Great news for foreign investors.
Parties to (i) a transfer of capital in a limited liability company (LLC) or (ii) a transfer of shares by founding shareholder or foreign shareholder in a joint stock company (JSC) no longer need to submit “documents evidencing completion of the transfer” to the Business Registration Authority when applying for registration of the transfer. This is an important and positive change introduced by Decree 78/2015 on business registration which will take effect from 1 November 2015. In particular, Decree 78/2015 allows the parties to any of the above transfers to submit (i) the transfer contract or (ii) documents evidencing completion of the transfer.
Under Decree 43/2010, parties to an M&A transaction involving a LLC or a JSC are required to submit “documents evidencing completion of the transfer”. Without clear definition of what could constitute “documents evidencing completion of the transfer”, the business registration authorities may require various types of documents including (i) evidence of payment of full purchase price to the seller’s account, (ii) evidence of the buyer’s funds in an escrow account, or (iii) an undertaking by the parties that they will complete the payment after registration with the business registration authority. Sometimes, figuring out which document should be submitted and how such document fit within the commercial arrangement of the parties takes a lot of time for the lawyers involved.
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