Securities include many types such as stocks, bonds, fund certificates, warrants, … and some other types of securities as prescribed by law. However, according to the Enterprise Law 2020, not all businesses can issue securities, such as partnerships, private enterprises are types of businesses that not allowed to issue any type of securities. So what type of business can issue securities? Let’s find the answer with Lawyer X through the following article:
What type of business can issue securities?
Private enterprises must not issue securities of any kind (Clause 2, Article 118 of the Enterprise Law 2020).
A partnership must not issue any type of securities (Clause 3, Article 177 of the Enterprise Law 2020).
Limited liability company:
– A limited liability company may not issue shares, except in the case of conversion into a joint-stock company.
– A limited liability company with two or more members may issue bonds by this Law and other relevant laws; the private placement of bonds must comply with the provisions of Articles 128 and 129 of the Enterprise Law 2020.
(Clause 3, 4, Article 46, Clause 3, 4, Article 74 of the Law on Enterprises 2020)
Joint-stock companies entitled to issue shares, bonds, and other securities of the company (Clause 3, Article 111 of the Enterprise Law 2020).
Conditions for the company to issue shares
To be issued shares, a company must meet some of the following conditions:
– At the time of registration for the offering, the contributed charter capital must be 10 billion VND or more calculated according to the value recorded in the company’s accounting books.
– Business operations of the year immediately preceding the year of registration must be profitable.
For example, Your company wants to issue shares in 2020. Then your business activities in 2019 must be profitable, with no accumulated losses as of 2020.
There is a plan to issue and use the capital received from the offering. The general meeting of shareholders must approve these plans in the meeting
Some other conditions as prescribed by law. Specifically:
– There is a decision of the General Meeting of Shareholders approving the form of issuing shares to increase share capital from equity;
– There are sufficient sources of performance based on the audited quasi financial statements from the following sources:
– Development Investment Fund;
– Undistributed after-tax profit;
– Capital surplus;
– Other funds (if any) used to supplement the charter capital as prescribed by law.
Note:
The total value of the above capital sources must not be lower than the total value of additional share capital according to the plan approved by the General Meeting of Shareholders.
Companies that issue additional shares to increase share capital from equity must report to the State Securities Commission.
Reporting documents include:
– Report on the issuance of shares to increase share capital from equity source;
– Decision of the Board of Directors approving the implementation of the issuance plan;
– The most recent audited financial statement by the law
– Decision of the General Meeting of Shareholders to approve the plan to issue shares
– Documents proving the transfer of profits from subsidiaries to the parent company according to the guidance on profit distribution from the corporate accounting system.
– In case the parent company issues shares to increase share capital from undistributed after-tax profits or realized capital lower than undistributed after-tax profits based on the consolidated financial statements.
– Higher than the undistributed profit after tax on the parent company’s financial statements
Please see more:
What are the conditions to set up a securities company in Vietnam?
Can Officers establish company in Vietnam?
Frequently asked questions
Securities are evidence that confirms the legal ownership of that owner with the assets or capital of the issuing company or organization. Besides, securities can be in the form of certificates, journal entries, or electronic data.
Securities include classes such as stocks, bonds, fund certificates, etc. Then, securities are also considered to be a negotiable and fungible abstract commodity that represents a financial value. Securities are divided into three main categories: debt securities, derivative securities, and equity securities.
Thus, shares are a type of security according to current legal regulations.
To issue securities, the company must meet some of the following conditions:
– At the time of registration for the offering, the contributed charter capital must be 10 billion VND or more calculated according to the value recorded in the company’s accounting books.
Business activities of the year immediately preceding the year of registration must be profitable.
Thus, if the business activity of the previous year is a loss, the company is not allowed to issue securities
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