Currently, the demand for consolidating joint venture companies is increasing. So what are the legal regulations regarding the consolidation of joint venture companies? Let's follow the article below to learn more.

I. The need for the consolidation of joint venture companies

The consolidation of joint venture companies is the process by which two or more joint venture companies combine to form a new company. This consolidation may stem from various reasons, such as wanting to enhance business efficiency or seeking to expand the market... For this reason, this form is currently being explored and sought after by businesses. 

II. Legal regulations on the consolidation of joint venture companies

The legal regulations on the consolidation of joint venture companies are as follows: 

1. The concept of consolidating joint venture companies.

Pursuant to Clause 1 of Article 200 of the Enterprise Law 2020, the consolidation of companies refers to two or more companies (hereinafter referred to as the companies being consolidated) that can merge into a new company (hereinafter referred to as the consolidated company), while simultaneously terminating the existence of the companies being consolidated.

Thus, it can be understood that the consolidation of joint venture companies is the process by which two or more joint venture companies combine to form a new company. This new company will inherit all assets, rights, and obligations of the old companies.

2. Conditions for consolidating joint venture companies.

Pursuant to Clauses 3 and 4 of Article 200 of the Enterprise Law 2020, the conditions for consolidating joint venture companies are as follows: 

- The company being consolidated must ensure compliance with the provisions of the Competition Law regarding company consolidations.

- After the consolidated company registers its business, the company being consolidated ceases to exist; the consolidated company enjoys legal rights and benefits and is responsible for the obligations, unpaid debts, labor contracts, and other asset obligations of the companies being consolidated. The consolidated company naturally inherits all rights, obligations, and legal benefits of the companies being consolidated according to the company consolidation agreement.

3. Procedures and steps for consolidating joint venture companies.

Pursuant to Clause 2, Article 200 of the Enterprise Law 2020, the procedures and steps for the consolidation of joint venture companies are as follows: 

Step 1: The company being consolidated prepares the consolidation agreement and drafts the Standing rules for the consolidated company. The consolidation agreement must include the following key contents:

- The name and address of the headquarters of the companies being consolidated;

- The name and address of the headquarters of the consolidated company;

- Procedures and conditions for consolidation; labor utilization plan; 

- The deadlines, procedures, and conditions for the conversion of assets, the conversion of capital contributions, shares, and bonds of the company being consolidated into the capital contributions, shares, and bonds of the consolidated company; 

- Deadline for the consolidation execution;

Step 2: Members, company owners, or shareholders of the company being consolidated through the consolidation agreement, the Standing rules, elect or appoint the Chairman of the Members' Council, the Chairman of the company, the Board of Directors, the Director, or the General Director of the consolidated company, and proceed with business registration for the consolidated company in accordance with the provisions of this Law. 

The consolidation contract must be sent to creditors and notified to employees within 15 days from the date of approval.

III. Questions about the merger of joint venture companies

1. The competent authority approves the consolidation of joint venture companies.

Pursuant to Article 73 of Decree 01/2021/ND-CP, the competent authority responsible for approving the consolidation of joint venture companies is the Business Registration Office.

2. Is it mandatory to notify the Competition office about the consolidation of joint venture companies?

Pursuant to Point b, Clause 1, Article 29 of the Competition Law 2018, the consolidation of enterprises is considered one of the forms of economic concentration.

Thus, the consolidation of the joint venture companies must be notified to the Competition office.

Above are the details surrounding the topic of the consolidation of joint venture companies. To receive support and to learn about the legal information and regulations regarding the consolidation of joint venture companies, you may contact NPLaw for consultation with a team of experienced lawyers and legal professionals.