06 requirements for making private placement of shares of a public company in Vietnam

Specifically, according to Article 31 of the Law on Securities 2019 of Vietnam, in order to make a private placement of shares, convertible bonds, warrant-linked bonds, a public company shall satisfy the following requirements:

1. There is a decision of the General Meeting of Shareholders to ratify the plan for issuance and the plan for use of capital generated by the private placement with specific criteria and quantity of investors;

2. The private placement is only available to strategic investors and professional investors;

3. The transfer of privately placed shares, convertible bonds and warrant-linked bonds is limited to 03 years for strategic investors and 01 year for professional investors from the ending date of the private placement, except for transfer between professional investors, transfer under an effective court judgment or decision, arbitral decision, and transfer due to inheritance as prescribed by law;

4. There is an interval of at least 06 months between two private placements of shares, convertible bonds, warrant-linked bonds;

5. The ratio of holding of shares, conversion of bonds into shares and execution of warrants by foreign investors is conformable with law.

Besides, this Law also stipulates that in order to make a private placement of bonds in cases other than private placement of shares, convertible bonds or warrant-linked bonds, a securities company or fund management company that is not a public company shall satisfy the following requirements:

- There is a decision of the General Meeting of Shareholders or the Board of Directors or the Board of members or the company’ owner to ratify the plan for issuance and the plan for use of capital generated by the private placement with specific criteria and quantity of investors;

- The private placement is only available to professional investors;

- The transfer of privately placed bonds is limited among professional investors, except for transfer under an effective court judgment or decision, arbitral decision, and transfer due to inheritance as prescribed by law;

- The financial statement of the year preceding the year in which the bonds are issued is audited by an accredited audit organization;

- The prudential ratios and operation safety ratios (if any) are maintained as prescribed by law.

The Government shall specifically provide for private placement by public companies, securities companies, fund management companies mentioned in this Article; private placement of other securities by public companies.

View more details at the Law on Securities 2019 of Vietnam, effective from January 01, 2021.

Ty Na

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