How Does a Public Company Trade Its Own Shares?
Article 8 Circular 120/2020/TT-BTC (Effective from February 15, 2021) stipulates the trading of its own shares by public companies as follows:
A public company repurchasing its own shares on the stock trading system must comply with the following regulations:
a) The public company must conduct transactions of repurchasing its own shares in accordance with the information disclosed under Clause 4, Article 37 of the Securities Law.
b) The principles for determining the repurchase price of its own shares by the public company through matching orders or negotiation are stipulated as follows:
- Purchase price ≤ Reference price + (Reference price x 50% Price fluctuation margin).
- Purchase volume: On each trading day, the total purchase volume must be at least 3% and not exceed 10% of the registered transaction volume with the State Securities Commission (the purchase volume does not include canceled volume and this regulation is waived if the remaining purchase volume is less than 3%).
This regulation applies until the public company completes the transaction of repurchasing its own shares with the volume registered with the State Securities Commission.
A public company repurchasing its own shares is allowed to sell those shares after repurchase according to the provisions of Clause 7, Article 36 of the Securities Law. The sale of shares is conducted on the stock trading system following the trading regulations of the Vietnam Stock Exchange or outside the stock trading system in accordance with legal provisions on registration, depository, clearing, and settlement of securities transactions.
Except for the case stipulated in Clause 2 of this Article, a public company repurchasing its own shares before January 1, 2021, must sell the repurchased shares through matching orders or negotiation as follows:
- Selling price ≥ Reference price - (Reference price x 50% Price fluctuation margin).
- Selling volume: On each trading day, the total selling volume must be at least 3% and not exceed 10% of the registered transaction volume with the State Securities Commission (the selling volume does not include canceled volume and this regulation is waived if the remaining selling volume is less than 3%).
Respectfully!
