Which organizations and individuals are not allowed to purchase initially issued shares of the public service provider being converted?
Public service providers converting to joint-stock companies: What methods are available for the initial share sale?
According to the provisions of Clause 2, Article 7 of Decree 150/2020/ND-CP on this matter as follows:
Currency for Payment and Initial Share Sale Methods
1. Domestic and foreign investors purchase shares of the converted public service provider in Vietnamese Dong.
2. The initial share sale is conducted through the following methods:
a) Public Auction
- The auction method is applied in cases of public auction sales where there is no distinction between investors being organizations, individuals, domestic or foreign;
- Public auction organization is conducted at the Stock Exchange. In cases where the converted public service provider has shares for sale with a face value of less than 10 billion VND, the competent authority as stipulated in Article 39 may consider and decide to organize the auction at securities companies or service centers, asset auction enterprises in accordance with the law on asset auction (except for cases stipulated on the strategic investor auction sale as set out 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 sales location, on mass media, and publicly disclosed on the Government of Vietnam's electronic portal at least 20 working days before the auction sale of shares;
- The selling price by public auction method is the successful bid price of each investor. The investor winning at what price level buys the shares at that price but not lower than the starting price.
b) Underwriting*
- The underwriting method is the method of issuing shares with a commitment to underwrite by an organization that functions as an underwriter to distribute all the shares sold outside as approved by the competent authority.
Cases of underwriting sales to foreign investors must ensure compliance with legal provisions on the rights to purchase, contribute capital of foreign investors in Vietnamese enterprises.
If not all shares are sold, the underwriting organizations are responsible for buying the remaining shares at the guaranteed price as committed in the Underwriting Contract, which is not lower than the starting price.
- The obligations and rights of the underwriting organization follow legal regulations on securities and the Underwriting Contract signed between the underwriter and the authorized representative of the converted public service provider.
c) Direct Agreement*
- The direct agreement method is the method of selling shares to investors based on the results of negotiations between the Steering Committee or the organization authorized by the Steering Committee and each investor.
- The direct agreement method is only implemented:
+ Selling to strategic investors in cases: Strategic investors register to buy shares in quantities equal to or less than the number of shares expected to sell to strategic investors as per the approved conversion plan, or there is only one strategic investor registering to buy shares.
+ Selling to investors the unsold shares as stipulated in Article 32 of this Decree.
+ Selling to employees and the trade union organization.
3. Depending on the entities and conditions for the initial share purchase, the competent authority stipulated in Article 39 of this Decree determines the share selling method in accordance with Clause 2 of this Article.
4. The Ministry of Finance guides Clauses 2 and 3 of this Article.
Therefore, the joint-stock company converted from a public service provider conducts its initial share sale through the following methods:
- Public Auction
- Underwriting
- Direct Agreement
- Other methods as decided by the competent authority.
Which organizations and individuals are not permitted to purchase initial shares issued by the converted public service provider?
What entities are permitted to purchase shares in the initial share issuance by the joint-stock company converted from a public service provider?
Based on the regulations in Article 12 of Circular 111/2020/TT-BTC regarding the entities permitted to purchase shares in the initial share issuance by the joint-stock company converted from a public service provider, they include:
- Domestic and foreign investors as stipulated in Clauses 1 and 2, Article 6 of Decree 150/2020/ND-CP, including organizations, individuals (including employees in the converted public service provider).
- Strategic investors are domestic and foreign investors meeting the conditions as stipulated in Point b, Clause 3, Article 6 of Decree 150/2020/ND-CP.
- Entities as stipulated in Article 37 of Decree 150/2020/ND-CP.
- The trade union organization at the converted public service provider as stipulated in Point b, Clause 2, Article 31 of Decree 150/2020/ND-CP. The trade union organization authorizes the competent person to perform procedures related to the share purchase.
Which organizations and individuals are not permitted to purchase initial shares issued by the converted public service provider?
Organizations and individuals not permitted to purchase initial shares issued by the converted public service provider follow the provisions of Clause 4, Article 6 of Decree 150/2020/ND-CP, specifically including:
- Members of the Steering Committee, the Task Force for converting the public service provider into a joint-stock company (excluding members representing the converted public service provider);
- Intermediary financial organizations and individuals within these organizations participating in advising the conversion of the public service provider into a joint-stock company, auditing units for financial reports, and auditing agencies determining the value of the public service provider (except underwriting organizations buying unsold shares under an underwriting contract);
- Organizations conducting the share auction and individuals within these organizations related to the auction;
- Persons related to the organizations and individuals stipulated in Points a, b, and c of this Clause according to Clause 17, Article 4 of the Law on Enterprises 2014 or its amended, supplemented, or replaced document (if any).
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