Circular 118/2020/TT-BTC guiding the offering and issuance of securities

CIRCULAR

Guiding a number of provisions on offering and issuance of securities, public bid, redemption of stocks, public company registration and cancellation of status of public companies

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Pursuant to the Law on Securities dated November 26, 2019;

Pursuant to the Law on Enterprises dated June 17, 2020;

Pursuant to the Government’s Decree No. 87/2017/ND-CP dated July 26, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Government’s Decree No. 155/2020/ND-CP dated May 15, 2014, detailing the implementation of a number of articles of the Law on Securities;

At the proposal of the Chairman of the State Securities Commission;

The Minister of Finance hereby promulgates the Circular guiding a number of provisions on offering and issuance of securities, public bid, redemption of stocks, public company registration and cancellation of status of public companies.

Section I.

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular replaces the following Circulars:

1. Forms of the prospectuses for public offering of securities, or issuance of stocks for swap;

2. Forms of the notices of offering or issuance of securities or public bid;

3. Forms of the reports on results of the offering or issuance of securities or public bid;

4. Forms of documents on disclosure of information about public companies; dossiers of registration of public companies formed after enterprise division, separation, consolidation or merger; the cancellation of status of public companies that no longer satisfy the conditions for being treated as public companies due to their reorganization, dissolution or bankruptcy;

5. The redemption of stocks of public companies.

Article 2. Subjects of application

Subjects of application of this Circular include:

1. Issuing institutions;

2. Public companies;

3. Shareholders of public companies that conduct the public offering of stocks;

4. Securities companies;

5. The Vietnam Exchange and its subsidiary companies (hereinafter referred to as the Stock Exchange), the Vietnam Securities Depository and Clearing Corporation;

6. Other relevant agencies, organizations and individuals.

Section II

FORMS OF THE PROSPECTUSES, NOTICES AND REPORTS ON RESULTS OF THE OFFERING OR ISSUANCE OF SECURITIES, PUBLIC BID

Article 3. Prospectus forms

1. The issuing institutions registering for public offering of securities, issuance of stocks for swap, and shareholders of public companies registering for public offering of securities shall make the prospectuses according to the following forms:

a) The prospectus of initial public offering of stocks made according to the Form provided in Appendix No. 01 to this Circular;

b) The prospectus of additional public offering of stocks of a public company made according to the Form provided in Appendix No. 02 to this Circular;

c) The prospectus of public offering of stocks of shareholders of a public company made according to the Form provided in Appendix No. 03 to this Circular;

d) The prospectus of initial public offering of stocks to transform a limited liability company into a joint-stock company, made according to the Form provided in Appendix No. 04 to this Circular;

dd) The prospectus of public offering of bonds made according to the Form provided in Appendix No. 05 to this Circular;

e) The prospectus of public offering of convertible bonds and bonds accompanied with warrants of a public company made according to the Form provided in Appendix No. 06 to this Circular;

g) The prospectus of additional offering of stocks to the public of a public company after restructuring or a public company formed after consolidation of companies other than those subject to restructuring, or a public company after separation, made according to the Form provided in Appendix No. 07 to this Circular;

h) The prospectus of public offering of bonds of a public company after restructuring or a public company formed after consolidation of companies other than those subject to restructuring, or a public company after separation, made according to the Form provided in Appendix No. 08 to this Circular;

i) The prospectus of public offering of convertible bonds and bonds accompanied with warrants of a public company after restructuring or a public company formed after consolidation of companies other than those subject to restructuring, or a public company after separation, made according to the Form provided in Appendix No. 09 to this Circular;

k) The prospectus of issuance of stocks of a public company for public bid, made according to the Form provided in Appendix No. 10 to this Circular;

l) The prospectus of issuance of stocks for swap under the consolidation contract, made according to the Form provided in Appendix No. 11 to this Circular;

m) The prospectus of issuance of stocks of a public company for swap under the merger contract, made according to the Form provided in Appendix No. 12 to this Circular. 2. The prospectus forms mentioned in Clause 1 of this Article must contain the following principal information:

a) Information about the people who are primarily responsible for the prospectus;

b) Information about risk factors;

c) Information about the issuing institutions, public companies whose stocks are offered for sale, including the process of establishment and development, apparatus organization model, relevant companies, and business activities;

d) Information about the founding shareholders, majority shareholders, company owner; company president, members of the Board of Directors, members of the Members’ Council, Chief Executive Officers, Chief Operating Officers, Chief Accountant;

dd) Information about the business performance, financial situation and plans;

e) Information about the offering or issuance, including characteristics of the offered or issued securities; method and schedule of distribution; cases of cancellation of the offering;

g) Information about the purpose of offering and issuance; plans on use of the proceeds from the offering, except for the case of initial public offering of stocks, to become a public company through a change in ownership structure without increasing the charter capital of the issuing institution, public offering of stocks by shareholders of a public company;

h) Information about partners involved in the offering or issuance, including consultancy organizations, issuance-underwriting organizations, distribution agents, bondholder representatives and audit firms;

i) Other important information that may exert an impact on investors’ decisions;

k) Signatures of the people who are primarily responsible for the prospectus as prescribed in Clause 3, Article 19 of the Law on Securities;

l) The list of documents enclosed with the prospectus, including decisions of the Shareholders’ General Meeting or Board of Directors or Members’ Council or the company owner involved in the offering, issuance, financial statements under Article 20 of the Law on Securities, documents related to the projects using capital raised through the offering, and other documents (if any).

3. The issuing institutions making the prospectus according to the form provided in Clause 1 of this Article must ensure the following requirements:

a) Information stated in the prospectus must be clear, accurate, truthful, non-conflicting and contain all contents that may affect investors' decisions. The language in the prospectus must be simple and easy to understand; the use of acronyms, specialized and technical terms must be accompanied by clear explanations;

b) Source of reference of important information, information for comparison in the prospectus must be stated clearly;

c) The prospectus must be made in a clear format, and the font and size must be legible;

d) When analyzing risk factors, it is necessary to mention impacts on the business activities, financial situation, business performance of the issuing institutions; the offering and issuance; securities prices; projects using capital raised through the offering, risk factors to be classified and named by groups, risk factors with negative influence should be arranged in the order of announcement from high to low levels;

dd) Information about the business activities and financial situation to be reflected about the performance of the issuing institutions and public companies with stocks offered for sale in the latest 2 fiscal years up to the end of the most recent quarter; for the parent company, the announced business performance includes the consolidated business performance and those of the parent company;

e) Information about the major shareholders, company owner, company president, members of the Board of Directors, members of the Members’ Council, supervisors, Chief Executive Officer, Chief Operating Officer, Chief Accountant must reflect information on interests related to the issuing institutions, shareholders of the public company offering stocks to the public;

g) Purposes of the offering, issuance, and plans on use of the proceeds from the offering must be in compliance with the plans approved by the Shareholders’ General Meeting or Board of Directors or Members’ Council or the owner of the company;

h) In case the issuing institution amends and supplements the prospectus, it must clearly state such amendments and supplementations, and reasons thereof.

Article 4. Forms of the notices of offering and issuance of securities or public bid

1. The notice of public offering of stocks shall be made according to the Form provided in Appendix No. 13 to this Circular;

2. The notice of public offering of bonds shall be made according to the Form provided in Appendix No. 14 to this Circular;

3. The notice of issuance of stocks of a public company for public bid shall be made according to the Form provided in Appendix No. 15 to this Circular;

4. The notice of issuance of stocks for swap under the consolidation or merger contract shall be made according to the Form provided in Appendix No. 16 to this Circular;

5. The notice of issuance of stocks to pay dividends, issuance of stocks to increase share capital from equity shall be made according to the Form provided in Appendix No. 17 to this Circular;

6. The notice of issuance of stocks under the program selected for employees in the company shall be made according to the Form provided in Appendix No. 18 to this Circular;

7. The notice of issuance of stocks to perform the warrant rights shall be made according to the Form provided in Appendix No. 19 to this Circular;

8. The notice of public bid shall be made according to the Form provided in Appendix No. 20 to this Circular.

Article 5. Forms of the reports on results of the offering or issuance of securities or public bid

1. The report on results of the public offering of stocks shall be made according to the Form provided in Appendix No. 21 to this Circular;

2. The report on results of the public offering of bonds shall be made according to the Form provided in Appendix No. 22 to this Circular;

3. The report on results of the private offering of stocks or offering of preferred stocks accompanied with warrants shall be made according to the Form provided in Appendix No. 23 to this Circular;

4. The report on results of the issuance of stocks for swap with shares for defined shareholders in other public companies, swap with shares for shareholders of the non-public joint-stock company, swap with contributed capital for members of a limited liability company, or debt swap shall be made according to the Form provided in Appendix No. 24 to this Circular;

5. The report on results of the issuance of stocks of a public company for public bid shall be made according to the Form provided in Appendix No. 25 to this Circular;

6. The report on results of the issuance of stocks for swap under the consolidation contract shall be made according to the Form provided in Appendix No. 26 to this Circular;

7. The report on results of the issuance of stocks for swap under the merger contract shall be made according to the Form provided in Appendix No. 27 to this Circular;

8. The report on results of the issuance of stocks to pay dividends, issuance of stocks to increase share capital from equity shall be made according to the Form provided in Appendix No. 28 to this Circular;

9. The report on results of the issuance of stocks under the program selected for employees in the company shall be made according to the Form provided in Appendix No. 29 to this Circular;

10.  The report on results of the issuance of stocks for conversion of bonds shall be made according to the Form provided in Appendix No. 30 to this Circular;

11.  The report on results of the issuance of stocks to perform the warrant rights shall be made according to the Form provided in Appendix No. 31 to this Circular;

12.  The report on results of the overseas offering of stocks or new issuance of stocks serving as a basis for overseas offering of depositary receipts shall be made according to the Form provided in Appendix No. 32 to this Circular;

13.  The report on results of the public bid shall be made according to the Form provided in Appendix No. 33 to this Circular.

Section III

REGISTRATION OF PUBLIC COMPANIES, CANCELLATION OF PUBLIC COMPANY STATUS

Article 6. Form of a document on disclosure of information about the public company

The document on disclosure of information about the public company shall be made according to the Form provided in Appendix No. 34 to this Circular.

Article 7. Dossier of registration of a public company formed after enterprise division, separation, consolidation, or merger

A dossier of registration of a public company formed after enterprise division, separation, consolidation, or merger must comprise:

1. The documents specified at Points a, b, c, d and e, Clause 1, Article 33 of the Law on Securities.

2. Financial statements of the latest year of the joint-stock companies formed after enterprise division, separation, or consolidation, audited by independent audit firms. At the time of submitting the dossier for registration of the public company, if the latest annual financial statement is unavailable due to the company’s operating time is less than one fiscal year as prescribed, the latest audited annual financial statement in its registration dossier shall be replaced by the latest financial statement audited by the independent audit firm.

3. Financial statements of the latest year of the joint-stock companies formed after merger, audited by independent audit firms. In case the company formed after merger carries out the enterprise registration after the end of the accounting period of the latest year, the company must supplement the latest audited financial statement.

Article 8. Cancellation of status of public companies that no longer satisfy the conditions for being treated as public companies due to their reorganization, dissolution, or bankruptcy

1. Cancellation of status of public companies that no longer satisfy the conditions for being treated as public companies after enterprise division, consolidation, merger, dissolution, or bankruptcy

a) Public companies shall make reports, disclose information about their reorganization, dissolution or bankruptcy in accordance with the law on disclosure of information on securities market;

b) After the public companies’ legal status is updated on the national enterprise registration database or the court issues a decision on announcement of the enterprise bankruptcy, the State Securities Commission shall consider and announce of the cancellation of status of public companies on its information disclosure media.

2. Cancellation of status of public companies whose Enterprise Registration Certificates have been revoked

a) Public companies have their Enterprise Registration Certificates revoked shall make reports and disclose information in accordance with the law on disclosure of information on securities market;

b) The State Securities Commission shall consider canceling the status of public companies within 180 days after receiving reports on the revocation of Enterprise Registration Certificates;

c) Past the time limit specified at Point b of this Clause, the State Securities Commission shall notify the cancellation of status of public companies on its information disclosure media.

3. Cancellation of status of public companies that no longer satisfy the conditions for being treated as public companies after separation or merger

a) Order, procedures and dossiers of cancellation of status of public companies that no longer satisfy the conditions for being treated as public companies after separation or merger shall comply with Articles 38 and 39 of the Law on Securities;

b) The State Securities Commission shall notify companies of the cancellation of status of public companies within 15 days after receiving the complete and valid dossiers of cancellation of status of public companies, concurrently announce on its information disclosure media.

4. Cancellation of status of public companies that no longer satisfy the conditions for being treated as public companies due to their transformation from joint-stock companies into limited liability companies

a) Public companies granted Enterprise Registration Certificates due to transformation of enterprise forms shall make reports and disclose information in accordance with the law on disclosure of information on securities market;

b) After receiving reports and announcement on information disclosure as prescribed at Point a of this Clause, the State Securities Commission shall consider and notify the cancellation of status of public companies on its information disclosure media.

Section IV

STOCK REDEMPTION

Article 9. Documents of report on stock redemption

1. Before redeeming its own stocks, a public company specified in Clause 1, Article 36 of the Law on Securities shall send to the State Securities Commission reporting documents, including:

a) A report on stock redemption, made according to the form in Appendix No. 35 to this Circular;

b) A decision of the Shareholders’ General Meeting approving the redemption of stocks and a redemption plan;

c) A decision of the Board of Directors approving a plan on organization of stock redemption;

d) A written certification of the designation of a securities company other than a member of the Stock Exchange which redeems its own stock to carry out the transaction;

dd) The latest audited financial statement as prescribed;

e) Documents proving that the company has sufficient funds to redeem its stocks. If a public company, as a parent company, redeems its stocks by using share capital surplus, development investment fund, or another fund, the funds for the implementation shall be based on the parent company’s financial statement. In case a public company, as a parent company, redeems its stocks by using the after-tax undistributed profits, the funds for the implementation shall not exceed the after-tax undistributed profits stated in the audited consolidated financial statement. In case the after-tax undistributed profits used for stock redemption is lower than the one stated in the consolidated financial statement but higher than the one stated in the financial statement of the parent company, decisions of the subsidiary companies’ competent authorities, approving the profit distribution and statements certified by the banks, proving the transfer of profits from subsidiary companies to the parent company are additionally required;

g) Documents proving the company’s satisfaction of law-prescribed conditions for stock redemption in case it operates in a conditional business investment sector or trade.

2. Before redeeming its own stocks as prescribed at Point a, Clause 2, Article 36 of the Law on Securities and redeeming stocks of its own employees under the regulation on issuance of stocks to employees as specified at Point b, Clause 2, Article 36 of the Law on Securities, a public company shall send to the State Securities Commission reporting documents, including:

a) An announcement of information on stock redemption, made according to the form in Appendix No. 36 to this Circular;

c) A decision of the Board of Directors or Chief Executive Officer on implementation of the stock redemption plan.

Article 10. Report and disclosure of information on stock redemption

1. A public company specified in Clause 1, Article 9 of this Circular shall report and disclosure the information, redeem its stocks and report on stock redemption results according to Clauses 3, 4,  5 and 6, Article 37 of the Law on Securities. Contents of information disclosure shall comply with the form in Appendix No. 36 to this Circular. Contents of report on stock redemption results shall comply with the form in Appendix No. 39 to this Circular.

2. A public company specified in Clause 2, Article 9 of this Circular may redeem its own stocks 07 working days after the date of reporting to the State Securities Commission and disclosing information on its website, in information disclosure media of the State Securities Commission and Stock Exchange, using the form in Appendix No. 36 to this Circular. Within 10 days after the completion of the stock redemption, the public company shall send a report on redemption results to the State Securities Commission and disclose information to the public, using the form in Appendix No. 39 to this Circular.

Article 11. Change of stock redemption

1. A public company must not change the stock redemption, the plan for stock redemption as reported and disclosed, except for force majeure cases (natural disasters, epidemics, wars and others) approved by the State Securities Commission.

2. Within 24 hours from the time of deciding the change of stock redemption plan, the public company shall report to the State Securities Commission, and disclose the information about the change decision on its website, in information disclosure media of the State Securities Commission and Stock Exchange, using the form in Appendix No. 37 to this Circular.

3. Within 03 working days from the date of receiving the report on the change, the State Securities Commission shall give the opinions on the change of stock redemption plan.

4. Within 24 hours from the time the State Securities Commission approves the change of stock redemption plan, the public company shall disclose the information about the change of stock redemption plan on its website, in information disclosure media of the State Securities Commission and Stock Exchange, using the form in Appendix No. 38 to this Circular.

5. The public company may change its stock redemption after performing the information disclosure as prescribed in Clause 4 of this Article.

Article 12. Stock redemption by public bid method

A public company that redeems its own stocks by public bid method shall comply with regulations on public bid of stocks specified in the Government’s Decree No. 155/2020/ND-CP dated December 31, 2020 on detailing and guiding the implementation of a number of articles of the Law on Securities, in which documents of report on stock redemption include:

1. Documents specified in Clause 1, Article 85 of the Government’s Decree No. 155/2020/ND-CP dated December 31, 2020 on detailing and guiding the implementation of a number of articles of the Law on Securities;

2. Documents prescribed at Points dd, e and g, Clause 1, Article 9 of this Circular.

Article 13. Report and disclosure of information on the sale of treasury stocks

A public company that redeems its own stocks in cases specified at Points b and c, Clause 7, Article 36 of the Law on Securities shall sell its stocks as follows:

1. The public company may sell the treasury stocks 24 hours after sending the report on stock redemption results, report on results of stock issuance to pay dividends, stock issuance to increase its share capital from equity to the State Securities Commission and disclose the information to the public.

2. The sale of treasury stocks must be completed within 10 working days from the date the public company reports to the State Securities Commission and discloses the information about such sale to the public, using the form in the Appendix No. 36 to this Circular.

3. Within 10 days after the completion of the treasury stock sale as prescribed in Clause 1 of this Article, the public company shall send a report on results of treasury stock sale to the State Securities Commission and disclose information to the public, using the form in Appendix No. 39 to this Circular.

Article 14. Responsibilities of a security company designated to act as a stock redemption agent

1. Guiding a public company to redeem its own stocks according to regulations and the plan as announced;

2. Ensuring that the public company has sufficient money on its trading account when placing buying orders for trading volume according to the plan as reported and disclosed;

3. Do not use information related to the stock redemption of the designating public company that has not been disclosed to the public to purchase the public company’s securities or disclose relevant information to third parties, except for cases as defined by law.

Article 15. Responsibilities of the Stock Exchange

1. Supervising listed institutions, institutions with trading registration to implement the information disclosure before, during and after the stock redemption and sale of treasury stocks in accordance with regulations;

2. Supervising the stock redemption of designated securities companies according to regulations.

Section V

IMPLEMENTATION PROVISIONS

Article 16. Implementation provisions

1. This Circular takes effect on February 15, 2021 and replaces the Minister of Finance’s Circular No. 162/2015/TT-BTC dated October 26, 2015 guiding the public offering of securities, or offering of stocks for swap, additional issuance of stocks, redemption of stocks, sale of treasury stocks and public bid of stocks.

2. The State Securities Commission, Stock Exchange, Vietnam Securities Depository and Clearing Corporation, issuing institutions, public companies, securities companies and related organizations and individuals shall be responsible for the implementation of this Circular./.

* All Appendices are not translated herein.