Procedures for offering shares to the public of a joint-stock company in Vietnam

NguyenThiThuTrang April 13, 2022

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Offering shares to the public must go through a certain order and procedures. So how does the law of Vietnam regulate the procedure for offering shares to the public? Let’s find out with Lawyer X through the article below.

Legal grounds

– Enterprise Law 2020

– Securities Law 2019

What are shares?

Before learning about the procedure for offering shares to the public. Let’s find out with Lawyer X: What are shares?

Shares are essentially property rights expressed in shares, which are the smallest division of the company’s charter capital. Charter capital is divided into equal parts called shares. Individuals or organizations that own shares called shareholders.

– The value of each share (par value of shares) is decided by the company and recorded in the shares. The par value of the shares may differ from the offering price of the shares.

– Shares are the legal basis to prove their status as shareholders of the company regardless of whether they participate in the establishment of the company or not.

Types of shares offering

A share offering is an increase in the number of shares or types of shares that your company is entitled to offer to increase its charter capital.

An offer of shares may be made in the following forms:

– Offering shares to existing shareholders.

– Private offering of shares.

– Offering shares to the public.

What is a public offering of shares?

A public offering of shares is the offering of shares to investors or the use of advertising and public solicitation methods when making the offering.

If you want to offer shares, your company needs to carry out the procedures for offering shares to the public by regulations.

Procedures for offering shares to the public

Step 1: Register to offer shares to the public

Issuing organizations and shareholders of public companies, before offering securities to the public, must register with the State Securities Commission. Except in the following cases:

– public offering of shares to convert state-owned enterprises; one-member limited liability companies with 100% charter capital held by state-owned enterprises; public non-business units into joint-stock companies.

– Besides, the sale of shares according to the legally effective judgment or decision of the Court or the Arbitrator’s decision. Or the sale of a manager’s shares; recipient of assets in the event of bankruptcy or insolvency.

A dossier of registration for a public offering of shares includes:

– Registration certificate for the public offering of shares.

– Prospectus.

– Charter of the issuer.

– Moreover, the decision of the General Meeting of Shareholders to approve the issuance plan; the plan to use capital obtained from the offering, and the written commitment to the listing. Or register to trade shares on the stock trading system.

– Written commitment to meet regulations.

– The written commitment of major shareholders before the time of the initial public offering of shares of the issuer to jointly hold at least 20% of the charter capital of the issuer for at least 1 year from the closing date of the offering

– Consulting contract for the registration of public offering of shares with a securities company.

– Similarly, written confirmation of the bank; foreign bank branches on opening an escrow account to receive money to buy shares of the offering.

– Lastly, underwriting commitment (if any).

Step 2: Disclosure before offering

Within 30 days from the date of receipt of a complete and valid application for registration of a public offering of securities. The State Securities Commission shall issue the Certificate of Registration of a Public Offering of Securities. In case of refusal, it must reply in writing and clearly state the reason.

Besides, within 07 days from the effective date of the above registration certificate. The issuer must publish the Notice of Release on 01 electronic newspaper or printed newspaper in 03 consecutive issues.

Step 3: Distribution of securities

The distribution of securities must ensure fairness and publicity; ensure the minimum time limit for investors to register to buy securities is 20 days. Except for the case that the securities offered for sale covered warrants; This deadline must state in the Release Notice.

So, the distribution of securities must be completed within 90 days; from the effective date of the Certificate of Registration for the Public Offering of Securities.

The report on the results of the offering to the State Securities Commission must complete within 10 days; from the closing date of the offering. At the same time, the written confirmation of the bank attached; a branch of the foreign bank where the escrow account opened on the proceeds from the offering.

What is the difference between shares and stocks?

Frequently asked questions

When are shares considered sold?

Shares are considered to have been sold when full payment is made and the required information about the purchaser is fully recorded in the register of shareholders. From that point on, the person buying the shares becomes the shareholder of the company.

In which case is it suspended from offering shares to the public?

The State Securities Commission has the right to suspend a public offering of securities for a maximum of 60 days in the following cases:
1. An application file for registration of a public offering of securities contains false information or omits important contents that may affect investment decisions and cause damage to investors.
2. The distribution of securities did not comply with regulations.

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Contact LSX Lawfirm

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