Apolat Legal Advises Shareholders of Foreign-Invested Company in Vietnam on Cross-Border Share Contribution Structure

Apolat Legal advised and assisted the shareholders of a foreign-invested company in Vietnam in connection with a transaction involving the use of their shares in such company to establish new companies in France. The client is a French-Vietnamese company operating in website design and development, open-source development, and digital strategy.

Under the transaction structure, two shareholders of the Vietnamese company used their shares in that company as capital contribution to establish two companies in France, resulting in a change in the shareholder structure of the Vietnamese company. Based on the valuation of the shares in the Vietnamese company, the charter capital of the two newly established companies in France was recognized at up to EUR 750,000.

A notable feature of the deal was that, while this type of transaction is not uncommon for Vietnamese companies in general and is often used in practice in structures involving cross-ownership, there have been very few similar transactions involving foreign-invested companies in Vietnam. Vietnamese law also contains limited guidance on this type of transaction where foreign investment elements are involved, which created practical difficulties in the process of working with the competent authorities.

The successful completion of the deal demonstrates that even a transaction with limited regulatory guidance and few precedents may still be implemented effectively if it is structured appropriately and supported by clear and well-reasoned explanations to the relevant authorities.

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