Does the public tender offer requirement apply to the indirect acquisition of a Vietnamese public company through the acquisition of its non-public parent company?
There is no clear answer to this question because it is unclear what constitutes “indirect ownership” under the 2019 Securities Law. Specifically, among other cases, pursuant to Article 35.1(a) of the 2019 Securities Law, the public tender offer requirement applies when (underlining added): An investor and the investor’s affiliates (except where the investor and their affiliates are investment funds or fund management companies) intend to purchase voting shares, resulting in direct or indirect ownership of 25% or more of the outstanding voting shares of a public company.
Unclear:
· The first reference to “voting shares” refers to the voting shares of the relevant public company (target company) or may refer to the voting shares of any company; and
· Whether ownership of shares in a company that owns shares in the target company may be considered indirect ownership of shares in the target company.
Therefore, the aforementioned tender offer requirement may apply even to an investor purchasing shares of the target company’s non-public parent company (such parent company is referred to as the Non-Public Parent Company), if such purchase results in the investor holding an indirect ownership interest in the target company reaching the 25% threshold. For example, when the Non-Public Parent Company holds 25% of the total shares of the target company, if an investor intends to purchase a controlling stake or 100% of the Non-Public Parent Company, that investor may be required to make a tender offer because, after the purchase, the investor would indirectly own 25% of the target company through the Non-Public Parent Company.
On the other hand, other regulations regarding public tender offers indicate that the requirement for a public tender offer applies only to investors purchasing shares of a target company that is a publicly traded company, resulting in their ownership of the target company’s shares reaching the prescribed threshold:
· Article 3.25 of Decree 155/2020 defines a “public tender offer” as the act by an organization or individual of publicly carrying out the purchase of a portion or the entirety of the voting shares of a publicly traded company, or the closed-end fund certificates of a closed-end fund, in accordance with legal regulations to ensure fairness for the shareholders and investors of the target company and the target investment fund. “Target company” is also defined as “a publicly traded company whose shares are the subject of a public tender offer” under Article 3.26 of Decree 155/2020; and
· Another case where a public tender offer applies is when an investor and their related parties hold 25% or more of the voting shares in a publicly traded company and intend to acquire additional shares, resulting in a direct or indirect ownership ratio reaching or exceeding 35%, 45%, 55%, 65%, or 75% of the outstanding voting shares of a public company (Article 35.1(b) of the 2019 Securities Law). This indicates that the investor must intend to purchase shares of the target company, which is a public company.
However, if the provisions on public tender offers under the 2019 Securities Law are interpreted as applying only to cases where an investor and their related parties intend to purchase shares of the target company, then the term “indirect ownership” would not be necessary in Articles 35.1(a) and 35.1(b) of the 2019 Securities Law, because in such cases, both the investor and their related parties would always have direct ownership of the target company’s shares as a result of purchasing those shares.
