What are the conditions for scrip issues by public companies? What are the procedures for scrip issue in Vietnam?
What are the conditions for scrip issues by public companies?
According to the provisions of Article 60 of Decree 155/2020/ND-CP of Vietnam, the conditions for scrip issue by public companies include:
- There is a scrip issue plan which is approved by the General Meeting of Shareholders.
- The undistributed post-tax profit is sufficient to pay dividend according to the latest annual financial statement audited by an accredited audit organization. In case the issuer is a parent company, the distributed profit must not exceed the undistributed post-tax profit on the latest audited consolidated financial statement. In case the distributed profit is lower than undistributed post-tax profit on the consolidated financial statement and higher than the undistributed post-tax profit on the separate financial statement of the parent company, profit shall only be distributed after profits from subsidiary companies are transferred to the parent company.
- There is a plan for settlement of fractional shares and fractional shares (if any) which is approved by the General Meeting of Shareholders (GMS) or Board of Directors.
- The State Bank of Vietnam has approved the increase in charter capital in accordance with regulations of law on credit institutions in case the issuer is a credit institution; The Ministry of Finance has approved the increase in charter capital in accordance with regulations of law on insurance business in case the issuer is an insurer.
What are the conditions for scrip issues by public companies? What are the procedures for scrip issue in Vietnam?
What are reporting documents on scrip issues by public companies?
According to the provisions of Article 61 of Decree 155/2020/ND-CP of Vietnam on reporting documents on scrip issue by public companies, including:
- The report form No. 16 in the Appendix hereof.
- The decision of the GMS to approve the issuance plan.
- The decision of the Board of Directors to execute the issuance plan.
- The latest annual financial statement audited by an accredited audit organization.
- The decision of the competent authority of the subsidiary company to approve the distribution of profits, the statements confirmed by the banks proving that profits have been transferred from the subsidiary companies to the parent company in case the distributed profit is lower than undistributed post-tax profit on the consolidated financial statement and higher than the undistributed post-tax profit on the separate financial statement of the parent company.
- The decision of the GMS or Board of Directors to approve the plan for settlement of fractional shares and fractional shares (if any).
- State Bank of Vietnam’s written approval for increase in charter capital in accordance with regulations of law on credit institutions in case the issuer is a credit institution; The Ministry of Finance’s written approval for increase in charter capital in accordance with regulations of law on insurance business in case the issuer is an insurer.
What are the procedures for scrip issue in Vietnam?
According to the provisions of Article 69 of Decree 155/2020/ND-CP of Vietnam on the procedures for scrip issue in Vietnam as follows:
- The issuer shall send the documents specified in Articles 61, 63, 65 of this Decree to the State Securities Committee (SSC).
- Within 07 working days from the receipt of satisfactory documents, SSC shall send a written notification of the receipt of the documents to the issuer and post it on SSC’s website, or issue a written rejection and provide explanation.
- Within 07 working days from the day on which SSC issues the notification, the issuer shall publish a notification on the websites of the issuer and the Stock Exchange at least 07 working days before the end of the issuance.
- The issuance must not last for more than 45 days from the day on which SSC issues the notification of the receipt of satisfactory documents.
- During the process of scrip issue or issuance of shares to increase share capital from equity, the company may repurchase the fractional shares (if any) as treasury shares under the plan approved by the GMS (or the Board of Directors if authorized by the GMS). The shares repurchased by the company shall be settled in accordance with Clause 7 Article 36 of the Law on Securities and relevant regulations.
- Within 15 days from the end of the issuance, the issuer shall send reports on the result of the issuance to SSC and publish it on the website of the issuer and Stock Exchange. In case of issuance of employee stock option plan (ESOP) shares, these reports shall be enclosed with:
+ The list of employees that participate in the ESOP which specifies the quantity of shares distributed to (for bonus shares) or paid by each employee;
+ The written confirmation by the bank or foreign bank branch (FBB) where the escrow account is opened of the revenue generated by the issuance, except issuance of bonus shares to employees.
- Within 03 days from the receipt of the satisfactory report, SSC shall send a written notification of the receipt of the report to the issuer, the Stock Exchange and Vietnam Securities Depository and Clearing Corporation (VSDCC), and announce the receipt of it on the website of SSC.
- After receiving the notification from SSC, the issuer may request unfreezing of the amount obtained from the offering, except issuance of bonus shares to employees.
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