In practice, many enterprises encounter situations where they are participating in a bidding while simultaneously undergoing a merger due to corporate restructuring or changes in business strategy. Such circumstances may lead to various legal issues, including the bidder's eligibility, the validity of the bid dossier, contract execution, and the obligation to notify the procuring entity. The following article provides an in-depth analysis of the relevant legal provisions and the proper legal approach to handling situations where an enterprise is participating in a bidding while being merged.

I. Legal implications of a merger during the bidding process

A merger occurring while a bidder is participating in a bidding may have significant legal implications for the contractor selection process. When an enterprise participating in a procurement package undergoes a merger, critical factors such as the bidder's legal status, the validity of its bid dossier, its qualification documents, and its contractual obligations may all be affected. In many cases, the surviving company assumes all rights and obligations of the merged company in accordance with enterprise law. However, within the procurement framework, such changes must still be disclosed to and reviewed by the procuring entity to ensure the transparency, competitiveness, and legality of the contractor selection process.

Failure to comply with the prescribed legal procedures when a merger occurs during the bidding process may expose the enterprise to risks such as being deemed no longer eligible to participate, having its bid rejected, or becoming involved in disputes during contract execution. 

II. Understanding the legal issues relating to a merger during the bidding process

1. Does a merger during the bidding process change the bidder's legal entity status?

Pursuant to the Law on Enterprise 2020 (as amended in 2025), specifically Article 201 governing corporate mergers, if one or more companies are merged into another company, the merged company ceases to exist, while the surviving company receives all lawful rights, obligations, interests, and liabilities of the merged company.

Accordingly, if a merger during the bidding process:

  • The merged company's legal entity status terminates upon completion of the enterprise registration procedures.
  • The surviving company becomes the legal entity and receives all rights and obligations arising from the bid dossier or the procurement contract if the bid is successful.

In other words, Vietnamese law does not prohibit a bidder from undergoing a merger while participating in a bidding. However, the merger changes the legal entity acting as the bidder, and the surviving company obtains all related rights and obligations. In practice, the bidder should promptly notify the procuring entity so that its continued eligibility may be assessed in accordance with Article 5 of the Law on Bidding 2023 (as amended in 2025).

2. If an enterprise is participating in a bidding while undergoing a merger, whose qualifications (experience, equipment, etc.) will be recognized?

If a merger occurs during the bidding process, the law permits the post-merger bidder to continue participating in the bidding and to inherit the qualifications and experience of the original bidder.

Specifically, Clause 14, Article 140 of Decree No. 214/2025/ND-CP on the handling of situations arising during the procurement process provides that: If a bidder is participating in a bidding and subsequently undergoes a merger, the post-merger bidder is entitled to continue participating in the bidding and shall inherit the bidding qualifications and experience of the merged bidder.

3. How does a merger during the bidding process affect a bidder's reputation (rating) on the National E-Procurement System?

As a general principle, a merger occurring during the bidding process does not automatically diminish or adversely affect a bidder's reputation (rating) on the National E-Procurement System, provided that the enterprise fully complies with its notification obligations and does not commit any violations of procurement laws.

Pursuant to Clause 5, Article 63 of Decree No. 214/2025/ND-CP, a bidder's reputation is adversely assessed or recorded only if the bidder commits violations during the procurement process, such as withdrawing its bid contrary to regulations, refusing to participate in contract negotiations or to execute the contract after being awarded the contract, failing to submit the required bid security, or failing to perform its contractual obligations.

Conversely, if the merger results in the bidder's inability to perform the commitments made in its bid dossier, then the resulting conduct, such as refusing to execute the contract or unlawfully withdrawing the bid, may lead to adverse reputation assessments or other sanctions under the National E-Procurement System.

III. Legal provisions governing a merger during the bidding process

1. Under the applicable regulations, within how many days must an enterprise notify the Procuring Entity if it undergoes a merger while participating in a bidding?

The current procurement legislation does not prescribe a specific time limit (such as three or five days) within which an enterprise must notify the Procuring Entity if a merger occurs during the bidding process. Nevertheless, the law does establish the principles governing the handling of such situations.

Specifically, based on Clause 14, Article 140 of Decree No. 214/2025/ND-CP, if a bidder is participating in a bidding and subsequently undergoes a merger, the post-merger bidder is entitled to continue participating in the bidding and shall inherit the bidding qualifications and experience of the merged bidder.

2. What is the procedure for updating bidder information on the National E-Procurement System when a merger occurs during the bidding process?

Pursuant to Clause 14, Article 140 of Decree No. 214/2025/ND-CP, if a bidder is participating in a bidding and subsequently undergoes a merger, the post-merger bidder is entitled to continue participating in the bidding and shall inherit the bidding qualifications and experience of the merged bidder.

In practice, to ensure that the information recorded on the National E-Procurement System remains accurate, the enterprise should complete the following fundamental procedures:

  • Updating the enterprise's legal information in its bidder account, including the enterprise name, tax identification number, and Enterprise Registration Certificate issued after the merger.
  • Uploading supporting documents evidencing the merger, such as the merger resolution, merger agreement, or the new Enterprise Registration Certificate.
  • Notifying the Procuring Entity of the change in the bidder's legal status during the bidding process.

Upon completion of the information update, the post-merger bidder may continue participating in the subsequent stages of the procurement process by relying on the qualifications and experience inherited from the merged enterprise.

3. What is the legal basis allowing the surviving company to execute the procurement contract if the merged company is awarded the contract while undergoing a merger during the bidding process?

Pursuant to Clause 14, Article 140 of Decree No. 214/2025/ND-CP, if a bidder is participating in a bidding and subsequently undergoes a merger, the post-merger bidder is entitled to continue participating in the bidding and shall inherit the bidding qualifications and experience of the merged bidder. This provision ensures that changes to the enterprise's organizational structure do not disrupt the contractor selection process.

Furthermore, according to Clause 1, Article 201 of the Law on Enterprise 2020, upon completion of the merger, the surviving company receives all lawful rights, obligations, and interests of the merged company. Accordingly, if the merged enterprise is awarded the contract, the surviving company is legally entitled to execute and perform the procurement contract with the Procuring Entity by obtaining the rights and obligations of the merged enterprise.

4. What conditions must be satisfied for the Procuring Entity to recognize the eligibility of the post-merger bidder?

Pursuant to Article 5 of the Law on Bidding 2023 (as amended in 2025), the post-merger bidder must satisfy the following fundamental conditions in order to be recognized as an eligible bidder:

  • It has been lawfully established and is operating in accordance with applicable laws.
  • It maintains independent financial accounting (applicable to enterprises).
  • It is not undergoing dissolution, bankruptcy proceedings, or insolvency.
  • It is not prohibited from participating in procurement activities under a decision issued by a competent authority.
  • It is not subject to criminal prosecution.
  • It has been included on the shortlist if the procurement package has completed the shortlisting stage.
  • In the case of a foreign contractor, it forms a consortium with a domestic contractor or engages a domestic subcontractor where required by law.

5. Are there any changes to the financial qualification requirements (charter capital, revenue, etc.) following a merger during the bidding process?

Pursuant to Clause 14, Article 140 of Decree No. 214/2025/ND-CP, if a bidder is participating in a bidding and subsequently undergoes a merger, the post-merger bidder is entitled to continue participating in the bidding and shall inherit the bidding qualifications and experience of the merged bidder.

Accordingly, during the evaluation of the bid dossier:

  • Financial indicators previously declared, such as charter capital, revenue, financial capacity, and other financial qualifications, may be inherited from the merged enterprise, provided that such succession is substantiated by legal documents evidencing the merger.
  • The post-merger enterprise shall be the legal entity responsible for demonstrating its financial capability to the Procuring Entity.
  • The bidder should provide documentary evidence of the merger, including the merger resolution, the new Enterprise Registration Certificate, and relevant financial statements, to establish that the financial resources have been lawfully transferred.

IV. Questions regarding a merger during the bidding process

1. if the surviving company is also bidding for the same procurement package as the merged company, would a merger during the bidding process constitute a "conflict of interest"?

A merger occurring during the bidding process is not automatically regarded as leading to a conflict of interest, as the merged company ceases to exist upon completion of the merger, leaving only a single surviving legal entity.

Pursuant to Article 201 of the Law on Enterprise 2020 (as amended in 2025), the surviving company inherits all rights and obligations of the merged company. Furthermore, based on Clause 14, Article 140 of Decree No. 214/2025/ND-CP, if a bidder undergoes a merger during the bidding process, the post-merger bidder is entitled to continue participating in the bidding and to obtain the qualifications and experience of the merged bidder.

2. If the bid was submitted under the original company name, which seal will be used to execute the contract if the enterprise is awarded the contract after undergoing a merger during the bidding process?

If the bid dossier was submitted under the original company's name but the company is subsequently merged into another enterprise, the procurement contract shall be executed in the name of, and under the seal of, the surviving company.

Pursuant to Clause 4, Article 201 of the Law on Enterprise 2020 (as amended in 2025), upon completion of the merger, the surviving company succeeds to all lawful rights, interests, and obligations of the merged company, while the merged company ceases to exist. In addition, Clause 14, Article 140 of Decree No. 214/2025/ND-CP provides that the post-merger bidder is entitled to continue participating in the bidding and to inherit the qualifications and experience of the merged bidder.

3. How should an enterprise proceed if the procuring entity refuses payment as the invoice bears the name of the surviving company rather than the name of the original bidder?

If the Procuring Entity refuses payment on the ground that the invoice is issued in the name of the surviving company instead of the original bidder, the enterprise should establish the legal succession resulting from the merger, rather than treating the two companies as separate legal entities.

As discussed above, upon completion of a merger, all assets, rights, and obligations of the merged company are transferred to the surviving company, while the merged company ceases to exist. Consequently, it is entirely lawful for the surviving company to issue invoices and receive payments in relation to a procurement contract executed by, or arising from the participation in the bidding process of, the original company, as the surviving company has succeeded to all rights and obligations of the merged enterprise.

 

Accordingly, the legally appropriate course of action is to provide the Procuring Entity with a complete set of documents evidencing the legal succession, including:

  • The merger agreement;
  • The Enterprise Registration Certificate issued after the merger; and
  • A written explanation confirming the succession to the rights and obligations of the merged company.

4. Can a merger during the bidding process result in the forfeiture of bid security if the enterprise fails to timely update its legal documents?

A merger occurring during the bidding process does not automatically result in the forfeiture of the bid security. However, if the enterprise fails to promptly update or complete the required legal documents, thereby preventing the Procuring Entity from identifying the lawful successor to the bidder, risks relating to the enforcement of the applicable procurement security may arise.

Specifically, according to Clause 20, Article 140 of Decree No. 214/2025/ND-CP, if, during either the contractor selection process or contract performance, it is discovered that the successful bidder has committed violations of procurement regulations or other legal violations that materially affect the contractor selection outcome, the competent authority may refuse to recognize the contractor selection result, and the investor is entitled to confiscate the contract performance security.

5. Should an enterprise intentionally conceal the fact that it has undergone a merger during the bidding process until the bidding results are announced?

An enterprise should not intentionally conceal the fact that it has undergone a merger while participating in a bidding until after the contractor selection results have been announced. Failure to disclose such information may be regarded as the provision of false or misleading information, or the intentional misrepresentation of information contained in the bid dossier, thereby exposing the bidder to the risk of having the contractor selection result annulled or being sanctioned for violations of procurement laws.

  • Pursuant to Clause 4, Article 16 of the Law on Bidding 2023, one of the prohibited acts in procurement activities is fraud, including the provision of false information or the deliberate misrepresentation of information during the bidding process.
  • Furthermore, based on Clause 21, Article 140 of Decree No. 214/2025/ND-CP, if a bidder is found to have committed violations affecting the competitiveness, fairness, or transparency of the contractor selection process, the contractor selection result may not be recognized, and the relevant procurement securities may be subject to enforcement.

V. Are you looking for a reputable and experienced lawyer to assist you with legal issues relating to a merger during the bidding process?

If your enterprise is facing legal issues arising from a merger during the bidding process, seeking advice from experienced legal counsel is essential to ensure compliance with applicable laws and to avoid risks such as disqualification of the bid, contractual disputes, or the loss of legitimate rights and interests throughout the procurement process.

With a team of lawyers experienced in corporate law, procurement law, and corporate mergers and restructuring, NPLaw is well positioned to assist clients in reviewing bidder eligibility, advising on the proper procedures for updating information with the Procuring Entity, preparing the necessary legal documentation, and representing enterprises throughout their dealings with investors to safeguard their lawful rights and interests.

The information provided above is for reference purposes only. Should you require legal advice tailored to your specific circumstances, please contact NPLaw Firm for prompt professional assistance.