Are foreign investors allowed to purchase shares initially offered when the public service provider is transformed into a joint-stock company?
Are foreign investors allowed to purchase the initial shares of a public service provider converted into a joint-stock company?
According to Clause 1, Article 7 of Decree 150/2020/ND-CP, it is stipulated as follows:
Payment currency and method of the initial share sale
1. Domestic and foreign investors purchasing shares of a converted public service provider shall use Vietnamese Dong.
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Foreign investors are allowed to purchase the initial shares offered by a public service provider converted into a joint-stock company. This transaction is conducted in Vietnamese Dong.
Are foreign investors allowed to purchase the initial shares when the public service provider is converted into a joint-stock company?
How is the public auction method to sell initial shares of a converted public service provider regulated?
According to Point a, Clause 2, Article 7 of Decree 150/2020/ND-CP, it is stipulated as follows:
Payment currency and method of the initial share sale
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2. The initial share sale shall be conducted using the following methods:
a) Public auction
- The auction method applies in cases of public auction sale without discrimination between investors as organizations, individuals, domestic or foreign;
- The public auction organization shall be carried out at the Stock Exchange. In cases where the converted public service provider offers shares with a nominal value of less than 10 billion VND, the competent authority as prescribed in Article 39 may consider and decide to organize the auction at securities companies or service centers, asset auction companies according to the provisions of the law on asset auctions (except in cases specified for selling to strategic investors as stated in Clause 3, Article 6 of this Decree);
- Information about the converted public service provider and the auction organization must be announced at the auction place, on mass media, and publicly disclosed on the Government of Vietnam's Portal at least 20 working days before organizing the auction;
- The selling price in the public auction method is the successful bid price of each investor. Investors who win at any price level buy shares at that price but not lower than the starting price.
Thus, the public auction method to sell initial shares of a converted public service provider is regulated as follows:
- The auction method applies in cases of public auction sale without discrimination between investors as organizations, individuals, domestic or foreign;
- The public auction organization shall be carried out at the Stock Exchange. In cases where the converted public service provider offers shares with a nominal value of less than 10 billion VND, the competent authority may consider and decide to organize the auction at securities companies or service centers, asset auction companies according to the provisions of the law on asset auctions (except in cases specified for selling to strategic investors);
- Information about the converted public service provider and the auction organization must be announced at the auction place, on mass media, and publicly disclosed on the Government of Vietnam's Portal at least 20 working days before organizing the auction;
- The selling price in the public auction method is the successful bid price of each investor. Investors who win at any price level buy shares at that price but not lower than the starting price.
How is the underwriting method to sell initial shares of a converted public service provider regulated?
According to Point b, Clause 2, Article 7 of Decree 150/2020/ND-CP, it is stipulated as follows:
Payment currency and method of the initial share sale
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2. The initial share sale shall be conducted using the following methods:
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b) Underwriting method
- The underwriting method is the method of issuing shares with the commitment and guarantee of the underwriting organization to distribute all the shares offered outside as approved by the competent authority.
In cases of underwriting for foreign investors, it must comply with the provisions of the law regarding the right to purchase and contribute capital of foreign investors in Vietnamese enterprises.
In cases where shares are not fully sold, the underwriting organizations are responsible for purchasing the remaining shares at the guaranteed price as committed in the Underwriting Contract based on the principle of not being lower than the starting price.
- The duties and rights of the underwriting organization are executed according to the provisions of the law on securities and the Underwriting Contract signed between the underwriting organization and the authorized representative of the converted public service provider.
Thus, the underwriting method to sell initial shares of a converted public service provider is regulated as follows:
- The underwriting method is the method of issuing shares with the commitment and guarantee of the underwriting organization to distribute all the shares offered outside as approved by the competent authority.
In cases of underwriting for foreign investors, it must comply with the provisions of the law regarding the right to purchase and contribute capital of foreign investors in Vietnamese enterprises.
In cases where shares are not fully sold, the underwriting organizations are responsible for purchasing the remaining shares at the guaranteed price as committed in the Underwriting Contract based on the principle of not being lower than the starting price.
- The duties and rights of the underwriting organization are executed according to the provisions of the law on securities and the Underwriting Contract signed between the underwriting organization and the authorized representative of the converted public service provider.
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