Decisions on Consolidation, Merger, Division, and Separation of 100% State-Owned Enterprises

Short answer: Consolidation, merger, division, or separation of enterprises with 100% state-owned charter capital is carried out under Decree 23/2022/ND-CP (Articles 13–15, 19). The decision is issued by the agency/individual that decided to establish the enterprise (or the Prime Minister where the enterprise was established by the Prime Minister), must clearly stipulate the succession of rights and obligations, and must be sent to creditors and notified to employees within 15 working days.

Legal basis

• Decree 23/2022/ND-CP (Articles 13, 14, 15, 19).

Reorganization forms (Article 13)

• Consolidation: two or more enterprises consolidate into a new enterprise; the consolidated companies cease to exist;
• Merger: one or more enterprises merge into another enterprise (transferring all assets, rights, and obligations); the merged company ceases to exist;
• Division: one enterprise divides its assets, rights, and obligations to establish two or more new enterprises; the divided company ceases to exist;
• Separation: part of the assets, rights, and obligations is transferred to establish a new enterprise; the separated company continues to exist.

Conditions (Article 14)

• Consistency with the document on enterprise arrangement and innovation approved by the Prime Minister (if none exists, the owner’s representative agency submits it to the Prime Minister for consideration);
• New enterprises formed after division or separation must meet enterprise establishment conditions;
• Consolidation and merger must comply with the Law on Competition.

Decision-making authority (Article 15)

• Enterprises established by the same agency/individual: that agency/individual issues the decision;
• Merger of enterprises established by different agencies: the agency that established the acquiring company issues the decision, on the basis of a written agreement with the other party; if one party was established by the Prime Minister, the Prime Minister issues the decision;
• Consolidation of enterprises established by different agencies: the agency assigned by the Prime Minister to exercise the owner’s representative rights issues the decision (the Prime Minister issues the decision where the enterprises were established by the Prime Minister).

Decision contents and notification obligations (Article 19)

• The decision must clearly stipulate the succession of rights and obligations of the reorganized enterprise;
• The decision and consolidation/merger contracts must be sent to all creditors and notified to employees within 15 working days from the date of issuance.

To reorganize a state-owned enterprise in the correct order and protect the parties’ interests, please contact ANT Legal’s lawyers for review and advice before proceeding.