Vietnam: How much is the penalty for a public company advertising information on a private placement of shares before the time of offering?
Who are the subjects participating in the private placement of shares by a public company in Vietnam?
Pursuant to Article 31 of the 2019 Law on Securities in Vietnam, the subjects eligible to participate in the private placement of shares are as follows:
Private placement by public companies, securities companies, fund management companies
1. In order to make a private placement of shares, convertible bonds, warrant-linked bonds, a public company shall satisfy the following requirements:
a) 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;
b) The private placement is only available to strategic investors and professional investors;
c) 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;
d) There is an interval of at least 06 months between two private placements of shares, convertible bonds, warrant-linked bonds;
dd) The ratio of holding of shares, conversion of bonds into shares and execution of warrants by foreign investors is conformable with law.
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Thus, the private placement is only available to strategic investors and professional investors.
Vietnam: How much is the penalty for a public company advertising information on a private placement of shares before the time of offering?
In how many days must the public company complete the private placement of shares in Vietnam?
Pursuant to Article 48 of Decree No. 155/2020/ND-CP stipulating the completion of a private placement of shares of a public company in Vietnam as follows:
Procedures for private placement
1. The issuer shall send the application for private placement to the State Securities Commission.
2. Within 07 working days from the receipt of the satisfactory report, the State Securities Commission shall issue a written approval and announce the receipt of the application on its website. In case the application is rejected, the State Securities Commission shall make a written response and provide explanation.
3. The issuer shall complete the private placement within 90 days from the day on which the State Securities Commission issues the written approval.
4. Within 10 days from the end of the offering, the issuer shall send the report on the revenue generated by the offering enclosed with confirmation of the bank or foreign bank branch where the escrow account is opened to the State Securities Commission in accordance with the State Securities Commission and disclose this information on the websites of the issuer and the State Securities Commission.
5. Within 03 days from the receipt of the satisfactory report, the State Securities Commission shall send a written notification of the receipt of the report to the issuer, the Stock Exchange and Vietnam Securities Depository and Clearing Corporation, and announce the receipt of it on the website of the State Securities Commission.
6. After receiving the notification from the State Securities Commission, the issuer may request unfreezing of the amount obtained from the offering.
7. The interval between the private placements shall be at least 06 months from the ending date the private placement, including private placement of shares, convertible bonds, warrant-linked bonds, warrant-linked preference shares; issuance of shares for swap to shareholders of non-public joint stock companies, swapping stakes of contributing members of limited liability companies; issuance shares for swap to pre-selected shareholders in public companies; issuance of shares for swapping debts.
Thus, the public company must complete the private placement of shares within 90 days from the day on which the State Securities Commission issues the written approval.
Is there any penalty for advertising private placement of shares before the time of the offering?
Pursuant to Article 8 of Decree No. 156/2020/ND-CP (amended by point c, clause 7 Article 1 of Decree No. 128/2021/ND-CP) stipulating penalties for administrative violations on securities offering and issuance individually as follows:
Violations against regulations on private placement of securities
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3. A fine ranging from VND 100,000,000 to VND 150,000,000 shall be imposed for one of the following violations:
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c) Disclosing information for advertising or soliciting investors to buy offered or privately placed securities; advertising the offering or private placement of securities on the media;
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9. Remedial measures:
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d) The violating entity is compelled to remove information in case of commission of the violation in Point c Clause 3 of this Article;
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Thus, the public company advertising information about private placement of shares before the time of offering violates the law.
For the above acts, the public company will be administratively sanctioned from VND 100,000,000 to VND 150,000,000.
In addition, the public company is also compelled to remove its advertising information.
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