Securities has always been one of the exciting markets in the financial sector. Businesses participate in stock exchanges to buy and sell their company’s shares. The fact that companies are traded on the stock market is also regulated with the amount of operating financial capital and the conditions for a company to operate in the securities sector are very strict. As a result, some public companies are now unable to list their shares on exchanges because they do not meet the trading conditions, and are called unlisted public companies. So how to understand an unlisted public company? How to register transactions with unlisted public companies? To clarify this issue, Lawyer X would like to introduce the article “Regulations on unlisted public companies in Vietnam”. Invite your reference.
Legal grounds
Securities Law 2019
Decree 155/2020/ND-CP
What is a public company?
According to Clause 1, Article 32 of the Securities Law 2019, regulations on public companies are as follows:
A public company is a joint stock company in one of the following two cases:
- The company has contributed charter capital of VND 30 billion or more and has at least 10% of the voting shares held by at least 100 investors who are not major shareholders;
- The company has successfully conducted the initial public offering of shares through registration with the State Securities Commission as prescribed in Clause 1, Article 16 of this Law.
Accordingly, a public company is a joint-stock company in which the charter capital and percentage of shares are determined or according to the successful initial public offering of shares through registration with the Commission. State Securities.
Rights and obligations of public companies
According to Article 34 of the Securities Law 2019, the rights and obligations of a public company after being certified by the State Securities Commission to complete the registration are as follows:
- Disclosure of information according to regulations;
- Comply with regulations on corporate governance;
– Carry out the centralized registration of shares at the Vietnam Securities Depository and Clearing Corporation in accordance with regulations on securities registration;
A public company with a contributed charter capital of VND 30 billion or more and having at least 10% of the voting shares held by at least 100 investors who are not major shareholders must execute :
Register for trading of shares on the trading system for unlisted securities within 30 days from the date the State Securities Commission confirms the completion of the registration of a public company.
After 02 years from the first trading date on the trading system for unlisted securities, a public company has the right to submit a listing registration application when it meets the conditions for listing securities;
A public company that has successfully conducted an initial public offering of shares through registration with the State Securities Commission must list its shares or register for trading on the securities trading system in the following months: within 30 days from the end of the public offering.
Unlisted public company
According to Clause 26, Article 4, 5 of the Securities Law 2019 stipulates:
“Listing of securities means putting securities that are eligible for listing into trading on the trading system for listed securities.”
“Registration for trading means putting securities into trading on the trading system for unlisted securities.”
Besides, according to Point d, Point dd Clause 1, Article 34 of the Law on Securities 2019 stipulates the obligations of public companies as follows:
d) The public company specified at Point a, Clause 1, Article 32 of this Law must register for trading in shares on the trading system for unlisted securities within 30 days from the date of the State Securities Commission. confirm the completion of the public company registration. After 02 years from the first trading date on the trading system for unlisted securities, a public company has the right to submit a listing registration application when it meets the conditions for listing securities;
dd) The public company specified at Point b, Clause 1, Article 32 of this Law must list its shares or register for trading on the securities trading system within 30 days from the end of the offering. to the public.”
Regarding the listing of securities:
Securities that have been offered to the public, shares of public companies, closed-end fund certificates, exchange-traded fund certificates, covered warrants, futures contracts, and options contracts issued by the Securities and Exchange Commission. Securities approved by the State must be listed and registered for trading on the securities trading system.”
Normally, a public company that issues shares must list and register for trading on the stock exchanges within the prescribed time limit. However, for some reason, this company has not been able to list the securities. Therefore, this is the case of unlisted public companies.
The company has issued equity shares but is not traded on the stock exchange. Usually, before a public company can be listed on a stock exchange, certain requirements must be met. Each stock exchange has its own listing requirements that a company (or other entity) that wants to be listed must meet. Therefore, when the conditions are not met, the public company cannot carry out the listing of securities on the stock exchanges.
Why is the public company unlisted?
An unlisted public company is a public company that has been issued with shares but has not yet been listed or traded at a stock exchange.
Public companies are not listed because the company is too small to qualify for a listing on the stock exchange.
Major exchanges have listing conditions for stocks, including annual earnings thresholds, minimum number of shares outstanding, and listing fees.
An unlisted public company may have too few shareholders or the company’s management may want to avoid disclosing ownership under the listing conditions of certain exchanges.
Companies that have been delisted from exchanges can lead to the company becoming an unlisted public company. Delisting may be voluntary or may be due to failure to meet an exchange’s listing conditions.
The public company is not listed, which means that the owner of the company operates the business like a private company and avoids the regulations of the exchange.
Although unlisted public companies are less regulated than listed public companies, unlisted public companies are still more regulated than private companies.
Public companies are still subject to financial reporting requirements. Unlisted public companies may also be prohibited from marketing to investors.
Regulations on the registration of transactions of unlisted public companies
Are unlisted public companies required to register for stock trading?
According to Clause 1, Article 133 of Decree 155/2020/ND-CP, public companies must register for transactions as follows:
“Article 133. Subjects and time limit for registration of transactions
- Subjects registered for transactions
a) The public company is not listed on the Stock Exchange;
b) The company is subject to compulsory listing delisting or voluntary delisting but still satisfies the conditions of being a public company;
c) Equitized enterprises are subject to registration of transactions according to the law on transfer of state enterprises, one-member limited liability companies in which 100% of charter capital is held by state enterprises, public career to become a joint stock company….”
Accordingly, a public company that is not listed on the Stock Exchange belongs to one of the subjects registered for trading, so it is compulsory to register for trading.
Time limit for unlisted public companies to register for trading
According to Clause 2, Article 133 of Decree 155/2020/ND-CP, the time limit for public companies to register for transactions is as follows:
“Article 133. Subjects and time limit for registration of transactions
- Time limit for transaction registration
a) The public company must complete the registration of shares at the Vietnam Securities Depository and Clearing Corporation and register for trading on the Upcom trading system as prescribed at Points d and dd Clause 1 Article 34 Law on Securities;
b) Within 07 working days from the effective date of de-listing, the Stock Exchange is responsible for coordinating with the Vietnam Securities Depository and Clearing Corporation to register for transactions. with the shares of the delisted company;
c) The time limit for registration of transactions of equitized enterprises shall comply with the law on transfer of state-owned enterprises, one-member limited liability companies in which 100% of charter capital is held by the state-owned enterprises. public non-business units into joint-stock companies. Equitized enterprises that register for transactions on the Upcom trading system must fulfill the obligation to disclose information in accordance with the laws and regulations of the Stock Exchange.”
Accordingly, the public company must complete the registration of shares at the Vietnam Securities Depository and Clearing Corporation and register for trading on the Upcom trading system.
Within 07 working days from the effective date of delisting, the Stock Exchange is responsible for coordinating with the Vietnam Securities Depository and Clearing Corporation to register for trading of shares. The company’s shares are delisted.
The time limit for transaction registration of equitized enterprises shall comply with the law on transfer of state-owned enterprises, single-member limited liability companies in which 100% of charter capital is held by state enterprises, and public career into a joint stock company. Equitized enterprises that register for transactions on the Upcom trading system must fulfill the obligation to disclose information in accordance with the law and regulations of the Stock Exchange.
Will I be penalized if I don’t register to trade shares on Upcom?
According to Clause 3, Article 18 of Decree 156/2020/ND-CP stipulating fines for violations of regulations on securities listing and securities trading registration, specifically as follows:
Penalties for failing to register for trading or listing of securities or for trading or listing securities on time shall be sanctioned as follows:
A fine ranging from VND 10,000,000 to VND 30,000,000 shall be imposed for registration of securities trading or listing within 01 month;
A fine ranging from VND 30,000,000 to VND 70,000,000 shall be imposed for registering for trading or listing securities beyond the deadline from more than 1 month to 3 months;
A fine ranging from VND 70,000,000 to VND 100,000,000 shall be imposed for registration of trading or listing of securities beyond the deadline from 3 to 6 months;
A fine ranging from VND 100,000,000 to VND 200,000,000 shall be imposed for registering for trading or listing securities beyond the deadline from over 06 months to 09 months;
A fine ranging from VND 200,000,000 to VND 300,000,000 shall be imposed for registering for trading or listing securities beyond the deadline from over 9 months to 12 months;
A fine ranging from VND 300,000,000 to VND 400,000,000 shall be imposed for registration of trading or listing of securities overdue for more than 12 months or failing to register for trading or listing of securities.
Accordingly, depending on the actual overdue time, there will be a separate penalty for each specific case.
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Frequently asked questions
Conditions for listing shares include:
a) Being a joint stock company with charter capital contributed at the time of registration for listing of VND 30 billion or more based on the most recent audited financial statement, and at the same time a capitalization value of at least VND 30 billion. calculated on a weighted average basis, the settlement price of shares in the latest public offering under the provisions of this Decree or the reference price of shares traded on the Upcom trading system on average of the last 30 sessions prior to the date of issuance. the point of submission of the application for listing registration or the weighted average of the price paid in the initial sale of shares of the equitized enterprise;
b) The listing has been approved by the General Meeting of Shareholders; has traded on the Upcom trading system for at least 02 years, except for the case where the listing organization has offered to sell shares to the public or the enterprise is equitized;
c) The ratio of profit after tax to equity (ROE) in the year preceding the year of listing registration must be at least 5% and the business activities of 02 consecutive years before the year of listing registration must be profitable; there are no debts overdue for more than 01 year by the time of listing registration; no accumulated loss based on the most recent audited financial statements or reviewed semi-annual financial statements in case of listing registration after the end of the semi-annual financial statement period;
d) Except for the case of equitized enterprises, the organization registering for listing must have at least 15% of the voting shares held by at least 100 non-major shareholders; in case the charter capital of the organization registering for listing is VND 1,000 billion or more, the minimum ratio is 10% of the voting shares;
e) Shareholder being an individual or an organization whose ownership representative is the Chairman of the Board of Directors, a member of the Board of Directors, the Head of the Supervisory Board and a member of the Supervisory Board (Controller), the General Director ( Director), Deputy General Director (Deputy Director), Chief Accountant, Chief Financial Officer and equivalent managerial positions elected by the General Meeting of Shareholders or appointed by the Board of Directors and the major shareholder is a member of the Board of Directors. The related parties of the above subjects must commit to continue holding 100% of the shares they own for a period of 06 months from the first trading day of the shares on the Stock Exchange and 50% of the shares owned by them. these shares for the next 6 months, excluding the number of state-owned shares held by the above representatives;
f) The company, its legal representative has not been handled for violations within 02 years from the time of listing registration due to the performance of prohibited acts in securities and market activities. securities specified in Article 12 of the Law on Securities;
g) There is a securities company consulting the application for listing registration, unless the organization registering for listing is a securities company.
A listed company is a public company in which shares are allowed to be traded on stock exchanges. This is considered the highest form of development of a company. Because after becoming a listed company, it will be subject to strict management from state agencies.
At the same time, the company must transparently disclose information and principles of issuing securities to raise capital. Therefore, the motivation to become a listed company is the ability to raise capital on the stock market. Accordingly, listing securities is putting those securities eligible for trading at the stock exchange or securities trading centers.
Conclusion: So the above is Regulations on unlisted public companies in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
