What are the penalties imposed upon a public company for failing to apply for registration of tender offer as prescribed by law?
- What are the cases in which a tender offer is mandatory and has to be registered with the State Securities Commission of Vietnam?
- What is the application for tender offer in Vietnam?
- What are the penalties imposed upon a public company for failing to apply for registration of tender offer as prescribed by law?
What are the cases in which a tender offer is mandatory and has to be registered with the State Securities Commission of Vietnam?
Pursuant to Article 83 of Decree No. 155/2020/ND-CP stipulating the tender offer cases as follows:
Tender offer cases
1. The cases in which tender offer is mandatory prescribed in Clause 1 Article 35 of the Law on Securities.
2. In addition to the cases mentioned in Clause 1 of this Article, the organization or individual that intends to make a tender offer of shares of a public company or closed-end fund certificates shall comply with the regulations of this Decree on tender offer.
Thus, in the following cases, tender offer is mandatory and has to be registered with the State Securities Commission of Vietnam:
- The purchase of voting shares or closed-end fund certificates by an organization or individual and their related persons defined in Points a, b, c, d, e and g Clause 46 Article 4 of the 2019 Law on Securities in Vietnam will directly or indirectly lead to ownership of at least 25% of the voting shares of a public company, or at least 25% of the outstanding fund certificates of a closed-end fund;
- The organization or individual and their related persons defined in Points a, b, c, d, e and g Clause 46 Article 4 of the 2019 Law on Securities in Vietnam that are holding at least 25% of the voting shares of a public company, or at least 25% of the outstanding fund certificates of a closed-end fund wish to hold at least 35%, 45%, 55%, 65%, 75% of voting shares of a public company or outstanding fund certificates of a closed-end fund;
- Unless all voting shares of a public company or outstanding fund certificates of a closed-end fund have been bid for, the organization or individual and their related persons defined in Points a, b, c, d, e and g Clause 46 Article 4 of the 2019 Law on Securities in Vietnam that are holding at least 80% of voting shares of a public company or outstanding fund certificates of a closed-end fund shall buy the shares or fund certificates being held by the remaining shareholders or investors within 30 days at the same offered price and with the same payment method in the tender offer.
In addition, the organization or individual that intends to make a tender offer of shares of a public company or closed-end fund certificates shall comply with regulations of Decree No. 155/2020/ND-CP on tender offer.
What are the penalties imposed upon a public company for failing to apply for registration of tender offer as prescribed by law?
What is the application for tender offer in Vietnam?
According to the provisions of Article 85 of Decree No. 155/2020/ND-CP as follows:
Application for tender offer in Vietnam
1. In case the offerer pays with money, the application shall contain:
a) The application form No. 23 in the Appendix hereof;
b) The information disclosure sheet form No. 24 in the Appendix hereof;
c) A decision of the competent authority of the applying organization to approve the tender offer;
d) The written confirmation of payment guarantee between credit institution and the offerer, or the confirmation that the bank account of the applicant has been frozen in order to ensure that the offerer has sufficient funds for tender offer. These documents shall be sent to the State Securities Commission before it issues the notice of receipt of adequate documents;
dd) The securities company’s written confirmation that it is the tender offer agent;
e) A document of National Competition Committee about economic concentration in case the tender offer causes the level of economic concentration to be subject to notification.
2. In case tender offer with shares, the application shall contain the documents specified in Article 54 of this Decree;
Thus, individuals and organizations that make tender offer need to prepare the documents according to the above provisions.
What are the penalties imposed upon a public company for failing to apply for registration of tender offer as prescribed by law?
According to point a, clause 3, point c, point d, clause 6, Article 17 of Decree No. 156/2020/ND-CP on violations against regulations on tender offer as follows:
Violation against regulations on tender offer
...
3. A fine ranging from VND 200.000.000 to VND 300.000.000 shall be imposed for committing one of the following violations:
a) Failing to apply for registration of tender offer as prescribed by law;
...
6. Remedial measures:
…
c) The violating entity is compelled to relinquish the rights to vote directly or through an authorized representative in proportion to the number of shares obtained from the violation in Point a or b Clause 3 of this Article;
d) The violating entity is compelled to sell shares or closed-end fund certificates to reduce the holding ratio to below the one requiring the tender offer in case of commission of the violation in Point a or b Clause 3 of this Article within a maximum period of 06 months from the day on which the decision to enforce this measure takes effect;
...
Note: The fines specified above are applicable to organizations. In case an individual commits a violation similar to that of an organization, the fine level shall be equal to 1/2 of the fine level imposed on the organization.
Thus, a public company that fails to register a tender offer may be fined from VND 200 million to VND 300 million.
In addition, the violating company is compelled to relinquish the rights to vote directly or through an authorized representative in proportion to the number of shares obtained from the violation and is compelled to sell shares or closed-end fund certificates to reduce the holding ratio to below the one requiring the tender offer within a maximum period of 06 months from the day on which the decision to enforce this measure takes effect.
LawNet
