Our client was the UK parent of a company in Vietnam. They asked us to help them with the sale of their subsidiary (through a share sale).
Context and Challenge
In some respects the transaction was straightforward. It was along the lines of a management buyout so extensive warranties were not needed – the buyer knew the business that it was buying. On the other hand, we wanted to minimise the risk of our client having to deal with any issues after it had sold the business.
While it was unlikely that a warranty claim would be made, it was possible that claims could be made sooner or later from state authorities such as the tax authority or a local regulator. Having worked in similar jurisdictions before we were alive to the potential for local authorities to make an unexpected claim which could be challenging to sort out. Some businesses may feel that being in the UK is far enough away from the authorities in Vietnam for any claim from the Vietnamese authorities to be an issue. However, our client was regularly bidding on international tenders so, apart from anything else, they would have to have disclosed any claims brought against them, in particular tax claims, when they were tendering.
The process of agreeing the business sale with the buyer was straightforward. The share purchase agreement was accepted quickly with minimal warranties and due diligence from the buyer. Making the necessary registrations and notifications in Vietnam took longer but there were no problems.
As a UK based law firm we are never going to be best placed to make sure things were in order with the authorities in Vietnam but, being alive to the issues, we knew the kinds of risks that needed to be closed off and we also appreciated the importance of using the right lawyers in Vietnam. We have good networks in certain overseas jurisdictions and we were able to call on the support of a firm that we knew based in Ho Chi Minh City.
Throughout the sale process we worked with the Vietnamese law firm to ensure that the client achieved what it wanted out of the sale, minimised risk and that things were done properly with the local authorities. We also helped ensure that our client paid a fair price for the work carried out in Vietnam.
The deal went ahead as planned, it went smoothly and there have been no issues since completion in 2017.