and industries.
First, the interpretation of foreign investors in the current legal documents is not
unified.
Second, despite the WTO accession commitment, some current legislations which
have not clearly defined whether the foreign investors could enter the market
through acquisition activity have still existed. For instance, in the distribution
sector, all the 100% foreign invested businesses would have the distribution rights
in Vietnam since 1/1/2009. However, these businesses are restricted to open only
one distribution facility. So if foreign investors acquired a distribution facility of a
Vietnamese business owning more than one distribution facility, what regulated
law would be used?
2.3. Legislation on contract – the method of performing acquisition
transactions.
2.3.1. Types of contracts – the method to implement acquisition transactions.
Depending on the concept of acquisition that the legislations on types of
acquisition contracts in different countries may vary. Based on the analysis of
acquisitions in Vietnam and the concept of contract under the provisions of the
Civil Code, the author has launched the concept of acquisition as follows:
The private business acquisition contracts, contracts of entire charter capital
assignment, contracts of transferring the stakes, controlling shares, 100% state-
owned business sales contracts now referred to as the acquisitions contracts are
the agreement between the parties, whereby the owner transfers the entire capital
or the controlling shares to the purchaser. The buying party now has a part or
entire ownership of the enterprise and has the obligation of giving payment to the
business owner.
2.3.2. The content of the acquisition contract

during the process of competition law enforcement. The reason is that each
business only know about their sales without the obligation to know about the sales
of competitors in relevant market in order to calculate the market share of each
company then calculate the proportion of the combined market share of enterprises
participating in economic concentration.
Third, the measure to control economic concentration as defined in Article 18 of
The Law on Competition (2004) is not really effective.
Fourth, the regulations on the subject of economic concentration in Clause 1,
Article 2 of the Law on Competition (2004) are not compatible with the regulations
on the subject of economic concentration at the point b (2004).
Fifth, the regulations on economic concentration control in Vietnam are scattered
in many different laws, the law enforcement process will be interfered without the
mechanism of coordination between the public authorities.
2.4.2. Trading procedures of acquisition transactions out of the adjustment scope
of competition law.
The procedures for acquisitions beyond adjustment scope of competition law are
stipulated in enterprise law, investment law, and securities law. For acquisitions
transactions of 100% state-owned enterprises, credit institutions, the procedures are
specified in separate legal documents. Legislation on acquisition procedures has
still existed the following inadequacies: inconsistent and contradictory regulations
on private business acquisitions, making difficulties for law enforcement process;
whether the private enterprise code could be converted to a limited company with
two members or more or converted when the private enterprise is sold or not are
now the contents making difficulties in law enforcement process; regulations on
investment procedures in legal documents are not scientific, rational and still
overlap with the business registration provisions of the Enterprise Law (2005)…

Chapter 2 Conclusion
The forms of acquisitions in Vietnam include the entire business acquisitions and
partial business acquisitions through specific forms such as private business

agencies on state management to acquisition activity.
3.2.1.2. The State shall create favorable legal conditions for the operation of
financial institutions, consultancy, media agencies, and professional counseling
organizations acting as consultants, intermediaries and help parties of acquisition
activity to implement acquisition transactions successfully.
In order to achieve success for acquisition deals, the professional consultancy
organizations on acquisitions with highly qualified expertise on economics, legal,
and finance should be founded and encouraged to develop. In the next stage, the
competition administration authorities should establish departments of consultancy
for businesses to engage in economic concentration due to the following reasons:
(i) To assist the parties to identify if they are in cases of having to implement the
procedures of notifications of economic concentration or in cases of being
prohibited; analyze the impacts of restricting competition which may occur on the
market if that economic concentration is really implemented.
(ii) To assist the parties to limit the application of sanctions for failure to perform
the obligation of notifying (for the cases of having to notify economic
concentration) or implementing economic concentration in cases of being
prohibited.
3.2.1.3. Building a legal framework for the mechanism of providing and
controlling information on acquisition by developing a general national database
system on acquisitions.
Currently, there have been many state authorized agencies on managing acquisition
activity in Vietnam, however, there has not been official and consistent data of
business acquisition deals in reality. Some companies have collected data on
acquisition activities but these data are only for reference, not a formal recognition
by the State. Therefore, in parallel with the construction of national database
system on business registration, the development of national database system on
acquisition should be done in order to serve consultancy activities, enhance state
management effectiveness and efficiency of enforcement of law on acquisitions.
For instance, when the agency received the business registration changing profile

Third, give more competent authority to competition agency in assessing the
competitive impact of the economic concentration cases. The overall objective of
competition law is to protect competition, competition law with a view to
preventing the change of market structure leading to limited competition in the
market.
3.2.2.2. Amending the concept of business, the concept of acquisition specified in
Competition Law (2004)
Modifying the concept of business at Clause 1 Article 2 of Competition Law (2004)
The business entities as individuals operating independently and frequently do not
have to do business registration, with small capital, all performance criteria are
different from enterprises, and those entities could interconnect without
constituting any restriction of competition in the market.
Thus, starting from the purpose of controlling economic concentration in general
and controlling acquisition activity in particular, the concept of enterprise at Clause
1, Article 2 of Competition Law (2004) must be revised, the concept of enterprise
will not include the business entities operating independently and frequently
without business registration.
Amending the concept of acquisition in Competition Law in the direction of
acquisition is the transfer of business ownership through the forms of share
assignment, stake transfer of the business owners.
According to the general theory of Enterprise Law, the capital contribution to form
the charter capital of the enterprise at the time of establishment of the business or
during the operating process of the business is a way to become the business
owners from the capital contributors. Holders who wish to acquire the business
should “buy” all or enough dominant shares of the business owner to participate in
the business administration apparatus and control that enterprise. Applying the
principle of capital contribution to become the business owner, the acquisition of
property is not the way to form as the new owner of the asset selling business; the
property purchaser can not participate in managing and controlling operating
activities of the asset selling business. Therefore, regulations on asset acquisition

acquisitions in a number of areas of finance, insurance, banking, credit etc.
Thereby, meet the demands of both economic security and appropriate to the
characteristics of each business area as well as adhere to the rules of the acquisition
market.
3.2.2.5. Complete regulations on business conversion and private business
acquisition procedures
First, amend the provisions of Enterprise Law (2005) on the buying party of
private firms to “reregister” with the phrase “register to change the private
business owner”.
To amend the provisions of Enterprise Law in the direction of regulations on
changing private business owners at Article 44 of Decree 43/2010/ND-CP dated
15/4/2010 is rational because: (i) amended rules as proposals will reflect the nature
of the acquisitions is the private business owner sell the property under his
ownership and transfer legal status of the private business to the purchaser; (ii)
ensure equality in acquisition activities between private business owner and one
member limited company owner, the procedures to change the owner of the
enterprise must be done by the business acquirer; (iii) simplify entry procedures for
investors through the implementation of private acquisitions.
Second, supplement regulations on private enterprise transformation into a joint
stock company; conversion of two members limited company to one member
limited company.
According to the instruction decrees of Enterprise Law (2005), the private business
owner has the right to sell a part of private enterprise to others through converting
private enterprise into a limited company. However, the law does not provide for
the case of private companies to sell their own businesses to form a new business is
a joint stock company. Thus, at present, the private enterprise that wants to convert
into a joint stock company must switch through two phases: the first phase is
converting the private enterprise to a limited company; the second phase is the
conversion of a limited company into a joint stock company. Such conversions
involves many legal consequences as business registration change, stamp change,

shortcomings. The orientation of completing the acquisition legislation must
conform to the characteristics of the market economy in Vietnam; must ensure
consistency, transparency, and feasibility of acquisition laws as well as meet the
requirements of international economic integration.
2. These solutions will contribute to improve the efficiency of regulating the laws
on acquisitions and promote the sustainable development of acquisition activity in
acquisition market in Vietnam.

CONCLUSION
1. Acquisition is an activity of investment originated from America from the early
twentieth century and it has grown globally nowadays. Acquisitions have had
different impacts on the social economy. On the one hand, it has regulated the
business capital source more effectively and reasonably. On the other hand, it has
been taken place under more and more various and complex forms, might cause
competition restriction in the market. Therefore, legislation governing acquisitions
in many countries is mainly to control acquisitions under the adjustment of
competition law. Besides, the legislation on business, civil, commerce is the legal
framework recognizing the freedom of acquisitions of investors are taking place
healthily, effectively, transparently, and feasibly in the market.
2. Forms of acquisitions are diverse, including property acquisition form to control
the operation of the asset selling business; leveraged buyouts; transfer shares,
dominant stakes of the business owners.
In Vietnam, under the legal perspective, acquisition is understood in a narrower
sense. Acquisitions in Vietnam are interpreted as an activity to change the business
ownership to participate in management and control the operations of the target
enterprise. Acquisitions forms include: acquisitions of entire investment capital,
entire charter capital, the whole stakes, shares or the controlling shares to be able
to control activities of the target business.
3. Legislation on acquisitions can be understood in broad sense or narrow sense,
however, this assignment is only relative in nature. Within the scope of the thesis,