Initial public offering of securities to raise more capital; or an initial public offering of securities to become a public company, or a combination of both forms and an initial public offering of fund certificates to establish a securities investment fund, which must meet the following conditions: cases provided for by law.

Therefore, Hong Bang Law would like to share with you some essential information about the Initial Public Offering Process in Vietnam.

Legal basis:

• Law on Securities 2019
• Decree No. 155/2020/NĐ-CP detailing the implementation of several articles of the Law on Securities

Requirements:

A joint-stock company (the issuer) shall satisfy the following requirements to offer its shares publicly:

• The contributed charter capital is at least 30 billion VND on the offering date according to the accounting books;
• The company has profited over the last 02 years and has no accumulated loss on the offering date;
• There is a plan for issuance and use of capital generated by the offering ratified by the General Meeting of Shareholders;
• At least 15% of its voting shares have been sold to at least 100 non-major shareholders. If the issuer’s charter capital is 1.000 billion VND or above, the ratio shall be 10%.
• Before the offering date, the major shareholders have committed to hold at least 20% of the issuer’s charter capital for at least 01 years from the end of the offering;
• The issuer is not undergoing criminal prosecution and does not have any unspent conviction for economic crimes;
• The offering is consulted by a securities company unless the issuer is already a securities company;
• The issuer commits to have its shares listed or registered on the securities trading system after the end of the offering;
• The issuer has an escrow account to receive payments for the offered shares.

Application

• The application form;
• The prospectus;
• The issuer’s charter;
• The decision of the General Meeting of Shareholders to ratify the plan for issuance and the plan for use of capital generated by the offering, and the commitment to have the shares listed or registered on the securities trading system;
• The commitment to comply with the regulations in Point d and Point e Clause 1 Article 15 of this Law;
• The major shareholders’ written commitment to hold at least 20% of the company’s charter capital for at least 01 year from the end of the offering;
• The contract with a securities company for public offering consulting;
• A bank’s or FBB’s confirmation on the opening of an escrow account to receive payments for the offered shares;
• The public offering underwriting agreement (if any).

An application for the public offering of shares or bonds shall be enclosed with the decision of the Board of Directors or the Board of members or the company president to approve the application. The application for the public offering of shares of a credit institution shall have the SBV’s written approval for change of its charter capital. In case the public offering of an insurer leads to a change in its charter capital, the application shall be enclosed with the Ministry of Finance’s written approval for change of the insurer’s charter capital.

Procedures

Step 1: Issuing organizations and shareholders registering for the offering shall apply for registration of a public offering of securities to the State Securities Commission.

Step 2: Issuing organizations and shareholders registering for the offering are obliged to amend and supplement the dossiers of registration for the public offering of securities following regulations.

Step 3: Within 07 working days from the date of receipt of the notice from the State Securities Commission of the request to complete the procedures for issuance of the Certificate of registration of a public offering of securities, the issuer shall, registered shareholders send to the State Securities Commission 06 official prospectus to complete the procedures for issuance of the Certificate of registration of the public offering of securities.

Step 4: The State Securities Commission shall issue the Certificate of registration of a public offering of securities or refuse it according to the provisions of Article 25 of the Law on Securities.

Step 5: Within 07 working days from the effective date of the Certificate of Registration for the Public Offering of securities, the issuer or shareholder registering the offering must publish the Notice of Issuance on 01 an electronic or printed newspaper in 03 consecutive issues as prescribed in Clause 3, Article 25 of the Law on Securities and to disclose information on the website of the issuer, the shareholder registering for the offering being an organization ( if any), Stock Exchange. The official prospectus must be simultaneously posted on the website of the issuer, organization, registered shareholder (if any), and the Stock Exchange.

Step 6: Issuing organizations and shareholders registering for the offering shall distribute securities according to the provisions of Article 26 of the Law on Securities.

Competence authority:

– State Securities Committee

If you need more detailed advice and answers as well as how to access this service, please contact directly our Lawyer Nhat Nam via hotline: 0912.35.65.75, 0912.35.53.53 or call the toll free legal consultation hotline 1900.6575 or send a service request via email: lienheluathongbang@gmail.com

Best regards!