Vietnam: Failing to fulfill requirements set forth in law when underwriting the public offering shall be fined up to VND 200 million

According to Article 10 of the Decree No. 156/2020/NĐ-CP of the Vietnam’s Government, underwriting the public offering is one of the violations against regulations on execution of public offering in Vietnam. To be specific:

- A fine ranging from VND 70.000.000 to VND 100.000.000 shall be imposed for commenting or guaranteeing securities prices in the future, income or profits on the investors’ investment, or making no-loss guarantee, except cases of public offering of non-convertible bonds.

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

+ Using untruth or inaccurate information to make market surveys before obtaining the permission for public offering; distributing publicly offered securities against regulations of law;

+ Failing to transfer the capital generated by the offering to the escrow account; releasing or using the capital generated by the offering before the State Securities Commission of Vietnam (SSC) gives written confirmation of offering results;

+ Failing to disclose the audited report on capital use at the General Meeting of Shareholders (GMS) or failing to disclose the detailed descriptions of the use of capital generated by the public offering, which are included in the audited annual financial statements.

- A fine ranging from VND 150.000.000 to VND 200.000.000 shall be imposed upon the underwriter for committing one of the following violations:

+ Failing to fulfill requirements set forth in law when underwriting the public offering;

+ Underwriting a public offering in the form of firm commitment with total securities value higher than the underwriter’s owner's equity or exceeding 15 times the difference between short-term assets and short-term liabilities according to the latest financial statements.

+ …

Thus, failing to fulfill requirements set forth in law when underwriting the public offering shall be fined up to VND 200 million. Additional penalties for underwriters committing this act are that underwriting services shall be suspended for a period of 06 - 12 months. Concurrently, the violating entity is compelled to reduce the underwriting value of public offering as prescribed by the law for remedial measures.

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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