Selling shares in joint-stock companies according to Viet Nam Law on Enterprises

Shares in joint-stock companies can be sold easily among subjects. However, selling shares must comply with specific legal regulations in Viet Nam. Let’s find out this issue with Lawyer X through the following scenario: “Dear Lawyer! I would like to ask what regulations shall offering shares, selling shares in Viet Nam comply with? What conditions shall the private placement of shares of a non-public joint stock company satisfy? Thanks for answering me!”

Legal grounds

Viet Nam Law on Enterprises

Offering shares

– Offering shares means the company’s increase in charter capital by increasing the quantity of shares, types of authorized shares.

– Shares may be offered as follows:

+ Offering shares to existing shareholders;

+ Private placement of shares;

+ Public offering of shares.

– Public offering of shares, offering of shares of public companies and other organization shall be carried out in accordance with securities laws.

– The company shall register the change in charter capital within 10 days from the day on which the shares offering is complete.

*Offering of shares to existing shareholders

– Offering of shares to existing shareholders is an event in which the company increases the quantity and types of authorized and sell all of these shares to all shareholders in proportion to their holdings in the company.

– The offering of shares to existing shareholders by a non-public joint stock company shall be carried out as follows:

+ The company shall send a written notification by express mail to the shareholders’ mailing addresses written in the shareholder register at least 15 days before the deadline for subscribing for shares;

+ The notification shall contain the 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; the shareholder’s current shares and holding; the total quantity of shares offered and the number of shareholders having the right to buy them; the offered price; deadline for subscribing; full name and signature of the company’s legal representative. The notification shall be enclosed with the share subscription form issued by the company. If the share subscription form is not sent to the company by the deadline, it will be considered that the shareholder has renounced the right to buy shares;

+ Shareholders may transfer their right to buy shares to other persons.

– If the offered shares are undersubscribed, the Board of Directors is entitled to sell the remaining number of authorized shares to the company’s shareholders and other persons under conditions that are not more favorable than those offered to the shareholders, unless otherwise accepted by the GMS or prescribed by securities laws.

– Shares are considered soled when they are fully paid for and information about the buyer specified in Clause 2 Article 122 of Law on Enterprises is fully recorded in the shareholder register. From that time, the buyer is a shareholder of the company.

– After the shares are fully paid for, the company shall issue and deliver the share certificate to the buyer. In case a share certificate is not delivered, information about the shareholder specified in Clause 2 Article 122 of Law on Enterprises shall be recorded in the shareholder register to certify the shareholder’s owner of shares.

Private placement of shares

– The private placement of shares of a non-public joint stock company shall satisfy the following conditions:

+ The offering is not made through mass media;

+ Shares are offered to fewer than 100 investors, not including professional securities investors or only offered to professional securities investors.

– The private placement of shares of a non-public joint stock company shall be carried out as follows:

+ The company shall issue a decision on private placement of shares in accordance with Law on Enterprises;

+ The company’s shareholders exercise their rights to buy shares in accordance with Clause 2 Article 124 of Law on Enterprises, except consolidation and acquisition of companies;

+ In case the shares are not completely bought by the shareholders and the persons that receive the rights to buy shares, the remaining number of shares shall be offered by private placement under conditions that are not more favorable than those offered to the shareholders, unless otherwise accepted by the GMS.

– Foreign investors that buy shares offered in accordance with this Article shall complete the procedures for purchasing shares specified in the Law on Investment.

Selling shares

The Board of Directors shall decide the time, method and prices for selling shares. The selling prices must not be lower than their market values or latest book values, except:

– Shares that are sold for the first time to persons other than founding shareholders;

– Shareholders that are sold to all shareholders according to their holdings in the company;

– Shares that are sold to brokers or guarantors, in which case the discount or discount rate must be approved by the GMS unless otherwise prescribed by the company’s charter;

– Other cases in which the discount rates are specified in the company’s charter or resolution of the GMS.

Transfer of shares

– Shares may be transferred freely except the cases specified in Clause 3 Article 120 of Law on Enterprises and other cases of restriction specified in the company’s charter. The restrictions on transfer of shares specified in the company’s charter are only applicable if they are written in the certificates of the shares subject to restriction.

– The transfer shall be made into a contract or carried out on the securities market. In case of transfer under a contract, the documents shall bear the signatures of the transferor and the transferee or their authorized representatives. In case shares are transferred on the securities market, the transfer procedures prescribed by securities laws shall apply.

– In case of the death of a shareholder that is an individual, his/her heir at law or designated by a will shall become a shareholder of the company.

– In case a shareholder that is an individual dies without an heir or the heir refuses the inheritance or is disinherited, his/her shares shall be settled in accordance with civil laws.

– A shareholder may donate all or part of their shares to other organizations and individuals; use the shares to pay debts. The organization or individual that receives the donation or debt payment will become a shareholder of the company.

– The organizations and individuals that receive shares in the cases specified in this Article will only become shareholders when the information specified in Clause 2 Article 122 of Law on Enterprises is fully recorded in the shareholder register.

– The company shall register the changes of shareholders in the shareholder register as requested by relevant shareholders within 24 hours after the request is received.

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