Newest regulations on cases for cancellation of public offering in Vietnam

Newest regulations on cases for cancellation of public offering in Vietnam​ (Internet image)

1. Newest regulations on requirements for public offering in Vietnam

Article 15 of the Securities Law 2019 stipulates the requirements for public offering in Vietnam as follows:

* Conditions for the initial public offering (IPO) of shares by a joint-stock company include:

- Charter capital contributed at the time of registration for the offering must be at least VND 30 billion according to the value recorded in the accounting books;

- Business activities in the two consecutive years preceding the year of registration for the offering must be profitable without accumulated losses until the year of registration for the offering;

- Must have an issuance plan and a capital use plan approved by the General Meeting of Shareholders;

- At least 15% of the voting shares of the issuing organization must be sold to at least 100 investors who are not major shareholders; if the charter capital of the issuing organization is VND 1 trillion or more, then the minimum rate is 10% of the voting shares of the issuing organization;

- Major shareholders must commit to jointly holding at least 20% of the charter capital of the issuing organization for at least one year from the end date of the public offering;

- The issuing organization must not be under criminal prosecution or have been convicted of economic management offenses without having a clear criminal record;

- Must have a securities company advising on the registration dossier for public offer of shares, except if the issuing organization is a securities company;

- Must commit and implement the listing or registration of shares on the trading system after the public offering ends;

- The issuing organization must open an escrow account to receive payment for the shares of the offering.

* Conditions for additional public shares offering of a public company include:

- Meet the provisions at points a, c, e, g, h, and i of paragraph 1 of Article 15 of the Securities Law 2019;

- Business activities in the year preceding the year of registration for the offering must be profitable without accumulated losses until the year of registration for the offering;

- The nominal value of the additionally issued shares must not exceed the total nominal value of the outstanding shares, except in cases where the offering is guaranteed with a commitment to purchase all the shares to resell or to purchase the remaining undistributed shares by the issuing organization, increase capital from owner’s equity, or issue shares to exchange, merge, or consolidate enterprises;

- For public offerings intended to mobilize capital for the issuing organization’s project implementation, the shares must be sold to investors reaching at least 70% of the proposed quantity. The issuing organization must have a plan to cover the capital shortfall from the public offering.

* Conditions for public bonds offering include:

- The enterprise must have a charter capital contributed at the time of registration for the offering of at least VND 30 billion according to the value recorded in the accounting books;

- Business activities in the year preceding the year of registration for the offering must be profitable without cumulative losses or overdue debts over one year;

- Must have an issuance plan, a capital use plan, and a repayment plan approved by the General Meeting of Shareholders, the Board of Directors, the Members' Council, or the company owner;

- Must commit to fulfilling the responsibilities of the issuing organization to investors regarding issuance conditions, payment, protection of legal rights and benefits of investors, and other conditions;

- Must have a securities company advising on the registration dossier for public bonds offering, except if the issuing organization is a securities company;

- Meet the provisions in point e, paragraph 1 of Article 15 of the Securities Law 2019;

- Must have a credit rating for the bond-issuing organization according to the Government's regulations on cases requiring credit ratings and the timing of application;

- The issuing organization must open an escrow account to receive payment for the bonds of the offering;

- Must commit and implement bond listing on the securities trading system after the offering ends.

* Conditions for convertible bonds public offering are applied according to paragraph 2 and point d, paragraph 3 of Article 15 Securities Law 2019.

* Conditions for the initial public offering of fund certificates include:

- The total value of the fund certificates registered for offering must be at least VND 50 billion;

- Must have an issuance plan and an investment plan for the capital mobilized from the public offering of fund certificates in accordance with the Securities Law 2019;

- Must be supervised by a supervisory bank in accordance with the Securities Law 2019;

- Fund certificates offered to the public must be listed on the securities trading system after the offering ends, except for the offering of open-ended fund certificates.

* the Government of Vietnam regulates the conditions and dossier for public securities offerings to convert state-owned enterprises, one-member limited liability companies wholly owned by the state, public service providers into joint-stock companies; offering shares at lower than par value; public offering of securities by shareholders of public companies; public offering of securities by credit institutions under special control; offering securities abroad and other offering cases.

2. Instructions for public offering registration in Vietnam

According to Article 16 of the Securities Law 2019, the issuing organization and shareholders of the public company must register with the State Securities Commission before public securities offering, except in cases stipulated in paragraph 2 of Article 16 of the Securities Law 2019.

The following cases do not require registration for public securities offering:

- Offering debt instruments of the Government of Vietnam, Government-guaranteed bonds issued by policy banks, and local government bonds;

- Offering bonds by international financial institutions approved by the Government of Vietnam;

- Public offering of shares to convert state-owned enterprises, one-member limited liability companies wholly owned by the state, public service providers into joint-stock companies;

- Securities sales under court judgments or legally effective decisions, arbitration decisions, or sales of securities by managers or recipients of assets during bankruptcy or insolvency.

3. Newest regulations on cases for cancellation of public offering in Vietnam

According to Article 28 of the Securities Law 2019, the State Securities Commission shall decide to cancel the public securities offering in the following cases:

- The suspension period stipulated in paragraph 1 of Article 27 of the Securities Law 2019 has expired without rectifying the deficiencies leading to the suspension of the public offering;

- The initial public offering does not meet the minimum condition that the voting shares of the issuing organization are sold to at least 100 investors who are not major shareholders according to point d, paragraph 1, Article 15 of the Securities Law 2019;

- The additional public shares offering does not meet the conditions for sufficiently raising the capital for the issuer’s project implementation according to point d, paragraph 2, Article 15 of the Securities Law 2019.

Apart from the cases stipulated in paragraph 1 of Article 28 of the Securities Law 2019, the public securities offering is canceled according to legally effective court judgments, arbitration decisions, or competent authority decisions as per legal provisions.

* Note: Within 7 working days from the date the public securities offering is canceled, the issuing organization must announce the cancellation following the method stipulated in paragraph 3, Article 25 of the Securities Law 2019 and must retrieve the issued securities while refunding the investors within 15 days from the cancellation date. After this period, the issuing organization must compensate for investor damages according to the terms committed to the investors.

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