More violations and corresponding penalties on private placement of securities in Vietnam

Article 8 of the Decree No. 156/2020/NĐ-CP of the Vietnam’s Government has supplemented more violations and corresponding penalties on private placement of securities as follows:

(1) A fine ranging from VND 100.000.000 to VND 150.000.000 shall be imposed for committing one of the following violations:

- Failing to revise the application for registration of private placement when finding inaccurate, inadequate or misleading information or any new information related to the application submitted to competent entities;

- Carrying out the private placement of securities against the registered or approved plan;

- Disclosing information before the private placement which contains advertising information on the mass media, except information to be disclosed as prescribed by law; advertising the private placement on the mass media;

- Selecting ineligible investors to purchase privately place securities; failing to retain documents about selection of investors to purchase privately place securities as prescribed by law;

- Certifying the transfer of privately placed securities within the transfer restriction period or in case such transfer is prohibited by law.

(2) A fine ranging from VND 150.000.000 to VND 200.000.000 shall be imposed for committing one of the following violations:

- Changing the purposes or making changes in the plan for use of capital generated by the private placement without obtaining the approval from the General Meeting of Shareholders (GMS), Board of Directors, Board of Members or Company’s President as prescribed by law, or making changes in the plan for use of capital generated by the private placement before obtaining the GMS’s authorization;

- Using the capital generated by the private placement against the purposes or plan approved by GMS, Board of Directors, Board of Members or Company’s President, or the information disclosed to investors or the report submitted to or approved by competent authorities.

(3) A fine ranging from VND 200.000.000 to VND 300.000.000 shall be imposed for carrying out the private placement without satisfying the private placement requirements set forth in law, or without applying for registration with the State Securities Commission of Vietnam (SSC) (according to the Decree No. 108/2013/NĐ-CP, the fine is VND 80.000.000 - VND 120.000.000);

(4) A fine ranging from VND 400.000.000 to VND 500.000.000 shall be imposed for preparing or making certification on the application for registration of private placement which contains false information or conceals true information.

(5) A fine ranging from VND 1.000.000.000 to VND 1.500.000.000 shall be imposed for forging documents or making certification on forged documents proving the satisfaction of private placement requirements included in the application for registration of the private placement.

In comparison with the Decree No. 108/2013/NĐ-CP (amended by the Decree No. 145/2016/NĐ-CP), there were 03 levels of fines, of which VND 120.000.000 is the highest. However, the Decree No. 156/2020/NĐ-CP of the Vietnam’s Government has increased to 05 fine levels with the maximum fine amounting to VND 1.500.000.000.

More details at the Decree No. 156/2020/NĐ-CP of the Vietnam’s Government, effective from January 01, 2021 and replaces the Decree No. 108/2013/NĐ-CP and Decree No. 145/2016/NĐ-CP.

Phuong Thanh

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