Business mergers can be a rather strange concept because they rarely happen in business practice. However, understanding the merger process will help you do it effectively. Below is a detailed guide to the procedures for merging enterprises according to the latest regulations.
Business mergers can be a rather strange concept because they rarely happen in business practice. However, understanding the merger process will help you do it effectively. Below is a detailed guide to the procedures for merging enterprises according to the latest regulations.
According to Article 201 of the Law on Enterprises 2020 and Clause 2, Article 29 of the Law on Competition 2018, a merger of enterprises is defined as follows:
A merger is a process in which one or several companies (called the merged company) will merge into another company (called the merger company). The merged company will transfer all of its assets, rights, obligations and legal interests to the merged company, and the merged company will cease to exist.
Simple explanation:
- Company A (the merged company) will merge into company B (the merged company).
- Company A will cease to exist; all assets and liabilities of company A will be transferred to company B. - Company B will continue to operate after the merger.
Step 1: Prepare and Approve the Merger Agreement and Draft Charter
- The merger contract should include:
- Name and address of the head office of the merging company.
- Name and address of the head office of the merged company.
- Merger procedures and conditions.
- Labor use plan.
- Methods and procedures for conversion of assets, contributed capital, shares and bonds of the merged company into components of the merging company.
- Time limit for merger.
Step 2: Notify stakeholders and creditors
- Within 15 days from the date of approval of the enterprise merger contract, the merged company must notify employees and creditors of the enterprise merger.
Step 3: Close Tax Identification Number and Terminate Operation
- Procedures for termination of operation and closure of tax identification numbers include:
- Submit a report on the use of invoices.
- Complete tax obligations.
- Submit a dossier for closing a tax identification number, including:
- A written request for invalidation of the tax identification number.
- A certified copy of the business registration certificate.
- A copy of the decision and minutes of the dissolution meeting.
- A written certification of fulfillment of tax obligations from the General Department of Customs if there are import and export activities.
Step 4: Submit the enterprise merger dossier to the Business Registration Agency
- Submit the dossier at the Business Registration Office – Department of Planning and Investment where the merger company is located.
- Case 1: The merging company changes its business registration contents
- Components of the dossier include:
- Notification of changes in business registration contents.
- Merger contract.
- Resolution and minutes of the meeting approving the merger contract of related companies.
- The business registration certificate of the merged company.
- Documents proving the change in business registration contents.
- Case 2: The merging company does not change the business registration content
- Components of the dossier include:
- Notice of supplementation and update of business information.
- Merger contract.
- Resolution and minutes of the meeting approving the merger contract of related companies.
- The business registration certificate of the merged company.
Note:
- Within 10 working days from the date of completion of the merger, the merging company must send a written notice to the Business Registration Office to terminate the existence of the merged company.
- After registration, the merged company will cease to exist; The merging company will enjoy legal rights and benefits, and be responsible for unpaid debts, labor contracts, and other property obligations of the merged company.
In addition to complying with the provisions of the Law on Enterprises, the merger of enterprises needs to comply with the provisions of the Competition Law, including:
- Competitive impact assessment: According to Article 29 – Competition Law, the merger of enterprises needs to be assessed for its ability to have an impact on limiting competition in the market.
- The impact assessment includes:
- Combined market share before and after the merger.
- Combined market share before and after the merger.
- The degree of concentration in the market and the risk of creating market power.
- Supply chain relationships between participating businesses.
- Competitive advantage and ability to increase prices or profits.
- Ability to prevent other businesses from entering the market.
If you need more information or support, please contact ADVN LAW for detailed advice.
- Address: F2&F3, No. 2 Phung Khac Khoan, Da Kao Ward, District 1, Ho Chi Minh City
- Phone: 0903.693.301 – 0909.393.329
- Email: vanphongluatsuadvn@gmail.com; advnlaw@gmail.com
