ECOVIS Elkadeem & Co.

Legal Due Diligence for M&A in Vietnam

Mergers and Acquisitions (“M&A”) are considered one of the fastest ways to help investors expand into new markets, create synergies, and grow revenue. To minimize potential legal and commercial risks, a thorough assessment of the target company must be conducted. Legal due diligence (“LDD”) is one of the most important types of due diligence.

1. When does legal due diligence start?

Normally, after the parties have already signed:

• (i) a letter of intent or Memorandum of Understanding (MOU) between the investor and the seller;
• (ii) a non-disclosure agreement;
• (iii) and, in certain circumstances, after an initial deposit is made to confirm that the deal is serious enough for the company to prepare the initial documents.

2. Legal issues covered in due diligence

2.1. Legal status of target company
Enterprise Registration Certificate, Investment Registration Certificate, Business License and other granted certificates

2.2. Financial status of target company

• Capital, bank account and financial obligations
• Shareholders, contributed capital and contribution status of shareholders
• Corporate governance, company charter, recent meeting minutes and decisions issued
• Process and feasibility of capital transfer
• Labor contracts and human resources policies of the company
• Documents related to the ownership or long-term rental of assets: real estate, machines, equipment, etc.
• Financial reports, audit reports
• Any pending or signed agreements currently in place
• Any outstanding loans, debts, or obligations

2.3. Intellectual property

• Documents related to the possession of trademarks, trade names, design, etc.
• Infringement of intellectual property rights of organizations or individuals

2.4. Disputes and litigation

• Disputes in which the target company was/is a party to the dispute
• Civil, commercial, administrative lawsuits in which the target company was/is the plaintiff or defendant

3. Advice from our team

• Legal due diligence should be conducted by a law firm or registered lawyer in Vietnam.
• When selecting a lawyer, it may be helpful to find someone who is conversant in both Vietnamese and the native tongue of the investor.
• The investor typically determines the scope of the legal due diligence and may identify key issues to research and review. This will help ensure that the proposal and recommendations generated during this engagement meet the client’s expectations.

For further information please contact:

Vu Manh Quynh
Managing Partner
Ecovis Orient Counsel (Ecovis Vietnam Law)
Email: quynh.vu@ecovislaw.vn

Holding Law: Poland to Introduce a New Revolutionary Holding Regulation

Legislation related to corporate groups in Poland is picking up speed. A draft law has now been submitted which reorganises the powers of parent companies over subsidiaries. This includes, for example, that parent companies can issue legally binding instructions or request inspection of the subsidiary’s books.

As reported several months ago (see box), legislative work related to groups of companies (holdings) has accelerated in Poland in 2021. The government recently sent an official draft to parliament. The draft indicates a “vacatio legis” of six months, which means that depending on the pace of the legislative process, it can be expected that a holding regulation will come into force in the first half of 2022.

We can advise you on which measures you can consider if you are affected by the changes in the new holding law.

Piotr Pruś, Attorney-at-law, Partner, ECOVIS Legal Poland, Warszawa, Poland

The Cornerstones of the New Holding Law

The new law provides for some new solutions, such as the parent company’s power to issue legally binding instructions to subsidiaries that have elected to participate in a group of companies.

In addition, the supervisory and management bodies of the parent company will have the right to inspect the books and documents of the subsidiary, which is not currently the case. However, this solution will merely confirm the already existing practice in many companies.

What the New Holding Law Means for Shareholders

A shareholder representing no more than 10% of the share capital of a subsidiary will have the right to request that the parent company purchase its shares (a sell out right). On the other hand, the parent company will have the right to squeeze out minority shareholders of the subsidiary holding no more than 10% of the share capital of the subsidiary.

Balancing out the newly introduced right to issue legally binding instructions to subsidiaries, the parent company will bear material liability towards creditors of the subsidiary. This means that the creditors of the subsidiary will have the right, under certain conditions, to claim compensation from the parent company for any damage to creditors caused by such binding instructions being issued, say the Ecovis advisers.

The holding law will affect the operations of all capital groups with subsidiaries in Poland. In the coming months, shareholders and managers of such groups will have to consider and prepare the appropriate actions. This is important, as a decision on whether to participate in a group of companies will have a material influence on the operations of not only the subsidiary, but also the parent company, explain the Ecovis experts. The draft also contains numerous other new provisions, especially concerning the organisation and conduct of the supervisory board.

For further information please contact:

Piotr Pruś, Attorney-at-law, Partner, ECOVIS Legal Poland, Warszawa, Poland
Email: piotr.prus@ecovis.pl

Digital Nomads in Greece: Work Independently with Benefits and Privileges

Greece is seen as an attractive destination for digital nomads. This is particularly due to the benefits and privileges, such as lower income tax, provided for in law L. 4825/2021 passed by the Greek parliament. However, there are some bureaucratic hurdles to overcome for digital nomads wishing to work in Greece.

Αccording to the provisions of L. 4825/2021 Art. 11, digital nomads are usually considered to be residents of third countries who may work remotely through the use of digital devices for a period of at least twelve (12) months. To obtain their national visa, these people must submit the following documentation to the Greek consular authorities:

• • A) A solemn declaration declaring their will to stay in Greece based on the national visa they hold and at the same time assuring that they will not provide their services to any employer based in Greece.
  • B) An employment agreement with the employer, individual or legal entity based in a foreign country.
  • C) Details of the digital nomad work, i.e. the profession, name, legal seat or object of the company in cases where the person comes from a third country and keeps his/her own business based outside of Greece.
  • D) Any certificates proving their economic self-sufficiency and independence meaning that they will be able to cover their daily living expenses during their stay in Greece.
  • E) A national visa fee of EUR 75.

Do you have questions about income tax in Greece? Contact us.

Anastasia Moschovaki, Tax Lawyer, ECOVIS HELLAS L.T.D., Athens, Greece

Digital nomads may be accompanied in Greece by their family members who, in turn, may obtain a national visa with same expiry date as that of the digital nomad, explain the experts from Ecovis.

For further information please contact:

Dimitrios Leventakis, Managing Director, ECOVIS HELLAS L.T.D., Athens, Greece
Email: dimitrios.leventakis@ecovis.gr

Anastasia Moschovaki, Tax Lawyer, ECOVIS HELLAS L.T.D., Athens, Greece
Email: moschovaki.anastasia@ecovis.gr