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MATTER:

M&A fraud (2017)

CLIENT:

A number of Malaysian investors who were owning a Vietnamese-established company.

BACKGROUND:

The client is a Malaysian-invested company (the "Company”) that the Government of Vietnam has approved as the investor of a large-scale township project in Binh Chanh, Hochiminh City (the "Project”). The Project covers a 450-hectare land area aimed to build an urban zone and a 68-hectare land area aimed to build a resettlement project for those who have to move out of the 450-hectare project.

Early in the 2000s, this Project was initially invested by a joint venture of a Vietnamese-owned company that was a well-known real estate developer then in Vietnam (“Vietnamese Partner”) and a Singaporean investor. After years of co-operation, the Vietnamese Partner was divested due to the incapacity of the foreign partner in terms of financial funding. After that, some Malaysian investors (“New Investors”) acquired the Project by shares acquisition into the Company with an offshore structured deal (“M&A Transactions”).

In 2017, New Investors came to ATIM LAW FIRM to ask for legal advice and support to keep the Company’s corporate governance under their control and deal with the fraudulent behavior and abusive power of a former shareholder who previously sold all his shares to them in the Company.

CHALLENGES AND SOLLUTIONS:

The problem was arising from the fraud of the legal representative of the Company who was the former owner of the Company and already sold all his shares in the Company to the New Investors. Although he sold his 100% shareholding in the Company to the New Investors and fully received the payment, he still retained his name in the Company’s license as a shareholder holding 35% shareholdings. With his majority voting right, he structured the Company’s Charter to block the New Investors from executing of their voting right and management.

ATIM LAW FIRM advised the New Investors to trigger the Company’s Charter and the existing Law on Enterprise to dismiss his role as the Company’s Legal Representative and appoint a new one. ATIM LAW FIRM also supported the New Investors to register the M&A Transactions and the new appointment with the State authorities as well as prepared a responding program to respond and defend against the ex-owner’s upcoming lawsuit.

SERVICES AND RESULTS:

ATIM LAW FIRM had successfully supported the New Investors to solve this issue which includes the followings:

• Advised and successfully supported the New Investors to summon the Member Council’s meeting voting for dismissal of the fraud and the fake owner/legal representative and appointing the new legal representative for the Company;
• Represented the New Investors and successfully conducted legal procedures to reflect the genuine M&A Transactions and the new-appointed legal representative on the Company’s licenses issued by competent authorities in Vietnam;
• Represented the New Investors as interested parties to respond and defend against a lawsuit initiated by such the ex-owner at the Court. The man claimed against the New Investor’s dismissal of him and the Vietnam authorities’ issuance of the Company’s license to reflect the M&A Transactions and the newly appointed legal representative.

After several long time-consuming trials and a greater weight of evidence/arguments, the verdict of the People’s Court of Ho Chi Minh City was issued against the ex-owner which confirmed the ex-owner’s fraud, the legality of licenses issued by the authorities and awarded the whole ownership of the company to the New Investors.