Enforcing a Non-compete Agreement for Employment Contracts in Vietnam

July 7, 2022
In today’s business environment, foreign companies operating in Vietnam often include a non-competition provision or agreement in their labor contracts with their employees. However, as this type of provision is somewhat rare in Vietnam as well as being unfamiliar to Vietnamese administrative agencies and Courts, there are few persons with knowledge of the effects and implications of such a provision. Therefore, in this Insight, we would like to share with you our knowledge and experience with regard to (i) the definition of what constitutes a non-compete agreement in employment, (ii) why non-compete agreements are typically compulsory provisions in most labor contracts of foreign companies operating in Vietnam (though Vietnam law does not require or regulate them), and (iii) how non-compete agreements are applied and interpreted in the context of Vietnam law. Definition of a Non-Compete Agreement During the formation and development of a company, a significant amount of useful information is collected, developed and secured by the company. This may consist of information concerning customer relationships, products, trade secrets, business know-how, price, etc. (Confidential Information). A recruited employee’s access to Confidential Information is dependent on their position and job duties with the company. A potential risk is that the employees will use such Confidential Information to create benefits for themselves, such as: Disclosure of the Confidential Information to competing companies for illicit benefits; or Employees may establish or participate in a competing company operating along the same business lines as the former company and use the Confidential Information that they obtained to compete with the business operations of the former company. For instance, the employee may use the information...

Recent Trends in Interim Legal Resourcing

July 7, 2022
  As we emerge from the impact of Covid-19, one of the many decisions for GCs is how to resource the in-house legal team effectively. The combination of permanent headcount freezes, rising salary costs and a competitive market has made it more challenging to recruit, especially in some locations and specialisms. Even where recruitment is possible, it can take many months to on-board the right person, which doesn’t solve the immediate need created by ever increasing workloads. This is why we are seeing a growing number of GCs turn to interim lawyers as they consider what the structure and size of the team should be over the next 18-24 months. Since the start of 2021 and continuing into 2022, our legal resourcing teams across Asia, the UK and US have seen demand for interim lawyers grow significantly. Breaking this down further, we are seeing the following trends: The highest demand in the UK and Asia is for interim commercial lawyers, followed by transactional banking and derivatives lawyers, driven by the large IBOR transition program and other regulatory change projects within banks and financial institutions. We are also asked frequently for technology, data protection and employment lawyers. In the US, in addition to the traditional demand for commercial interim resource, we are seeing an increase in requests for attorneys with data privacy and IP experience. A lot of requests are from the financial services sector in the UK, US and Asia, which is not surprising given the relative size of some of the teams and highly regulated environment. However, we have also seen increased demand across all other sectors. Clients...

Talking ADR for ‘anytime, anywhere’ – Q&A with Daryl Chew

June 23, 2022
Please give us a brief overview of your professional background. I am the managing partner of the Singapore office of Three Crowns LLP, the world’s first global specialist arbitration firm. Apart from chairing the Board of Maxwell Chambers, I co-chair the Young Singapore International Arbitration Centre (YSIAC) committee and serve on the International Bar Association (IBA) Arb40 Steering Committee, Singapore Management University School of Law Advisory Board, and various governmental and regional arbitration committees. What was it that attracted you to Alternative Dispute Resolution (ADR)? The process of working with a passionate team to solve complex problems in a cross-border context, coming to grips with the nuances and dynamics of business problems and disagreements, and formulating strategy to achieve the client’s objectives never gets old – it is intellectually challenging but very human-centered as well. The diversity of issues across different industry sectors – from nuclear power projects to complex financial instruments – and the interposition of various cultures and nationalities in cross-border disputes also means that every case is a new learning opportunity and challenge.   It is almost one year on from your appointment as chairman of the Board of Directors of Maxwell Chambers. How would you describe your experience at the helm thus far? It has been a privilege and fulfilling experience. I assumed the role amidst the pandemic which presented several challenges but also significant opportunities for Maxwell Chambers. Our immediate priority was to take stock of the post-pandemic landscape and be relentless in finding new ways to improve our offering and the user experience. We took the opportunity presented by the pandemic to enhance...

Navigating the REITs Pilot Project in China: In conversation with East & Concord

June 22, 2022
1. April 2020 saw a pilot project for infrastructure public real estate investment trust (REIT) projects officially launched by the China Securities Regulatory Commission (CSRC) and the National Development and Reform Commission. Please can you provide some background and colour to the reasons for this significant move by Chinese authorities? China Infrastructure Real Estate Investment Trusts (hereinafter referred to as “C-REITs”) are another beneficial exploration of financial supply-side structural reform since the pilot registration-based IPO of the Science and Technology Innovation Board and ChiNext. After several rounds of large-scale infrastructure construction, China currently has a huge amount of infrastructure assets. Such illiquid assets restrict reinvestment and cause huge financial pressure on the government. C-REITs aim to revitalize the huge amount of infrastructure assets and strengthen the ability of the capital market to serve the real economy. We believe that C-REITs are the key to realizing the dual circulation development model. In the future, C-REITs are expected to become an effective tool for local public investment, and the C-REITs market is expected to become an internationally leading REITs market with large scale, variety, low risk, and strong liquidity. 2. One of the intentions for these vehicles is to fund projects local governments would otherwise have to finance. What changes and development can we expect to see in the real world in the coming years given the REITs which have already been registered, apart from the financial moves of these funds? In addition to revitalizing existing assets and opening up a new channel for infrastructure project financing, from the perspective of REITs’ development, C-REITs are expected to cover more types of real estate...

Compliance and Sanctions of Anti-Money Laundering and Countering the Financing of Terrorism in the UAE

June 20, 2022
As global financial flows get increased scrutiny this year, it is important to focus on the efforts being driven by the United Arab Emirates (UAE) to preserve and enhance its position as a global financial centre. The UAE has significantly improved its regime for anti-money laundering and countering the financing of terrorism (AML/CFT) by strengthening its policies and crafting practical solutions for their effective implementation. The recent updates to AML/CFT legislation in the UAE have meant that it is serious in upholding international standards and ensuring compliance to enhance the integrity of the global financial system. The UAE authorities require all entities, except for government owned entities and those operating in the financial free zones, to disclose Ultimate Beneficial Owners (UBOs). Further, supervisory authorities mobilise covered institutions to register on the ‘goAML’ platform and employ the filing of suspicious activity reports (“SARs”) to identify fraud schemes, and to subscribe to the automatic reporting system for sanctions lists. All these government measures directly contribute to these regulatory authorities’ work to protect investors, consumers and other market stakeholders by ensuring markets operate fairly. How do AML regulations impact me/my organisation? Federal Decree Law No. 20/2018 on Facing Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organization and its implementing regulations as enshrined in Cabinet Decision No. 10/2019 (the “AML regulations”) expanded coverage to entities aside from financial institutions, to cover those classified as Designated Non-Financial Businesses and Professions (DNFBPs) such as: (1) real estate brokers and agents; (2) dealers in precious metals and gemstones; (3) independent accountants and auditors; (4) corporate service providers; and (5) legal consultancy firms, advocates...

M&A Risk in Vietnam – Can Share Deals and Asset Deals be Used Interchangeably?

June 20, 2022
Share deals and asset deals In a typical M&A operation, shares or assets of the target company may be assigned from the seller to the buyer. In a share deal, the buyer’s aim is to become one of the owners or the new owner of the target company by acquiring part or the whole of its equity capital. In an asset deal, the buyer acquires assets of the target company and is not, in principle, to have any stakes in its ownership. Both share deals and asset deals are legally recognised by the Law on Investment, Law on Enterprises and relevant regulations in Vietnam. Quite often in practice, however, share deals and asset deals are interchangeable: the parties would go for a share deal if they discovered an asset deal to be complicated or time-consuming. From the view of the buyers and sellers, share and asset deals are equally valid and lawful options for them to structure their deals, depending on which one will provide them with the largest benefits. Such practice may be observed in Vietnam, although, statistically, share deals outnumber asset deals. By contrast, it appears that the relevant State authorities, especially the courts, are somehow very reluctant to accept such business practice. Risks in M&A deals arise therefrom. A conservative judicial precedent In August 2020, in a case adjudicated on appeal by the High Court in Ho Chi Minh City, the target company was a one-member limited liability company wholly owned by the plaintiff (the Company). On 10 June 2014, the plaintiff and the respondent signed a capital contribution agreement (the CCA) whereby they agreed to...