Consolidations and Demergers in Vietnam follow a distinct statutory procedure under the 2020 Enterprise Law, separate from ordinary M&A acquisitions.
Unlike M&A in the sense of a share or asset purchase, mergers, consolidations and demergers are corporate reorganisation mechanisms under the Enterprise Law with legal consequences for obligation succession and creditor protection that differ significantly from an ordinary M&A transaction.
This briefing, prepared by IVLF Advisors’ M&A advisory team, analyses the procedure, obligation-succession mechanism and key considerations when undertaking a merger, consolidation or demerger in Vietnam.
Distinguishing mergers, consolidations and demergers
A merger (sáp nhập) is where one or more companies transfer all assets, rights and obligations into a receiving company, and the merged company ceases to exist. A consolidation (hợp nhất) is where two or more companies combine to form a new company, with the consolidating companies ceasing to exist. A full demerger (chia) is where a company splits its assets, rights and obligations to form two or more new companies, and the original company ceases to exist; a partial demerger (tách) transfers part of the assets, rights and obligations to a new company without the original company ceasing to exist.
Procedure under the 2020 Enterprise Law (as amended by Law No. 76/2025/QH15)
The procedure for mergers, consolidations and demergers is set out in Articles 198–201 of the 2020 Enterprise Law, as amended by Law No. 76/2025/QH15. The basic steps include: preparing a merger/consolidation agreement or demerger resolution; approval by the Members’ Council/General Meeting of Shareholders of the relevant companies; enterprise registration for the receiving company/new consolidated company/new companies; and completing the procedure to terminate the existence of the merged/consolidated/demerged company.
Succession of rights and obligations
The receiving company or the consolidated company succeeds to all rights, obligations and lawful interests of the merged/consolidated company under the merger/consolidation agreement. For demergers, the new companies are jointly liable for the obligations, unpaid debts, labour contracts and other property obligations of the demerged company, unless the relevant parties (the company, creditors, employees) agree otherwise.
Creditor protection and notification obligations
Businesses undertaking a reorganisation must notify creditors, employees and relevant authorities before completing the procedure, particularly where a demerger disperses asset liability across multiple new legal entities. This is a point creditors typically require to be explicitly confirmed under loan agreements or commercial contracts containing change-of-control/reorganisation clauses before consenting to the reorganisation.
Labour considerations: succession of labour contracts under the 2019 Labour Code
Under Article 43 of the 2019 Labour Code, in a merger, consolidation or demerger, the successor employer must continue to employ the existing workforce and amend/supplement labour contracts accordingly; where it is not possible to retain all existing employees, the successor must develop and implement a labour utilisation plan as required by law. This is an obligation easily overlooked when a business focuses primarily on the financial and tax aspects of a reorganisation transaction.
Merger control
Mergers and consolidations fall within the scope of the 2018 Competition Law’s merger control regime, and where the applicable notification thresholds are exceeded, the business must complete a merger control notification with the National Competition Commission before completion — a process independent of the enterprise registration procedure.
Counsel’s view: Unlike a share-purchase M&A transaction, a merger/consolidation/demerger requires simultaneous review of four obligation categories: civil obligation succession (contracts, debts), labour obligations, creditor notification obligations, and potential merger control notification — overlooking any one of these can lead to post-reorganisation disputes.
Frequently asked questions
How does a merger differ from a consolidation?
In a merger, the merged company transfers everything into an already-existing receiving company; in a consolidation, the companies combine to form an entirely new company.
Who is liable for the debts of a demerged company?
The new companies formed by the demerger are jointly liable, unless otherwise agreed with creditors.
Does a merger always require a merger control notification?
Only where the applicable notification thresholds under the 2018 Competition Law are exceeded, independent of the enterprise registration procedure.
IVLF Advisors’ M&A advisory team helps businesses complete mergers, consolidations and demergers in compliance with current regulations while protecting stakeholders’ interests. Speak with our team about your corporate reorganisation plan for tailored advice.
Consolidations and Demergers in Vietnam: Practical Takeaway
Executing Consolidations and Demergers in Vietnam requires careful sequencing of shareholder resolutions, creditor notification, and asset and obligation allocation between the resulting entities. For related structuring guidance, see IVLF Advisors’ M&A and corporate restructuring advisory services. Companies should also review procedural requirements from the National Business Registration Portal for registering the resulting entities after a merger or demerger. Careful planning of Consolidations and Demergers in Vietnam reduces the risk of creditor challenges after completion.
Planning Consolidations and Demergers in Vietnam
Consolidations and Demergers in Vietnam require early legal due diligence, a clear allocation of assets and liabilities, and coordinated filings. Companies considering Consolidations and Demergers in Vietnam should engage experienced Vietnam corporate restructuring counsel to review creditor notices, employee succession, merger-control thresholds, and tax consequences. A practical timetable for Consolidations and Demergers in Vietnam also helps management avoid registration delays and post-completion disputes.
This article is provided for general information only and does not constitute legal advice for any specific case. Regulations may change – please consult a qualified professional before acting. Should further analysis be required, please contact one of our lawyers below.
