Apolat Legal Advises Japanese Shareholder on Exit from Vietnamese Subsidiary
Apolat Legal advised a Japanese shareholder holding 100% of the capital of its Vietnamese subsidiary in connection with the transfer of its entire equity interest in the subsidiary to a Vietnamese investor. The transaction value was USD 2.5 million.
In addition to structuring the capital transfer, Apolat Legal supported the client in securing recovery of the USD 2.5 million that the Vietnamese subsidiary had borrowed from the Japanese shareholder during its prior operation period. The recovery plan was designed through a combination of transfer pricing arrangements, liquidation of inventory, and disposal of goods prior to the handover of the Vietnamese subsidiary to the new investor.
A notable feature of the deal was that the Vietnamese subsidiary held land use rights over an area of 16,000 square metres in an industrial park in Binh Duong. Accordingly, in addition to advising on the transaction structure, Apolat Legal also supported the client in obtaining the necessary approval from the industrial park management authority for the transfer and in carrying out the relevant investment registration and enterprise registration amendment procedures.
Unlike a typical capital transfer transaction, this deal required the lawyers to have a strong understanding of both legal and financial issues. The transfer price was set at a relatively low level because the Vietnamese subsidiary had incurred substantial losses and significant outstanding debts, which created challenges when dealing with the competent authorities during the administrative approval process. In parallel, Apolat Legal carefully structured the payment terms to ensure that the Japanese shareholder could fully recover both the transfer price and the outstanding debts.
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