Vietnam: Conditions for public offering of share certificates

Vietnam: Conditions for public offering of share certificates

1. What are share certificates?

Article 121 of Vietnam's Law on Enterprises 2020 stipulates share certificates as follows:

A share certificate is a certificate issued by a joint stock company, a book entry or electronic data that certifies the ownership of one or a number of shares of the company.

A share certificate shall contain the following information:

- The company’s name, EID number, headquarter address;

- Quantity and type of shares;

- The face value of each share and total face value of the number of shares written therein;

- Full name, signature, mailing address, nationality and legal document number if the shareholder is an individual; names, EID numbers or legal document number and headquarters address if the shareholder is an organization;

- Signatures of the company’s legal representatives;

- Registration number on the company’s shareholder register and issuance date of the share certificate;

- Other information specified in Articles 116, 117 and 118 of Vietnam's Law on Enterprises 2020 for certificates of preference shares.

2.  Requirements for public offering of shares of a joint-stock company

Pursuant to Clause 1, Article 15 of Vietnam's Law on Securities 2019, a joint-stock company (the issuer) shall satisfy the following requirements to offer its shares publicly:

(1) The contributed charter capital is at least 30 billion VND on the offering date according to the accounting books;

(2) The company has profit over the last 02 years and has no accumulated loss on the offering date;

(3) There is a plan for issuance and use of capital generated by the offering ratified by the General Meeting of Shareholders;

(4) At least 15% of its voting shares have been sold to at least 100 non-major shareholders. If the issuer’s charter capital is 1.000 billion VND or above, the ratio shall be 10%.

(5) Before the offering date, the major shareholders have made a commitment to hold at least 20% of the issuer’s charter capital for at least 01 year from the end of the offering;

(6) The issuer is not undergoing criminal prosecution and does not have any unspent conviction for economic crimes;

(7) The offering is consulted by a securities company, unless the issuer is already a securities company;

(8) The issuer has a commitment to have its shares listed or registered on the securities trading system after the end of the offering;

(9) The issuer has an escrow account to receive payments for the offered shares.

3. Requirements for follow-on offering of shares of a joint-stock company

In Clause 2, Article 15 of Vietnam's Law on Securities 2019, in order to make follow-on offering, a public company (the issuer) shall satisfy the following requirements:

- The requirements specified in (1), (3), (5), (6), (7), (8)

- The company has profit in the preceding year and has no accumulated loss on the offering date;

- The value of the new shares does not exceed the total value of shares outstanding at their face value, unless there is a commitment to buy all of the shares of the issuer for reselling or to buy all of the unsold shares of the issuer, shares issued to raise more capital from equity, shares issued for swapping, consolidation or acquisition of enterprises;

- If the public offering is meant to raise capital to execute a project of the issuer, at least 70% of the offered shares must be sold to the investors. The issuer shall have a plan to make up for the shortage in case the capital generated by the offering is inadequate.

The issuer must have a plan to make up for the shortfall in capital expected to be mobilized from the offering to implement the project.

Ngoc Nhi

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