Can a public company in Vietnam repurchase its own shares? How is securities trading implemented?
Can a public company in Vietnam repurchase its own shares?
According to the provisions of Article 8 of Circular No. 120/2020/TT-BTC on this content as follows:
- A public company that repurchases its own shares on the securities trading system must comply with the following regulations:
+ It must repurchase its own shares as prescribed in Clause 4 Article 37 of the Law on Securities.
+ Principle of determining price for repurchasing shares of the public company adopting the order matching methods or put-through method is as follows:
++ Repurchase price ≤ Reference price + (Reference price x 50% of price fluctuation limit of shares).
++ Volume of shares to be purchased: Within each trading date, the total volume of shares to be purchased is at least 3% but does not exceed 10% of the trading volume registered with the State Securities Commission (the volume of shares to be purchased excludes the volume of cancelled orders and this regulation is exempt if the remaining volume of shares to be purchased is less than 3%).
This regulation shall apply until the public company completes its share repurchase with the volume registered with the State Securities Commission.
In addition, the public company that repurchases its own shares may sell the shares right after they are repurchased as prescribed in Clause 7 Article 36 of the Law on Securities. The sale of shares through the securities trading system shall comply with the trading regulations of Vietnam Stock Exchange or outside the securities trading system shall comply with regulations of law on securities registration, depositing, clearing and payment.
- Except for the case in Clause 2 of this Article, the public company that repurchases its own shares before January 01, 2021 shall sell the repurchased shares adopting the order matching method or put-through method as follows:
+ Repurchase price ≥ Reference price - (Reference price x 50% of price fluctuation limit of shares).
+ Volume of shares to be sold: Within each trading date, the total volume of shares to be sold is at least 3% does not exceed 10% of the trading volume registered with the State Securities Commission (the volume of shares to be sold excludes the volume of cancelled orders and this regulation is exempt if the remaining volume of shares to be sold is less than 3%).
Can a public company in Vietnam repurchase its own shares? How is securities trading implemented? (Image from the Internet)
How is securities trading implemented?
According to the provisions of Article 7 of Circular No. 120/2020/TT-BTC, securities transactions are carried out in two different stages, leading to different regulations on securities purchases before and after the implementation of the securities clearing and payment under the central counterparty clearing as follows:
- During the period of time over which the securities clearing and payment have yet to be carried out through the central counterparty clearing, securities shall be bought as follows:
+ The investor is only allowed to place a buy order if having sufficient cash in its/his/her securities trading account, except for the margin trading specified in Article 9 of this Circular. If the investor opens a depository account at a depository bank and a securities trading account at a securities company, the investor is entitled to place buy orders and the securities company is entitled to execute the buy orders when having the payment guarantee or confirmation of the depository bank that the depository bank accepts the request for securities payment made by the investor.
+ The securities company shall monitor the cash/securities balance (except for the case in which the investor opens a depository account at the depository bank) and check the validity and legitimacy of the investor's trading orders.
- After carrying out securities clearing and payment through the central counterparty clearing, securities shall be bought as follows:
+ The investor placing buy orders must have sufficient collateral deposited as clearing margin at the clearing member in accordance with regulations of law on securities registration, depositing, clearing and payment.
+ The securities company where the investor opens the securities trading account is only allowed to input orders into the securities trading system if the investor has fulfilled the requirements concerning clearing margin and requirements imposed by the clearing member. If the investor opens a trading account or clearing margin account at a securities company and a depository account at a depository bank, the securities company shall input orders into the securities trading system if there is a guarantee or confirmation of the depository bank of investor’s fulfillment of requirements concerning clearing margin and payment by negotiation between the securities and depository bank.
+ The monitoring and conformation of securities and cash balance prior to securities trading shall comply with regulations of law on securities clearing and payment.
Note:
- The investor is only allowed to place buy orders with respect to marketable securities available on its/his/her depository account on the trading day, except for the following cases: the member establishing the exchange-traded fund is allowed to sell exchange-traded fund certificates and component securities when there are sufficient exchange-traded fund certificates and component securities to be transferred prior to the maturity in accordance with the Vietnam Securities Depository and Clearing Corporation's Regulation; day trading specified in Article 10 of this Circular; sale of securities waiting to be transferred.
Depending on the market situation, the State Securities Commission shall sell securities pending settlement.
- The investor is not allowed to simultaneously place buy orders and sell orders on the same ticker symbol within a periodic order matching period, except for the orders that have been inputted into the securities trading system at the previous trading session and have yet to be matched but are still valid.
The securities company has the responsibility to control the placement of simultaneous buy and sell orders within a periodic order matching period by investors on the trading accounts opened at such company.
In addition, a foreign securities-trading organization is allowed to use the brokerage trading account specified in Point b Clause 7 Article 6 of this Circular to simultaneously place buy orders and sell orders on the same ticker symbol in each order matching (periodic or continuous) period or execute the put-through trading method but is required to follow the principle that the buy and sell orders are not placed by the same foreign investor.
When does the Vietnam Stock Exchange decide the price fluctuation limit?
According to the provisions of Article 4 of Circular No. 120/2020/TT-BTC on this content as follows:
- The Vietnam Stock Exchange shall decide on the price fluctuation limit after obtaining approval from the State Securities Commission.
- If the market stabilization is needed, the State Securities Commission shall make a decision on change of the price fluctuation limit and publish it on its web portal.
Thus, the Vietnam Stock Exchange shall decide on the price fluctuation limit after obtaining approval from the State Securities Commission.
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