Bui Duc Giang
PhD in Law
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| Packaging nitrogenous fertilizer at Ca Mau Fertilizer Company Limited of Vietnam Oil and Gas Group__Photo: Huy Hung/VNA |
KEY POINTS:
l Shares in private companies may be mortgaged whereas it is possible to take a pledge, a mortgage or an escrow deposit over shares in public companies;
l Two main consensual enforcement routes available to the holder of a security interest over shares: sale to a third party and appropriation;
l Enforcement of security over shares may be affected by insolvency procedures.
Taking security over shares as part of a security package granted to financial creditors is a common feature of financings in Vietnam. However, the current legal framework does not address all aspects of this type of security, even following the enactment of Law on Enterprises No. 68/2014/QH13 dated November 26, 2014 (the 2014 Law on Enterprises) with effect from July 1, 2015. This article discusses the general principles governing the attachment and enforcement of security over shares in private companies and of security over shares in public companies[1], including an examination of the shortcomings of Vietnamese law in this area. It will also chart recent developments in the law in this area...
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[1] For a full discussion of this topic, see Bui Duc Giang and Michel Trochu “Taking security over shares in Vietnam: Law and Practice”, International Business Law Journal (London), issue 4 of 2014.
