Vietnam: Conduct of a public auction and determination of auction results

According to Circular No. 40/2018/TT-BTC of the Ministry of Finance of Vietnam, the conduct of an auction and determination of auction results are prescribed as follows:

1. Conducting an auction:

The investors shall subscribe to the purchasing number of shares and submit the deposit as prescribed in point a, Clause 1, Article 11 of this Circular in the time prescribed in the regulation on auction sale. Auction entry slips will be given to investors by the auctioneering organization.

With regard to foreign investors, the provision of such slips must comply with regulations in Clause 2 Article 6 of Decree No. 126/2017/ND-CP of Vietnam’s Government.

The investors must fill out the slip as required including information on the bid price and send it to the auctioneering organization by:

- submitting the slip directly to the broker if the auction is organized by such broker and to auction agents if the auction is organized by the Stock Exchanges.

- submitting the slip by post as prescribed in the regulation on share auction.

2. Determination of auction results:

The determination of auction results must adhere to the principle of selecting the bids in the descending order to make sure that there will be enough shares offered to the investors but not lower than the reserve price.

At the lowest successful bid, if different investors (even foreign investors) offer the same bid but the number of remaining shares is less than total number of shares subscribed at the lowest successful bid, the number of shares purchased by each investor will be identified as follows:

Where there is a regulation on the maximum number of purchased shares for foreign investors, the auction results shall be determined in accordance with the above-mentioned principle but the number of shares purchased by foreign investors must not exceed the maximum number in compliance with law in force.

More details can be found in Circular No. 40/2018/TT-BTC of the Ministry of Finance of Vietnam, which takes effect from June 18, 2018.

- Thanh Lam -

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