Instructions for settlement of unsubscribed and unpaid shares in Vietnam

Hello, the editorial board would like to answer as follows:

1. Current procedures for public securities offering in Vietnam

According to the provisions of Article 41 of Decree 155/2020/ND-CP on the procedures for public securities offering in Vietnam as follows:

Step 1:

- The issuer/the offering shareholder shall submit the application for public securities offering to State Securities Commission (SSC).

- The issuer/the offering shareholder shall revise and supplement the application in accordance with Article 22 of the Law on Securities 2019 and regulations of Decree 155/2020/ND-CP.

Step 2:

- Within 07 working days from the receipt of the notification from SSC requesting completion of the procedures or issuance of the certificate of registration of public securities offering, the issuer/the offering shareholder shall send SSC 06 copies of the official prospectus.

- SSC shall decide whether to grant the certificate of registration of public securities offering or reject the application as prescribed in Article 25 of the Law on Securities 2019.

Step 3:

- Within 07 working days from the issuance of the certificate of registration of public securities offering, the issuer/the offering shareholder shall disclose publish the issuance notice on 01 online newspapers or 03 consecutive issues of a printed newspaper according to Clause 3 Article 25 of the Law on Securities 2019 and disclose it on the websites of the issuer/the offering shareholder that is an organization (if any) and SSC. The official prospectus shall be published on the websites of the issuer/the offering shareholder that is an organization (if any) and SSC.

- The issuer/the offering shareholder shall distribute the securities in accordance with Article 26 of the Law on Securities 2019.

Step 4:

-  Within 10 days from the end of the offering, the issuer or the underwriter, the offering shareholder shall send the report on the amount obtained from offering enclosed with confirmation of the bank or foreign bank branch (FBB) where the escrow account is opened to SSC as prescribed in Clause 5 Article 26 of the Law on Securities 2019 and disclose this information on the websites of the issuer/the offering shareholder that is an organization (if any) and SSC.

Step 5:

- Within 03 working days from the receipt of the satisfactory report, SSC shall:

+ Send a written notification to the issuer/the offering shareholder of the receipt of the report or issue the decision to cancel the offering in the cases specified in Point b, Point c Clause 1 Article 28 of the Law on Securities 2019; such a notification shall also be sent to the Stock Exchange and Vietnam Securities Depository and Clearing Corporation (VSDCC);

+ Publish information about the receipt of the report or the decision on cancellation of the offering on the website of SSC.

Step 6:

- After receiving the notification from SSC, the issuer/offering shareholder may request unfreezing of the amount obtained from the offering.

Thus, the process of offering securities to the public includes 6 main steps as follows:

- Submit the application for public securities offering to State Securities Commission.

- Complete procedures for issuance of certificate of registration of public securities offering.

- Announcing the issuance notice, prospectus and distributing securities.

- Report the results of the offering with bank confirmation to the State Securities Commission.

- SSC announces receipt of report or cancellation of offering.

- The issuer requests unfreezing of the amount obtained from the offering

2. Instructions for settlement of unsubscribed and unpaid shares in Vietnam

During the process of issuing shares, there may be some special cases, such as investors not registering to buy, not paying money to buy, or the number of fractional shares not being enough for distribution. These are issues that need to be resolved to ensure the issuance process is smooth and fair for all parties involved.

According to Article 42 of Decree 155/2020/ND-CP on settlement of unsubscribed and unpaid shares, fractional shares in Vietnam:

- The issuer shall distribute the unsubscribed and unpaid shares, fractional shares to one or some specific investors (in case of offering to existing shareholders in proportion to their holdings in the company) while ensuring fulfillment of conditions for offering, and that rights and obligations of the investors are not more favorable that those of existing shareholders, unless otherwise approved by the eneral Meeting of Shareholders.

- The eneral Meeting of Shareholders or Board of Directors shall determine the criteria and list of investors that may purchase the shares mentioned in Clause 1 of Article 42 of Decree 155/2020/ND-CP. Persons whose interests are relevant to the distribution of these shares must not vote. These shares will be restricted from transfer for at least 01 year from the ending date of the offering.

- The distribution of the shares mentioned in Clause 1 of Article 42 of Decree 155/2020/ND-CP to investors in the following cases is subject to approval by the eneral Meeting of Shareholders:

+ The offering to the related persons, organizations and individuals will cause their holdings to exceed the limits specified in Point a and Point b Clause 1 Article 35 of the Law on Securities 2019;

+ The quantity of shares offered to the related persons, organizations and individuals makes up at least 10% of charter capital of the issuer in one offering or in all offerings within the last 12 months.

- The restrictions prescribed in Clause 2 of Article 42 of Decree 155/2020/ND-CP do not apply to the shares purchased by the underwriter under the underwriting agreement and in case of settlement of fractional shares.

Thus, in case the investor does not register to buy or pay money to buy shares, these shares can be handled in a number of ways such as:

- The issuer shall distribute the unsubscribed and unpaid shares, fractional shares to one or some specific investors while ensuring fulfillment of conditions for offering, and that rights and obligations of the investors are not more favorable that those of existing shareholders, unless otherwise approved by the eneral Meeting of Shareholders

- The eneral Meeting of Shareholders or Board of Directors shall determine the criteria and list of investors that may purchase the shares. These shares will be restricted from transfer for at least 01 year from the ending date of the offering.

Best regards!

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