What are regulations on organizing auction activities when transferring capital of state enterprises invested in joint-stock companies in Vietnam?

What are regulations on organizing auction activities when transferring capital of state enterprises invested in joint-stock companies in Vietnam? - image from internet

Pursuant to Clause 13 Article 1 of the Decree 32/2018/ND-CP (amending the Decree 91/2015/ND-CP) on state capital investment in enterprises, use and management of capital and assets in enterprises, the regulations on organizing auction activities when transferring capital of state enterprises invested in joint-stock companies in Vietnam are stipulated as follows:

- After a competent authority grants a decision on the capital transfer plan, state enterprises inform the plan for transfer of their shares to joint-stock companies having investments of these state enterprises; state enterprises then prepare necessary documents for participation in an open auction in accordance with regulations in force.

- State enterprises sign a contract to hire a stock exchange, securities company, service center and property auctioning enterprise in accordance with laws on property auction (hereinafter referred to as auctioneer) to organize capital transfer activities according to the following principles:

+ If the face value of shares held at auction for the purpose of outward capital transfer is at least VND 10 billion, state enterprises may hire the Stock Exchange to act as an auctioneer.

+ If the face value of shares held at auction for the purpose of outward capital transfer is less than VND 10 billion, state enterprises may have such options as the Stock Exchange, securities companies, property auctioning companies that they can designate as an auctioneer.

The auction shall be held at the office of the auctioneer, state enterprise having shares to be transferred or any other location depending on arrangements between state enterprises and the auctioneer.

- The auctioneer shall be responsible for issuing rules of auctioning of shares and relevant sample documents prior to an auction after receipt of consent from state enterprises; these rules must ensure that capital transfer conforms to laws on management and use of state capital invested in manufacturing and business operations as well as other relevant regulations; the rules must clearly specify responsibilities and authority of parties concerned in the process of auctioning of shares for capital transfer purposes; the rules must prescribe disclosure of information about the auction (e.g. which information to be revealed and which means of communications to be used); the rules must prescribe eligible bidders, procedures for participation and notification of auctioning results (e.g. such information as duration of payment, payment details, receiving entity, address and account number), procedures for transfer of ownership of auctioned shares, penalties for violations and other regulations to be issued to meet managerial demands and must be aimed at ensuring public awareness, transparency and legality of such auction.

- State enterprises/auctioneers shall disclose auctioning documents which have been prepared in accordance with regulations in force to investors within the period of at least 20 days before the auction date at the main office of state enterprise or the main office of joint-stock company having capital transferred by state enterprises, and auction location through mass media (on three successive articles of a newspaper published nationwide and a newspaper of a locality where main offices of state enterprises and joint-stock companies are located) and post these information on the website of the share auctioneer, state enterprise and joint-stock company having capital transferred by state enterprise (if any).

- State enterprise/auctioneer shall, while disclosing information about auctioning of shares for capital transfer, send auctioning documents that they have prepared in accordance with regulations in force to the owner's representative entity and the Ministry of Finance (Department of Corporate Finance).

- Within the duration specified in auction rules, state enterprise, auctioneer and investors shall implement procedures for participation in auction; (both organizational and individual) investors who are qualified for participation in auction shall receive the participation registration form from state enterprise/auctioneer to register the amount of shares that they can buy and pay advance sums. Investors shall receive the auction participation slip from state enterprise/auctioneer (after paying advance sums) to be able to make a bid.

- Within the duration specified in auctioning rules, investors shall write down their bid in the auction participation slip and send it through to state enterprise/auctioneer by voting directly at the auction venue or voting by post as per rules for auctioning of shares.

- Open auction shall be carried out only if there are at least 02 investors qualified for participation who have submitted valid documents and implemented all required procedures for participation in auction under auctioning rules.

Above are regulations on organizing auction activities when transferring capital of state enterprises invested in joint-stock companies in Vietnam. Please refer to the Decree 32/2018/ND-CP for more details.

Best regards!