Regulations on Private Placement of Shares from January 1, 2021

Provisions on private placement of shares from January 1, 2021 - Illustrative image.

Specifically, Article 125 of the Enterprise Law 2020 stipulates that the private placement of shares by joint-stock companies that are not public companies must meet the following conditions:

- Not offered through mass media;

- Offered to fewer than 100 investors, excluding professional securities investors, or only offered to professional securities investors.

Notably, joint-stock companies that are not public companies shall carry out private placement of shares according to the following provisions:

- The company decides on the private placement plan in accordance with this Law;

- Except for cases of merger or consolidation, the company's shareholders shall have preemptive rights to purchase shares as follows:

- The company must notify in writing to the shareholders by a method ensuring that it reaches their contact address in the shareholder register no later than 15 days before the end of the registration period for purchasing shares;- The notification must include the full name, contact address, nationality, and legal document number of the individual if the shareholder is an individual; name, enterprise code or legal document number of the organization, and headquarter address if the shareholder is an organization; the number of shares and the percentage of shares currently held by the shareholder in the company; the total number of shares expected to be offered and the number of shares the shareholder has the right to purchase; the share offering price; the deadline for registration to purchase; and the full name, signature of the legal representative of the company. Included with the notification must be a sample share purchase registration form issued by the company. If the share purchase registration form is not returned to the company by the deadline specified in the notification, the shareholder is considered to have waived their preemptive right to purchase;- Shareholders have the right to transfer their preemptive rights to purchase shares to others.

- In case the shareholders and those who receive the preemptive rights do not buy all the shares, the remaining shares may be sold to others under the private placement plan with conditions not more favorable than those offered to the shareholders, unless otherwise approved by the General Meeting of Shareholders.

For details, see Enterprise Law 2020, effective January 1, 2021.

Le Vy

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE