Restricted cross-ownership between companies
VGP – Cross-ownership is interpreted as two enterprises which mutually own the same equity and shares.
Question: What are the regulations on restricted cross-ownership between companies as stipulated in the 2014 Law on Enterprises?
Answer: The Government on October 19, 2015 issued Decree 96/2015/ND-CP (Decree 96) providing in detail some articles of the Law on Enterprise 68/2014/QH13.
Under Decree 96, cross-ownership is interpreted as two enterprises which mutually own the same equity and shares.
For subsidiaries of the same parent company owning at least 65% of state-owned capital, the business capital contribution includes capital contribution and share purchases to establish a new enterprise, buy shares of equity and shares of an established enterprise.
For cases where capital is jointly contributed to establish enterprises, these will include the total number of shares and share capital owned by these enterprises greater than 51% of charter capital or total number of ordinary shares of the related company.
Under Decree 96, the Business Registration Agency is entitled to refuse registration of the change of members or shareholders if in the course of the application it detects the capital contribution and share purchase to establish an enterprise, the transfer of shares, or the related share capital contributions violate the provisions specified in Clauses 2 and 3 of Article 189 of the Law on Enterprise 2014./.
