Contract Considerations in M&A Mergers and Consolidations

Short answer: In a merger or consolidation (M&A) transaction, the contract system includes: the memorandum of understanding (MOU), the non-disclosure agreement (NDA), the merger/consolidation contract, the post-merger charter, and appendices transferring assets, employees, and contracts. Key points to note: the conditions for effectiveness of the merger contract, the mechanism of succession of rights and obligations, protection of creditors’ and employees’ rights, and registration procedures at the Business Registration Office. This article analyzes under the Law on Enterprises 2020 (as amended by Law No. 76/2025/QH15).

Legal basis

• The Law on Enterprises 2020, as amended and supplemented by Law No. 76/2025/QH15 — Articles 200–205 (division, separation, consolidation, merger, conversion of enterprises);
• The Civil Code 2015 — general provisions on contracts;
• Decree 168/2025/ND-CP on enterprise registration.

The contract system in a merger/consolidation transaction

1. Non-disclosure agreement (NDA)

Signed at the very beginning of negotiations and due diligence; sets the scope of confidential information, non-disclosure obligations, confidentiality period, and breach remedies.

2. Memorandum of understanding (MOU/Framework agreement)

Records preliminary intent: transaction structure, expected price, timeline, conditions precedent, and exclusivity period. Note: an MOU may be deemed binding if the parties express clear commitment — a lawyer should draft it to control the level of binding force.

3. Merger/consolidation contract

The central instrument of the transaction, signed by the participating companies, with the main contents:

• Names and addresses of the participating companies;
• Procedures and conditions of the merger/consolidation; plan for use of employees;
• Time limit and procedures for converting assets, capital, and shares of the merged/consolidated companies into assets, capital, and shares of the surviving/new company;
• Plan for handling ongoing contracts, financial and tax obligations;
• The effective date of the contract.

4. Post-merger/consolidation charter

The surviving company amends its charter; the consolidated company issues a new charter — both must be adopted by the parties in accordance with proper authority.

Key legal points in the merger contract

Conditions for effectiveness

The merger/consolidation contract must be approved by the Board of Members/General Meeting of Shareholders of each participating company at the statutory voting ratio; where foreign elements are involved or in conditional business sectors, approvals of competent authorities must be completed.

Succession of rights and obligations

The surviving/new company inherits all rights, obligations, and lawful interests of the merged/consolidated companies — including debts, contracts, and pending disputes. Succession cannot be contractually excluded against good-faith third parties.

Protection of creditors and employees

• Participating companies must notify creditors and employees in writing of the merger/consolidation;
• Creditors may demand debt payment or security for obligations before the transaction is completed;
• The employee plan must comply with the Labor Code 2019 on restructuring and termination of labor contracts.

Enterprise registration after the merger

The surviving company registers changes of enterprise registration contents; the consolidated company registers a new enterprise; the merged/consolidated companies cease to exist after the procedures are completed.

Frequently asked questions

Does the merger contract require notarization?

Enterprise law does not require notarization of merger/consolidation contracts. However, instruments transferring land use rights and assets subject to ownership registration in the merger must still comply with the prescribed form (notarization/certification under sectoral regulations).

What if creditors object to the merger?

The merger contract may still be approved under internal authority, but the company must address legitimate creditor demands (payment or security). Disputes with creditors are resolved through litigation.

How does a merger differ from a share purchase in contract terms?

A merger terminates the legal personality of the merged company with full succession — the merger contract is an enterprise reorganization instrument. A share purchase does not change legal personality — the share transfer agreement is an asset transfer transaction (ownership of shares) between shareholders.

Notes on applying current laws

Merger/consolidation contracts are complex instruments involving enterprise, labor, tax, land, and possibly competition law simultaneously. Sloppy drafting easily leads to post-transaction succession disputes. Contact an ANT Legal lawyer at 0966.475.966 for drafting and review of the M&A contract system.

Common risks to watch out for

• An MOU unintentionally creating binding obligations;
• Failure to notify creditors and employees as prescribed;
• Missing plans for contracts with change-of-control clauses;
• Incomplete transfer of ownership of assets subject to registration.

How ANT Legal can help

ANT Legal advises on merger/consolidation transaction structures; drafts NDAs, MOUs, merger/consolidation contracts, and charters; and carries out post-transaction notification and enterprise registration procedures. For quick advice, please contact our lawyers at 0966.475.966.

Related articles

• Risks in the M&A Process
• Unilateral Termination of Labor Contracts with Pregnant Employees
• Working Regime of Boards of Members in State-Owned Enterprises
• Can a Private Enterprise Owner Simultaneously Own a Household Business?
• Company Formation Services Nationwide in Vietnam