Question: I am writing to you on behalf foreign company based in USA, we are interested in investment in Vietnam and we already found an local company(registered in HCMC), we have negotiate with the owner and want to buy over the 100% share from 2 local shareholders, the company has USD2 million annual turnover with profit around USD40,000, I want to know if your law firm can help to complete the share transfer and how much is the fee to be charged.
Answen: This is with regards to our discussion from which you requested us to advise for your company (hereinafter referred to as “Client”) to acquire 100% equity of Vietnam Company Limited (hereinafter referred to as “the Assignor”).
Thus, we are pleased to present herewith our Legal Service Proposal for your kind reference.
1. OUR PRELIMINARY COMMENTS
According to information searched out from our side, we understand that, main business activities of the Assignor is trading computer, software, textile, clothe, foot wear, electronic equipment, telecommunication equipment, utensils etc…. The above business activities can be classified to trading activities under Vietnam-WTO Commitment.
According to our practical experience in similar previous cases, possibility of success of Client to acquire 100% equity from the Assignor:
– Business activities of Assignor must not fall in list of services or business activities prohibited or inhibited from involvement by Foreign Investors. As we have not been officially provided Certificate of Business Registration of the Assignor, we are not aware of if there is any registered business lines falling into list of investment sector that restrict ownership or not. If yes, such business activities shall be removed from the Certificate of Business Registration before acquiring 100% equity of the Assignor.
– Client must have enough financial ability to afford business activities in Vietnam.
Upon registration for acquiring equity of local company in Vietnam, the competent authority shall review financial ability report of Client in order to make sure that it has sufficient financial ability to finance business activities of the Company after the acquisition;
– Client must have good financial ability which is shown in the Audited Financial
Statement for 01 recent years and bank account statement;
– Assignor must comply with Vietnam Law during its operation. Assignor must provide sufficient documents proving that the Assignor has finished the capital contribution as registered with competent authority;
We also would like to note that, procedure for transfer of 100% equity from Client to the Assignee shall be subjected to the investment registration process. Under the new Investment Law 2014 which has just been effective from 1st July 2015, it shall take about 15 working days from submission of application dossier to the competent authority for obtaining the approval. Then, it shall take about 7 working days to officially record Client as new owner of the Company. However, until now, Vietnam Government has not yet issued detail guidance on implementation of the new Investment Law.
Thus, in practice, the licensing process may be delayed for a time. In such case, we shall advise you immediately.
2. SCOPE OF WORKS
With regards to the above said case, our scope of work shall be as follows:
2.1.Due diligence research
Conducting legal due diligence reviews in respect of the Assignee and producing a legal due diligence report in English covering specific matters, including due incorporation, historical and existing shareholdings, identity of senior officers, major business licenses, major corporate documents, continued existence of the Assignee (including winding-up)and proper fillings (including all tax fillings), registrations with various authorities in Vietnam, particulars of any actual or threatened litigation, arbitration or administrative proceedings concerning Assignee in Vietnam;
Preparing a legal opinion in English as to the laws of Vietnam, addressed to and for the benefit of, including but not limited to, Client, covering matters relating to theAssignee for the purposes of acquisition;
Answering queries from Client related regulators in respect of Vietnamese law issues and matters relating to the Assignee; Preparation of the application documents:
Notifying application documents required in accordance with Vietnamese law;
Drafting application documents required for submission purpose including board resolution, joint venture contract, corporate charter, application etc; Liaising with Client to discuss the draft application documents;
Amending the application documents based on your comments;
Obtaining preliminary comments from the licensing authority on the draft application documents;
Finalizing the application documents following comments from the licensing authority; and
Translating the final version of the application documents into Vietnamese for execution. Licensing procedures:
Submitting the application dossier to the licensing authority on your behalf;
Monitoring and following up with the relevant authorities on the approval process;
Keeping you updated on the developments and additional requirements, if any; and
Assisting you in obtaining the approval letter and updating the Certificate of business registration for recording Client as new owner of the Company.
2.2. The roadmap for acquisition of 100% equity of Assignee can be described in following steps as follows:
Step 1: Due diligence Study
The due diligence will be based essentially on results from searches of public records (if available) and documents provided by the Assignee and/or Client, and the relevant parties will cooperate to provide documents requested in full and in a timely manner;
While it may be necessary to work on-site at the Assignee, such field work (if any) will be limited to two or three days;
The due diligence documents will be available in Vietnamese or English;
Communication will be in English, and will mostly be via email and telephone;
For litigation and insolvency searches, there is virtually no public record in Vietnam, nor are court dockets available. SB Law will conduct general searches on public sources (such as the internet, certain online databases of governmental agencies, if any), and the information may be limited;
Structure of the transaction based on information known by SB Law, and our experience in similar cases. However, each transaction is different, and the transaction referred to above may develop differently than the parties anticipated, the scope of work may be enlarged to cover aspects not initially covered, and so on. In such case, if our estimated fees are exceeded, SB Law will also be entitled to discuss with Client to revisit our fees.
Step 2: Obtaining approval for acquisition of 100% equity of the Assignee: Collection of required documents: We shall collect necessary information and documents from Client and the Assignee.
Preparing the application dossier: We shall collect necessary information and documents from you. Upon receipt of necessary information and documents from you.
The initial drafted application dossier shall be sent to you for your comments. Then, after updating the application dossier based on your comments, we shall obtain the preliminary comments from the competent authority and send the finalized application dossiers for you to sign and seal. We anticipate that this phase shall be completed within 03 working days.
Submission of application dossier: Within 02 working days from receipt of duly signed and sealed application dossier, we shall submit the application dossier to the competent authority. It shall take about 30 working days from submission of application dossier to the competent authority to grant the approval. In practice, it can be longer due to that it take time for the competent authority to consult the Ministry of Industry and Trade, Ministry of Planning and Investment, Ministry of Finance before granting the Aproval.
Step 2: Amendment of the Certificate of Business Registration
Preparing the application dossier: We shall collect necessary information and documents from you. Upon receipt of necessary information and documents from you, we shall translate documents from English into Vietnamese and prepare the application dossier under the standard forms. The initial drafted application dossier shall be sent to you for your comments. Then, after updating the application dossier based on your comments, we shall obtain the preliminary comments from the competent authority and send the finalized application dossiers for you to sign and seal. We anticipate that this phase shall be completed within 02 working days.
Submission of application dossier: Within 02 working days from receipt of duly signed and sealed application dossier, we shall submit the application dossier to the competent authority. It shall take about 05 working days from submission of application dossier for the provincial licensing authority to grant the Amended Certificate of Business Registration.
Post licensing: Within 13 working days we shall complete the post licensing procedures.
3. PROFESSIONAL FEE
3.1. SB Law professional fees for the scope of work as stipulated at Item 4 shall be as follows:
Step 1: 2,500USD (Two thousand and five hundred US Dollar);
Step 2: 8,000USD (Eight thousand US Dollar)
Step 3: 500USD (Five hundred US Dollar). The fee is exclusive of any expense incurred on behalf of Client, including VAT
(10%); expense for translation of your documents from English into Vietnamese:
10USD/150 words and bank fee..
3.2. Services fee shall be paid to SB Law as follows:
– Within 03 working days from the date of signing the legal service contract, Client will pay for SB Law an advance payment which equivalent to 45% of the total estimated services fee.
– Client will pay 30% of the total estimated services fee within 03 working days from obtainment of approval from competent authority for acquisition of equity from the Assignee;
– Client will pay the remained fee and other cost and disbursement incurred on Client’s behalf within 05 working days from obtainment the amended Certificate of Business Registration for Client from SB Law.
– Client shall immediately notify SB Law of when actual payment(s) will be made on the amount specified in the invoice(s). SB Law will start working only upon receipt of payment of the respective invoice(s). Alternatively, SB Law reserves the right to withdraw the service if payment is not received 10 days after the date of the invoice.
Further, in the event payments are not received by the payable date, SB Law reserves the right to suspend services and/or levy and collect a late payment fee of 0.5% per month up to the date of receipt of payment by SB Law.
– In case the Legal Service Contract is terminated before the expiry date, SB Law shall be entitled to payment of the percentage of services carried out upon the total of the services up to the date of such termination.