Legal due diligence report in respect of Vietnamese Entity

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Question: We were asked to provide a company (the “Client”, i.e., the Issuer) in preparation for IPO in Hongkong with a consolidated fee quote for acting as the Issuer’s counsel.

Because the Client’s primary operating subsidiary is in Vietnam (the “Vietnam Subsidiary”), we will have to work with a Vietnam law firm in doing due diligence and issuing legal opinion covering the Vietnam Subsidiary. If your Firm is interested, I would like to invite you to provide fee quotes.

Answer: This is reference to your emails from which, we understand that your firm (hereinafter referred to as “Client”) would like us to prepare a legal due diligence report in respect of Vietnamese Entity, – a subsidiary of its client or the Issuer (hereinafter referred to as “Subsidiary”), in connection with the proposed IPO of the Issuer in Hongkong. We therefore are grateful to present you our Legal Services Proposal for your review and consideration.

1.Scope of works

Following works are proposed based on the request of Client. However, depending on the specific position/situation of Client, several work items may not be necessary. Meanwhile, other works may be required. SB Law shall immediately advise Client the same upon review documents of the case. However, any additional works shall not fall under the scope of this Legal Service Proposal Letter, but could be provided upon request.

  • Conducting legal due diligence reviews in respect of the Subsidiary 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 Subsidiary (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 the Subsidiary in Vietnam;
  • Conducting legal due diligence reviews in respect of key persons of the Subsidiary e., directors, presidents, etc and producing a legal due diligence report in English covering matters set forth in list of questions raised by HKSE;
  • Preparing a legal due diligence report in English as to the laws of Vietnam and providing the professional references of the law firm and lawyer. The documents that checked by Vietnamese Lawyer are supposed to be witnessed consistent with the original and provided with legal opinion as an attachment of the legal opinion. The legal due diligence report should include a detailed description of information of verification of the scope of service and make the following comments:

Legality of company’s establishment and share transfer, whether in conformity with Vietnamese Law in remainder and recruit, whether punished by Vietnamese environmental protection agency, industrial and commercial administration, customs, labor bureau, quality supervision agency, tax bureau or any other competent department and whether in lawsuit or arbitration. The right of land use, housing property, patent right, trademark right and tenancy contract and other rights of the property;

  • Answering queries from Client and/or assisting Client in answering queries in respect of Vietnamese law issues and matters relating to the Subsidiary, and working with other advisors of Client in preparing replies to such queries;
  • Reviewing, drafting and commenting on legal issues and related matters contained in the draft prospectus and reviewing the verification notes in relation to Vietnamese laws and the Subsidiary (if so required);
  • Drafting and revising relevant sections relating to the relevant legal framework of Vietnam for purposes of the prospectus (if so required);

For avoidance of any doubt, the scope of work shall strictly adhere to following specific assumption:

  • The due diligence will be based essentially on results from searches of public records (if available) and documents provided by the Subsidiary, 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 head office of the Subsidiary, such field work (if any) will be limited to two or three days;
  • The scope of due diligence investigation is limited to matters set out in Item (i) above;
  • 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;
  • Most substantive works in connection with the legal due diligence in Vietnam and the issuance and update of the Vietnam legal opinion or due diligence report will be within a time span of up to two months, and no significant substantive works will be required thereafter;
  • The estimated fees presented below are, among others, based on our understanding of the structure of the transaction based on information known by us, 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.
  • Responsibility of the Subsidiary:(i) Provide legal documents in English or Vietnamese according to the list of documents provided by us; and

    (ii) Arrange meetings between us and related individuals and organization for the purpose of due diligence investigation.

    2.PROFESSIONAL FEE

    The Price for performing the SB Law services as mentioned in item above will be as follows:

    Stage 1: 2,680USD (Two thousand and six hundred and eighty US Dollar);

    Stage 2: 1,065USD (One thousand and sixty five US Dollar);

    Stage 3: 625USD (Six hundred and twenty five US Dollar)

    The fee is exclusive of 10% VAT and actual expense for traveling out of Hanoi or Ho Chi Minh City.