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Navigating M&A in Vietnam: Compliance with New Regulations on Personal Data Protection, IP Law, and Global Minimum Tax

At the GC Summit 2024 event, held in collaboration with Legal500, ASL LAW emphasized the important factors in conducting M&A activities in Vietnam, specifically regarding regulations on personal data protection, intellectual property law, and requirements for global minimum tax.


Businesses engaging in M&A transactions in Vietnam need to pay attention to factors affecting sustainable and transparent operations in the Vietnamese market. Compliance and proper implementation of regulations in these areas are crucial for the success of a business.

During the presentation at the workshop, in addition to the usual aspects to consider in M&A deals, ASL LAW focused on three important new factors influencing the success of M&A transactions and the overall development of the M&A market in Vietnam: regulations on personal data protection, Vietnam intellectual property law, and requirements for global minimum tax.

ASL LAW’s presentation at the GC Summit 2024 is delivered by Mr. Pham Duy Khuong, Managing Partner of ASL LAW (center), Senior Lawyer Nguyen Tien Hoa (right), and Senior Associate Nguyen Le Tram (left).

I. The Impact of Personal Data Protection on M&A Activities

When preparing for an M&A transaction, involved parties as well as legal teams and consulting firms supporting them often utilize Virtual Data Rooms (VDR), OneDrive, Google Drive, etc., to share information.

According to the provisions of Decree 13/2023/ND-CP on personal data protection (“Decree 13“), this exchange is categorized as ‘data processing’ and needs to comply with the regulations in Decree 13 regarding information security.

However, sharing data via platforms like VDR lacks robust security mechanisms, leading to the potential leakage or theft of data.

The loss or leakage of critical data can have serious consequences as it may contain personal information as well as sensitive information provided by employees or individual customers.

One of the measures to mitigate data leakage or loss is for parties to only use services from reputable VDR providers. Additionally, access should be limited/controlled (viewing time, viewing rights, downloading rights, etc.) and information sharing should be restricted. Limiting the sharing of personal information can be achieved by sharing templates instead of granting access to computers/laptops or other electronic devices to the other party.

Legally, parties involved in M&A transactions need to proactively request other parties or partners, stakeholders in the deal to sign Non-Disclosure Agreements (NDAs) to ensure that Buyers, Sellers, Consulting/Law Firm in Vietnam maintain confidentiality.

If the shared information in meetings is external information, parties involved in M&A transactions need to obtain written consent from the Data Owner for the purpose of sharing information, usually in the form of a document called a Letter of Consent.

In the absence of a separate contract for this purpose, parties need to have consent provisions in other contracts such as employment contracts, sales contracts, etc., demonstrating the owner’s permission to use or process personal data for the stated purpose.

After the personal data processing is completed, the processing parties need to send an impact assessment report of the personal data processing to the relevant parties, ensuring that the data processing does not violate the prohibitions in Decree 13, such as tarnishing the dignity or image of the data owner.

1. Legal Due Diligence Related to Personal Data

Legal due diligence is an essential process in the execution of M&A transactions or other business deals.

The purpose of legal due diligence related to personal data is to ensure that the collection and processing of information are transparent and legal. The process of collecting, processing, storing, and using information needs to be carried out in accordance with the provisions of Decree 13 and related regulations.

Lawyer Pham Duy Khuong presents on the impact of personal data protection on M&A activities.

Some factors that parties involved in M&A in Vietnam need to consider regarding legal due diligence related to personal data include:

Identifying which personal information the seller collects

It is necessary to check whether the collected information is basic or sensitive, as well as which subjects’ information is collected, whether there is sufficient consent or other content indicating consent to process personal data.

Identifying the flow of personal information related to both online and offline data collection

It is necessary to determine how the information is collected, processed, and stored, including online collection through accepting cookies, online account registration, etc., or offline registration via phone or offline. In some cases, requesting submitted storage files or granting access rights for monitoring may be necessary.

Assessing the seller’s privacy policy and other disclosures across all platforms

It is essential to assess whether the seller’s privacy policy and related disclosures comply with current laws and practices. Parties should consider the specifics of each field to understand how information is collected—for example, hospitals/clinics may use registration forms or medical records; e-commerce may use online account registration, etc. Additionally, full disclosure of how the seller collects, uses, stores, and discloses personal information is required.

Assessing the existence of information security policies and procedures

In addition to reviewing security and disclosure policies, the buyer should review the seller’s information security policies and procedures to determine if the seller has appropriate procedures to handle and use the collected personal information. This may include reviewing policies and procedures for (i) data encryption, (ii) access and control of personal information, (iii) data deletion, (iv) data breaches and incident response, and (v) data storage…

Evaluating seller’s compliance with current privacy laws

Based on the privacy policy, it is necessary to request the actual data collection and processing procedures, as well as the responsible department. Interviews with the responsible department regarding actual implementation are essential to ensure compliance with the issued policies and procedures.

Identifying statements/agreements made for individuals and third parties regarding their personal data protection

The buyer needs to determine the seller’s role in relation to personal data (controller, joint controller, processor) to identify shared information and how it is shared with third parties, as well as identifying relevant parties and necessary agreement documents.

Understanding the history of data breaches and security incidents

The buyer must be informed of any data breaches or security incidents and how the seller handled those breaches.

The buyer should be aware of any past lawsuits, pending or processed, complaints, regulatory requests, administrative penalties, or fines related to any data breaches.

Understanding the seller’s security practices and explaining how these issues are addressed and/or resolved will provide the buyer with a basis for response as well as negotiation and planning for future development strategies.

2. Negotiating Purchase/Repurchase Agreements

After conducting legal due diligence and obtaining results, the parties will negotiate Commitment and Warranty terms related to:

  • Seller’s compliance with current data privacy laws.
  • Ongoing or potential personal data complaints.

The buyer may seek compensation for third-party complaints arising from seller’s non-compliance with personal data protection regulations. In case of incorrect warranties, the contract may be terminated or damages may be claimed.

3. After signing/concluding the agreement on personal data protection

The parties need to specify further what needs to be done after the conclusion or signing to allow for lawful transfer of personal data. Additionally, updating and amending privacy policies, forms, procedures, and infrastructure related to personal data protection to prevent losses is necessary.

Furthermore, the parties need to conduct impact assessment reports if any, such as the analysis mentioned above.

II. The Impact of Intellectual Property on M&A Activities

Unlike the common perception of many businesses, intellectual property (IP) plays a significant role in M&A activities. In fact, intellectual property can be considered one of the most critical factors influencing the success of an M&A deal.

1. Legal Due Diligence on Intellectual Property

Legal due diligence is an indispensable part of conducting business transactions such as M&A, ensuring that the parties involved in the transaction can operate sustainably and safely in the market.

Lawyer Nguyen Tien Hoa presents on the impact of intellectual property on M&A in Vietnam.

In the field of intellectual property, due to its intangible nature and difficulty in valuation, legal due diligence on intellectual property assets often poses challenges for businesses, especially technology companies with valuable intangible software and applications.

However, precisely because of this reason, legal due diligence on intellectual property assets is crucial in identifying potential risks related to intellectual property ownership. Without due diligence, information about a company’s intellectual property could be disclosed during M&A transactions, potentially impacting the target company if the M&A deal fails.

2. Issues to Consider in Legal Due Diligence

During the legal due diligence process for M&A transactions, there are several important issues that need to be carefully considered and examined. Here are some key points to note:

Formal Requirements before Legal Due Diligence:

  • Signing Non-Disclosure Agreements (NDA) to ensure confidentiality regarding intellectual property assets that may be disclosed during the M&A process.
  • Signing Memorandum of Understanding (MOU), which outlines the conditions for completing the transaction. In deals where intellectual property assets play a crucial role, signing this MOU is of utmost importance.

Identifying Intellectual Property Assets:

Requesting the target company to prepare a comprehensive list of intellectual property assets related to the target:

  • Registered (application numbers, patent numbers, etc.).
  • Unregistered or non-mandatory registration.
  • License agreements/technology transfers/franchise to others.
  • Licensed: The most common infringement is using unregistered software.

3. Ownership Status Assessment

The parties involved in M&A transactions need to rely on the granted list combined with research from WIPO, the Intellectual Property Office of Vietnam, the Copyright Office of Vietnam, etc., to determine whether the target company is the rightful owner, and whether there are similar pending applications that could cause confusion with another party’s trademarks or whether applications are currently being objected to/rejected.

Additionally, it is necessary to check contracts with contractors/employees that may be related to intellectual property ownership, especially regarding software copyright registration, company mascots, advertising materials, as well as the status of licensed intellectual property. Some questions need to be asked and answered, such as whether the intellectual property is exclusive or non-exclusive, whether it has a time limit, whether it has expired, and whether it can be transferred.

Finally, parties need to check if open-source code allows both parties to access and grant licenses to third parties. This is a factor that affects the buyer’s technology exclusivity.

4. Potential Disputes

The buyer needs to proactively check for potential disputes, such as disputes that have arisen but have not yet been resolved or disputes that may arise in the future before deciding to proceed to the next steps in the deal.

Whether there is a possibility of short-term disputes or not, the buyer should include provisions in the warranty that the seller will compensate the buyer for damages incurred.

5. Transfer and Issues to Consider in M&A

During negotiations, parties need to clarify the nature of the M&A contract. It needs to be determined whether it’s a transfer or merely a licensing arrangement for control, and whether third-party approval is required to complete the M&A transaction. These issues will affect the M&A structure.

Buyers need to review anti-assignment provisions. Sellers need to ensure they have established ownership rights documentation before signing.

After completing the due diligence process, any transfer needs to be recorded with the relevant authority if required.

6. Challenges in Cross-Border Transactions

Some challenges regarding intellectual property ownership in cross-border transactions include:

  • Differences in business culture: In Vietnam, most companies have not focused much on intellectual property ownership. Although confidentiality agreements are often signed, compliance is not high.
  • Difficulties in conducting intellectual property audits (IP Audit), legal due diligence: Because it is an intangible asset, determining its value, valuation, etc., is very complex and requires expertise and extensive experience in this field. However, in Vietnam, except for a few experienced and prominent entities, this market has not truly developed.
  • Appropriate certificates for intellectual property assets must be confirmed by lawyers in the seller’s country, which can lead to delays or unclear communication…

III. Impact of Global Minimum Tax on M&A Activities

With the goal of global economic development, creating a healthy competitive environment, ensuring fairness in the tax system among countries, and preventing tax erosion, since 2013, the Organization for Economic Co-operation and Development (OECD) has launched the Base Erosion and Profit Shifting (BEPS) initiative.

Lawyer Nguyen Le Tram presents the impact of the global minimum tax policy on the M&A market

This initiative consists of two main pillars to deal with tax challenges arising from the digitization of the economy: Pillar 1 on allocating taxing rights for digital activities and Pillar 2 on global minimum tax rates.

1. Impact of Global Minimum Tax Policy

  • Enhancing competitiveness: If some countries apply a Global Minimum Tax and have stable tax policies, this may promote fairer competition between markets, allowing businesses to make choices based on business factors rather than taxes.
  • Adjusting transaction structures: Companies may need to modify their financial structure and organize M&A transactions to optimize profits and minimize tax impacts.
  • Increased costs: When applying a Global Minimum Tax, companies often face higher tax costs, especially those operating in countries with lower average tax rates than the global minimum tax rate, such as Vietnam. This can affect costs in the process of conducting M&A transactions.
  • Tax incentives no longer directly impact foreign direct investment (FDI) inflows into Vietnam: The global minimum tax affects the attractiveness of the investment environment, thereby influencing foreign direct investment flows into Vietnam.

2. Recommendations on Alternative Policies to Attract and Promote M&A Activities

To ensure that M&A activities can continue to flourish in 2024, Vietnam should consider replacing preferential tax policies with alternative forms such as tax refunds or cost deductions.

Many countries have already implemented such incentives, with India being a prominent example with its legal framework related to the minimum global tax rate since 2020. Similar cost incentive policies have also been adopted by several other countries, including China, Thailand, Hong Kong, and the Republic of Ireland.

Some specific policies that Vietnam could implement include:

  • Supporting input material costs
  • Facilitating import and export activities
  • Land rental and land use incentives
  • Establishing centers for innovative and creative transformations
  • Enforcing investment support policies stipulated in the 2020 Investment Law, such as:
    • Developing technical infrastructure and social infrastructure within and outside investment project boundaries
    • Training and developing human resources
    • Providing credit support
    • Facilitating access to production and business premises
    • Assisting with the relocation of production and business facilities as per state agency decisions
    • Supporting science, technology, and technology transfer
    • Promoting market development and information provision
    • Supporting research and development

To ensure compliance with the new regulations on global minimum tax, enterprises should proactively engage reputable Vietnam law firm to receive timely support.

ASL LAW‘s legal team participates in the GC Summit Vietnam 2024 event.


ASL LAW is the top tier M&A law firm in Vietnam. If you need any advice, please contact us for further information or collaboration.

***ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].

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