What are the requirements for underwriting public offering in Vietnam? What is the minimum charter capital to perform securities underwriting in Vietnam?
What are the requirements for underwriting public offering in Vietnam?
According to the provisions of Clause 31, Article 4 of the 2019 Law on Securities in Vietnam on the definition of securities underwriting as follows:
Definitions
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31. Securities underwriting means an underwriter’s commitment to the issuer to buy part or all of the issuer’s securities for reselling, or to buy the unsold securities, or to put the best efforts to sell as much as possible of a securities offering.
Pursuant to the provisions of Article 17 of the 2019 Law on Securities in Vietnam stipulating the requirements for underwriting public offering as follows:
- A securities company or an organization shall satisfy the following requirements to underwrite a public offering:
+ The securities underwriting is licensed by SSC in accordance with this Law;
+ Financial safety criteria are satisfied as prescribed by law;
+ The underwriter is not a related person of the issuer.
- If underwriter opts to purchase of part or all of the issuer’s securities, the total value of securities purchased must not exceed the equity and 15 times the difference between the short-term assets and short-term debts according to the latest financial statement.
What are the requirements for underwriting public offering in Vietnam? What is the minimum charter capital to perform securities underwriting in Vietnam?
What is the minimum charter capital to perform securities underwriting in Vietnam?
According to the provisions of Article 175 of Decree No. 155/2020/ND-CP, the minimum charter capital for securities business operations of securities companies in Vietnam, specifically:
+ Securities brokerage: 25 billion VND;
+ Proprietary trading: 50 billion VND;
+ Securities underwriting: 165 billion VND;
+ Securities investment counseling: 10 billion VND.
+ Minimum capital provided for the branch in Vietnam of a foreign securities company is 10 billion VND.
+ The minimum charter capital of a fund management company, minimum capital provided for the branch in Vietnam of a foreign fund management company is 25 billion VND.
+ In case an organization registers more than one operation, the minimum charter capital shall be the sum of the minimum charter capital of each operation registered.
Thus, in order to perform securities underwriting, a securities company needs to meet a minimum charter capital of 165 billion VND.
In which case is a securities company not allowed to become a principal underwriter?
According to the provisions of Article 23 of Circular No. 121/2020/TT-BTC on securities underwriting operations of securities companies in Vietnam as follows:
- If securities companies underwrite the public offering of securities by way of buying part or all of the securities of issuers, they shall only be allowed to underwrite that total issuance of securities is not greater than equity and is not over 15 times more than the difference between the value of short-term assets and short-term liabilities according to the latest quarterly financial statements.
- A securities company is not allowed to underwrite the issue of its securities by entering into a firm commitment or becoming a principal underwriter in the following cases:
+ Securities company operating independently or joining with its subsidiaries or related persons owns at least 10% of the charter capital of an issuer, or has control over an issuer, or has the right to appoint the General Director (Director) of the issuer;
+ At least 30% of the charter capital of a securities company and at least 30% of the charter capital of the issuer are held by the same individual or entity;
+ Issuer that is independent or joins with its subsidiaries or related persons, owns at least 20% of the charter capital of a securities company, or has control over a securities company, or has the right to appoint the General Director (Director) of the securities company;
+ Any member of the Governing Board, General Director (Director) and related persons of a securities company is also a member of the Governing Board or the General Director (Director) of another issuer;
+ Any member of the Governing Board, General Director (Director) and related persons of an issuer is also a member of the Governing Board or the General Director (Director) of a securities company;
+ A securities company and an issuer have the same legal representative.
- Any securities company underwriting securities must open standalone accounts at commercial banks to receive money to buy securities from investors.
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