Công ty dịch vụ luật Apolat Legal

Part 1: Transfer of Commercial Contracts In the context where enterprises are increasingly undertaking restructuring to optimize their operational models and management efficiency, the business transfer model is gradually becoming a commonly used approach alongside traditional M&A transactions. As a matter of principle, business transfer refers to the transfer by an enterprise of certain rights, obligations, and assets from one legal entity to another through a series of independent transactions. In practice, particularly within corporate groups and holding company structures, business transfer is often utilized as a mechanism to streamline organizational structures, reallocate functions among affiliated entities, and enhance both governance efficiency and tax optimization. It should be clarified that this does not constitute a form of corporate reorganization as prescribed under Clause 31 Article 4 of the Law on Enterprises 2020 (including division, separation, consolidation,...

The conversion of loans into equity – commonly referred to as a Debt/Equity Swap (“ DES ”) – is increasingly prevalent in the internal financial structuring of companies, particularly where shareholders or capital contributors seek to legitimize funds previously injected into the company. However, this mechanism also represents a financial arrangement that entails significant legal risks, especially where it is implemented in an ad hoc manner without a clear legal basis. This article highlights the key legal risks that companies should carefully consider prior to undertaking such a transaction.   1. Legal nature of DES   In essence, a loan and an equity contribution represent two entirely distinct legal relationships. A loan arises from a loan agreement, under which the borrower is obliged to repay both principal and interest in accordance with the agreed terms . 1 In contrast, an equity contribution refers to an asset contributed by a member or shareholder to the company...