M&A makes up majority of foreign capital inflows

HCMC - Some US$6 billion out of US$7.63 billion in foreign investment capital pledged to HCMC last year came from capital contributions, share acquisitions and purchases of stakes from domestic businesses.

HCMC vice chairman Le Thanh Liem said at a conference in Binh Duong Province on February 14 that the pledged investment capital from foreign investors for HCMC last year picked up by 15.59% against the previous year. Of these, there were 1,060 new projects, with total registered capital of US$811.68 million, and 244 projects with additional capital of over US$835 million.

Last year also saw 3,283 cases in which foreign investors received approval to contribute capital, buy shares and contribute capital to domestic firms, with registered capital totalling US$5.99 billion.

With these results, HCMC received around 60% of foreign capital.

According to Liem, the 2014 investment law has provided a favorable legal corridor for foreign investors to proceed with mergers and acquisitions (M&As).

There have been continuous increases in the number and value of these investments, with only US$1.5 billion received in 2016, US$3.68 billion in 2017 and almost US$6 billion last year.

Liem noted that registered capital through M&As in HCMC had so far reached US$10 billion, 22% of the total foreign capital the city has attracted since 1988.

Also, in HCMC private investments are overwhelming foreign investments. Liem pointed out that the amounts of private capital and foreign direct investment (FDI) capital were almost the same, 29% and 29.5% in 2000, but 68.1% and 15.6% in 2015.

Regarding absolute values, private investments in the city have risen 33-fold, from VND7.4 trillion to VND250 trillion, whereas FDI capital has soared by 7.45 times, from VND7.6 trillion to VND56 trillion.

As shared by Liem, in the past, FDI businesses tended to dominate major property projects, which required heavy investment and advanced construction technology, but local businesses are now able to compete and even buy some projects owned by FDI firms.

On a national scale, Liem said that many economic groups have grown rapidly, dominated the markets and competed with FDI firms in areas where Vietnam is often weaker such as telecoms, automobile manufacturing and electronics manufacturing.

This, according to Liem, has confirmed the position and role of domestic firms in the new age.

However, Liem raised the issue of whether FDI attraction policies are no longer able to maintain their effectiveness as they once did.

He also highlighted the need to build a separate policy to attract special partners. “We have attracted many large investors to Vietnam, but what we have not been able to do is get multinational companies to base their headquarters or research and development wings in Vietnam.”

This is partly due to the fact that Vietnam’s investment environment is not ripe enough to be appealing and the country has yet to impose drastic measures to attract special partners, Liem added.

Last month, the Ministry of Planning and Investment coordinated with the Government Office; relevant ministries and agencies; and the governments of Haiphong, Bac Ninh and Hanoi to organize meetings on foreign investment attraction. These meetings, chaired by Deputy Prime Minister Vuong Dinh Hue, were intended to gather the opinions and proposals of local governments on foreign investment policies.

The meeting in Binh Duong on February 14 was attended by more than 650 representatives of the Central Economic Commission, ministries and agencies, governments of southern localities and authorities of economic zones, industrial parks, associations and investment organizations.

-TheSaigontime-

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M&A market in HCMC hits US$2.5 billion in Jan-May

Capital contribution and share purchases by foreign investors via mergers and acquisitions (M&As) in HCMC amounted to some US$2.5 billion during the year up to late May, 3.6 times higher than the value of foreign direct investments, according to the HCMC Department of Planning and Investment.

Foreign investors conducted 1,130 M&A deals with local companies in the January-May period, said Le Thi Huynh Mai, deputy director of the department.

This period also saw 354 fresh FDI projects, whose registered capital was roughly US$403 million, and 98 operational FDI projects adjusting up their investment capital by nearly US$278.4 million.

HCMC was the most attractive destination for foreign investors pouring funds via capital contribution and share acquisition transactions.

Earlier, according to the Foreign Investment Department under the Ministry of Planning and Investment, foreign investors carried out 2,340 transactions to contribute capital and acquire stakes in local firms with a combined value of US$2.75 billion during the year up to May 20, up a hefty 53.5% from a year earlier.

They included 1,117 transactions to raise the chartered capital of companies worth US$1.58 billion, and 1,224 deals worth US$1.17 billion to buy domestic stakes without increasing the chartered capital.

HCMC took the lead in terms of M&A deals last year. Data from the Foreign Investment Department showed foreign investors injected US$6.19 billion into capital contribution and share acquisition, of which the city accounted for a staggering 60% of the amount.

This trend is expected to see a steep rise in the coming time. Su Ngoc Anh, director of the HCMC Department of Planning and Investment, noted at a previous meeting that his agency would pay more attention to this kind of investment, especially those transactions in the local retail sector.

As the city is a major, dynamic market and has many effective operating companies, more foreign investors have felt encouraged to have a presence there, according to analysts.

The municipal government has also created favorable conditions for foreign investors to contribute capital and acquire stakes through quick procedures, thereby spurring such investments.

Notably, the Government’s Decree 60/2015 allows foreign investors to increase their ownership in many listed and public companies from 49% to 100%, except for those active in conditional business sectors.

In addition, they have seen more opportunities emerging, especially with the Government’s determined efforts to equitize State-owned enterprises to divest State stakes from noncore business operations.

Source: The Saigon Times

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Scope of works of Mergers and Acquisition Lawyers

Due to the globalization of markets, intensification of competition in the business world, beginning of mass privatization, intensive development of private and mixed forms of companies, Mergers and acquisitions have become quite common. These days, companies agree to Mergers and acquisitions to make changes in their business operations, both quantitatively and qualitatively within a short period of time. But, the bitter truth is that most of the M & A transaction fail to get the predictable success and all those companies that go under transaction suffer a great loss in the long run.

If you handle a company or a business organization and mulling to strike an M & A transaction, it will be advantageous for you to seek the legal consultation from mergers and acquisition lawyers. They can help you in many ways. Some key points are detailed here below. Just wade through it carefully. You will be able to know how helpful they are in M & A transactions:

1. To Prepare Grounds For Mergers And Acquisitions

In simple words, Merger is a process in which the assets and operations of the two different companies are joined and controlled by the management of a new company which comprises shareholders, employees, investors, CEOs, Managers, etc, of the original companies. On the other hand, an acquisition is a process in which one company obtains control over another by acquiring a controlling stake with the right to vote.

Mergers and acquisitions of companies or business firms are regulated by different laws. Most of the companies are unfamiliar with the rapidly changing laws in this regard and they end of making mistakes unknowingly which may invite problems from the law enforcement agencies and the government in the long run.

Therefore, they must hire M&A law firms to conduct Mergers and acquisitions as per the existing law and avoid legal problems easily and quickly. Law firms have expert lawyers that can help you to prepare the terms and conditions for M & A transactions keeping its legal provisions in mind.

2. Company Valuation For Mergers And Acquisitions

As companies go under M & A transactions for development, improving competitiveness, increasing profitability, it is very important for them to evaluate the revenues and profits of the targeted companies, their production capacities, existing property rights to real estate objects, trademarks, intellectual property, licenses, client base, etc. It helps them to adequately determine the actual value of the company and suggest a legitimate price for M & A transactions. Financial and legal consultants, auditors, and independent appraisers can help you a lot in this regard and determine the actual worth of it by evaluating its sales, income tax returns, the value of properties, etc.

3. Protection From Legal Action Taken By Employees

Whenever Mergers and acquisitions take place, a newly created company fires several employees from the job to cut the operational cost, save the resources and use them for the advancement of the company. Always keep in mind that unlawful termination of employees can trigger several litigations against your company and dilute the future business opportunities up to a great extent. It will be good for you to find legal assistance from Mergers and Acquisition Lawyers. This will help you find the best talent for your company and discard the inferior ones without facing any legal trouble.

4. Mediation With Rival Parties

When companies go for Mergers and acquisitions, the business interests of various parties are affected, such as shareholders, investors, partners, CEOs, etc. It will be very difficult for a company to get involved in legal battles against all these parties and register victory without the appropriate preparation of cases. That is why, lawyers generally arrange the face-to-face meeting of these rival parties, discuss the point of discords and try to reach out a respectable solution through dialogue, mediation, and consultation. It is beneficial for all parties as they are able to solve their business disputes without getting involved in prolonged legal battles and wasting their resources.

5. Determination Of Tax Liabilities

When the size and business of your company grow after signing an M & A transaction, tax liabilities are also increased. But, every businessman wants to pay the minimum tax so that he can make progress in the business and expand it fuhrer. A lawyer can help you to easily determine your actual tax liabilities as per the law and save some of your resources.

Collect: Quora

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How Confidentiality Agreements Important In Mergers & Acquisitions Transactions

These days, Mergers and acquisitions are highly popular in the business world. Previously, M&A transactions were mainly an instrument for a company expansion and one of the most desired kinds of investments

in developed countries, but M&A transactions are being held continuously all across the world. The purpose of a merger or acquisition transaction can be both a strategic expansion of business (market share, technology, geography, etc,), and a financial purchase for resale or public offering of shares. In some cases, & A transactions can be aimed at eliminating a competitor and blocking its development.

In Mergers and acquisitions, Confidentiality Agreements plays an important role. It helps business organizations to maintain the privacy of their assets, trade secrets, future business expansion plan, etc. Have a look at some main advantages of the Confidentiality agreement in M&A transactions.

1. Involved Parties

Only the purchaser and the vendor parties that agree to the confidentiality agreement. If a company with only a few or no assets is getting the confidential information, the vendor may need a guarantor to the agreement. The guarantor has to ensure the parties that he/she will strictly follow his obligations under the confidentiality agreement. To take care of all these, you should hire Mergers and Acquisition Lawyers. They can supervise the activities of all the participants and make sure they are following the agreement without any fail.

2. Revealing The Secret Information

Generally, the confidentiality agreement notifies the ‘purpose’ of the agreement which includes the assessment by the purchaser and allowed individuals to review M&A transactions as per the deal. M&A Law Firms can play an important role here. They can supervise whether the authorized person is working properly or not. So, you must avail their legal consultation services and ensure the confidentiality of M&A transactions.

3. Things To Be Disclosed

All those parties that are involved in the confidentiality agreement are not allowed to reveal the sensitive information related to the companies. It has some exception too, such as

The allowed persons that are appointed to observe the confidentiality agreement. Professional advisors, employees, and party directors can be appointed as permitted persons. Those parties are required to know the confidential information to complete the M&A transactions. In some situations, where there are potential providers of finance, co-investors, and syndicates, parties may assume them as “allowed persons” and can communicate with them.

While exchanging highly sensitive information, the disclosing persons may need parties to make separate confidentiality agreements and exchange them with each other to maintain the privacy of their information at all costs.

4. Announcement For Public

Generally, parties involved in M&A transactions are supposed not to make the public announcement about their deals because it can create an environment of negativity for customers, suppliers, and employees. So, you should do the same. If there is any need to make the public announcement for the enlightenment of the stakeholders, you can do that in consultation with other involved parties.

5. Breach Of Agreement

If any party breaches the agreement, other involved individuals can solve the matter through dialogue or take the legal route to protect the deal. M&A Law Firms can help you a lot in this regard. Just explain each and everything very well and get the things done.

6. Exemption

The confidentiality agreement in M&A transaction is not applied on the following:

Information which is already available in the public domain,

Information which is already occupied by some legally before the deal,

Information which is disclosed to 3 parties that are not supposed to keep the privacy of the deal and

Information which the other party made public with the prior approval of the disclosing party.

7. Termination Of The Deal

All involved parties generally agree to maintain the privacy of their information for 1-2 years once the deal is reached. In some cases, if you need, you can come out of the deal if it is no longer beneficial for you and your business. For this, you need to inform other parties as agreed in the deal.

Final Words:

In M&A transactions, there is a huge importance of keeping the important information private and confidential to make progress sooner or later. The above-mentioned points show the importance of Confidentiality Agreements in M&A transactions.

Source: Quora

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What a Law Firm Could Assist in an M&A Deal?

M&A, abbreviated by Mergers and Acquisitions is expanding in both quantity and volume in Vietnam in many sectors. Successful M&A deals depend on various factors and legal due diligence, and drafting agreements are important processes in Vietnam.

For investors whom are interested in M&A deal in Vietnam as buyer or seller,it is important to hire a law firm that will assist in the process. The law firm in Vietnam could provide assessment of the target company through a legal due diligence, a legal background directly related to M&A deal, all of which are necessary to the completion of a successful deal. The attorney could then draft the letter of intent, and legal contracts, including the final purchase agreement, which will include a lot of stipulations that will need to be done correctly in order for the business transaction to be beneficial to both parties and in compliance with Vietnam regulations.

A law firm with expertise of Vietnam regulations, with the lawyers having experience and legal knowledge will be able to provide the clients with the right check-list of the documents to review.  In addition, the presence of lawyers contributes to strengthening the trust of the parties. In recent years, foreign businesses have often made acquisitions of all or part of a Vietnamese enterprise, and they often require the seller to engage law firms specializing in M&A. And now, not only the foreign businesses but also the Vietnamese parties are in need of conducting M&A deals with the participation of lawyers to ensure the success.

Lawyers shall conduct legal due diligence of enterprises, check reports and explanations with prudence, honesty and efficiency. They help the buyer and/or seller to understand their legal status, legal rights and obligations, legal regulations for assets, labor contracts, land records, construction and investment registration, certificates, and licenses and other matters. This is the basis for determining the status of enterprise and possible legal risks may cause. Lawyers will conduct and produce the most comprehensive, accurate, legal and objective information and legal documents by their professional, knowledgeable and ethical.

Lawyers shall advise the structure of an M&A to ensure the commercial intent that the parties are aiming and shorten the execution time and costs. In addition, it ensures the legality of procedures, safety and minimizes the legal and financial risks for the parties.

There is no common contract template for all M&A deals. Lawyers shall actualize the trade agreements, the will of the parties to the legally binding terms of the contract as well as clearly defines the rights and obligations of the parties to ensure the enforceability, minimize unlawful agreements or unclear terms that may cause the subsequent disputes.

 Source: antlawyers

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What could be assisted in an M&A Deal by a law firm?

M&A, abbreviated by Mergers and Acquisitions is expanding in both quantity and volume in Vietnam in many sectors. Successful M&A deals depend on various factors and legal due diligence, and drafting agreements are important processes in Vietnam.

For investors whom are interested in M&A deal in Vietnam as buyer or seller,it is important to hire a law firm that will assist in the process. The law firm in Vietnam could provide assessment of the target company through a legal due diligence, a legal background directly related to M&A deal, all of which are necessary to the completion of a successful deal. The attorney could then draft the letter of intent, and legal contracts, including the final purchase agreement, which will include a lot of stipulations that will need to be done correctly in order for the business transaction to be beneficial to both parties and in compliance with Vietnam regulations.

A law firm with expertise of Vietnam regulations, with the lawyers having experience and legal knowledge will be able to provide the clients with the right check-list of the documents to review.  In addition, the presence of lawyers contributes to strengthening the trust of the parties. In recent years, foreign businesses have often made acquisitions of all or part of a Vietnamese enterprise, and they often require the seller to engage law firms specializing in M&A. And now, not only the foreign businesses but also the Vietnamese parties are in need of conducting M&A deals with the participation of lawyers to ensure the success.

Lawyers shall conduct legal due diligence of enterprises, check reports and explanations with prudence, honesty and efficiency. They help the buyer and/or seller to understand their legal status, legal rights and obligations, legal regulations for assets, labor contracts, land records, construction and investment registration, certificates, and licenses and other matters. This is the basis for determining the status of enterprise and possible legal risks may cause. Lawyers will conduct and produce the most comprehensive, accurate, legal and objective information and legal documents by their professional, knowledgeable and ethical.

Lawyers shall advise the structure of an M&A to ensure the commercial intent that the parties are aiming and shorten the execution time and costs. In addition, it ensures the legality of procedures, safety and minimizes the legal and financial risks for the parties.

There is no common contract template for all M&A deals. Lawyers shall actualize the trade agreements, the will of the parties to the legally binding terms of the contract as well as clearly defines the rights and obligations of the parties to ensure the enforceability, minimize unlawful agreements or unclear terms that may cause the subsequent disputes.

Source: antlawyers

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Vietnam M&A market hits US$1.8 billion in Jan-May

 Capital contributions and share purchases by foreign investors via mergers and acquisitions (M&A) deals amounted to around US$1.8 billion in the first five months of the year, up a whopping 116.2% compared to the same period last year.

Foreign investors engaged in 2,061 M&A transactions in the period, according to the Foreign Investment Agency under the Ministry of Planning and Investment. Foreign investors via M&A deals have now entered various sectors, including production and services.

For example, Thailand’s Siam Cement Group acquired the entire stake worth US$156 million in a cement manufacturer, Vietnam Construction Materials JSC, in the central province of Quang Binh, while South Korean food firm CJ CheilJedang Corporation raised its controlling stake to 71.6% in the former Cau Tre Export Processing JSC late last year.

In regard to the real estate sector, Singapore’s Keppel Land Limited through its subsidiary Krystal Investments Pte Ltd clinched a deal with the Southern Waterborne Transport Corporation (Sowatco) to acquire an additional 16% stake worth VND845.9 billion in the Saigon Centre property in downtown HCMC.

M&A deals in the real estate market could hit a record high this year as many investors are sounding out opportunities to pour billions of dollars in budget and mid-end apartments, offices, hotels and industrial parks, according to property services provider Jones Lang LaSalle Vietnam.

The European Chamber of Commerce in Vietnam (EuroCham) says many investors consider M&A deals as the most effective way to penetrate the Vietnamese market and expand their business as well. This investment trend is expected to continue next year.

The growth of M&A deals is thanks to the 2014 Investment Law that clarifies some previously ambiguous regulations, according to analysts.

Specifically, foreign investors have no need to go through investment procedures if they choose investment capital contributions and share purchases.

Notably, Decree No. 60/2015/ND-CP allows investors to increase their ownership at many listed and public companies from 49% to 100%, except for those active in conditional business sectors.

Besides, they have seen more opportunities emerging, especially the Government’s effort to equitize State-owned enterprises to divest State stakes from non-core business operations.

Source The Saigon Times

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How To Conduct Legal Due Diligence for M&A in Vietnam?

Legal Due Diligence help management make better investment decision in Vietnam

Mergers and Acquisitions (M&A) has become popular in Vietnam as the country develops and more investors are eager to invest and gain control of the business enough to engage in, decide important business matters through partial or full ownership of an enterprise.  A successful M&A mean the parties achieve their financial and commercial goals (increasing capital, raising management capacity, branding, etc) and ensuring safety and restraint the risk at the lowest level, though legal due diligence undertaken by law firm in Vietnam.

The Importance of Legal Due Diligence of Enterprise in M&A activities

Legal due diligence of enterprises focuses on full and detailed assessment of legal issues relating to the legal entity, capital contribution status, shareholder status, legal rights and obligations. From the investigation information, the parties can anticipate legal risks, assess opportunities to come up with alternatives. In addition, legal assessments help parties evaluate the reliability of their counterparts as well as understand their advantages and constraints for the negotiation process.

What Legal Due Diligence in M&A Activities Entail?

• Evaluate the factors related to the legal status and capacity of the target enterprise: Review the legitimacy of the establishment, operation, possession of enterprise; ensure that the enterprise is not subject to procedures for dissolution or bankruptcy and compliance with the law of the enterprise in the course of operation. The information to be checked includes: dossiers, certificate of enterprise establishment, operation licenses, practice certificates, professional liability insurance, company charter, agreement between the company owner on rights of shareholders, capital contributors, minutes of meetings, member/shareholder register, certificate of capital contribution.
• Evaluate the factors related to the business and financial activities of the target enterprise: Review the system of customers and partners of the enterprise; the documents on economic contracts (with customers, suppliers, etc); dossier of investment, construction, land, project; information on guarantee, mortgage (if any), debt and credit agreement, M&A, financial leasing contract, exclusive contract, franchise, etc, in terms of value, legality, validity, progress to evaluate legal risks in the future. Review the financial statements on the accuracy of the financial status of the business.
• Verify the factors related to labor: Review labor contracts, labor agreements, internal labor regulations to determine the enterprise’s financial obligations to employees, compliance Labor law and reception of labor after the purchase or sale.
• Verify the factors related to intellectual property: Review intellectual property rights of enterprises including: trademarks, trade names, industrial designs, layout designs, business secrets, etc; the property has granted the patent/license. Review matters of infringement of intellectual property rights of other organizations, individuals or legal persons in order to anticipate the risks of being sued or claiming damages.

In addition, in an M&A deal, the acquirer should ensure that participation in capital contribution or acquisition of the target enterprise is permitted, the form of M&A implementation is in accordance with the law and the M&A deal was approved by the competent authority of each party. After that, the factors related to M&A transaction procedures and constraints and restrictions of law (if any) must be evaluated.

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