Circular No 196/2011/TT-BTC dated December 26, 2011 of the Ministry of Finance guiding the initial sale of shares and the management and use of proceeds from the equitization of enterprises with 100% state capital into joint-stock companies

THE MINISTRY OF FINANCE

Circular No 196/2011/TT-BTC of December 26, 2011, guiding the initial sale of shares and the management and use of proceeds from the equitization of enterprises with 100% state capital into joint-stock companies

Pursuant to November 29, 2005 Enterprise Law No. 60/2005/QH11;

Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Government’s Decree No. 59/2011/ND-CP of July 18, 2011, on transformation of enterprises with 100% state capital into joint-stock companies;

The Ministry of Finance guides the initial sale of shares and the management and use of proceeds from the equitization of enterprises with 100% state capital into joint-stock companies as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope and subjects of regulation

This Circular guides the order, procedures and methods of initial sale of shares and the management and use of proceeds from the equitization of entities specified in Article 2 of Decree No. 59/2011/ND-CP (below referred to as equitized enterprises).

Article 2. Interpretation of terms

1. Share auction means the public sale of shares of an equitized enterprise to purchasers with competitive bids.

2. Unsuccessful share auction is a share auction for which no investor or only one investor has registered for participation.

3. Issuance underwriting means that an issuance underwriter commits with an issuing organization to carrying our procedures before offering securities for sale, purchasing part or all of securities of the issuing organization for re-sale or purchasing the quantity of securities left unsold or supporting the issuing organization in distributing its securities to the public.

4. Issuance underwriter is a securities company or a group of securities companies licensed to perform the issuance underwriting operation for enterprises under the law on securities and the securities market.

5. Share auctioneer is a stock exchange or an intermediary institution (securities company) providing share auction services for sale of shares or an equitization steering committee holding an auction for initial sale of shares of an equitized enterprise to investors under this Circular as approved by the equitization-deciding agency.

6. Deposit means a sum of money advanced by a share purchaser to secure its/his/her right to purchase shares.

7. Reserve price means the initial price of one share offered for sale to the outside which is set by a competent authority not be lower than its par value (VND 10,000). The reserve price of an enterprise’s shares put up for auction shall be determined on the basis of its valuation results, prospects and the value of the professional risk provision fund to be left at the enterprise (if any).

Chapter II

SPECIFIC PROVISIONS

Section I

PURCHASERS AND SALE PRICES OF SHARES

Article 3. Share purchasers

1. Laborers named on the list of regular laborers of an equitized enterprise at the time of disclosure of its value as provided in Article 48 of Decree No. 59/2011/ND-CP.

2. Trade union organizations in equitized enterprises as provided at Point c, Clause 2, Article 36 of Decree No. 59/2011/ND-CP. Trade union organizations shall authorize competent persons to carry out procedures for share purchase.

3. Domestic and foreign institutional and individual investors defined in Clauses 1 and 2, Article 6 of Decree No. 59/2011/ND-CP (including also laborers of equitized enterprises).

4. Strategic investors that are domestic or foreign investors defined at Point a, Clause 3, Article 6 of Decree No. 59/2011/ND-CP.

Article 4. Entities ineligible for participation in an auction for initial sale of shares

1. Members of the equitization steering committee, excluding those who are representatives of the equitized enterprise.

2. Intermediary financial institutions and their employees engaged in providing consultancy, enterprise valuation and financial statement audit, and audit agencies engaged in enterprise valuation, except issuance underwriters that purchase unsold shares under issuance underwriting contracts.

3. The auctioneer and its employees engaged in the share auction.

4. Affiliated companies and associated companies in the same group or corporation and parent company-subsidiary company conglomerate.

Article 5. Initial sale prices of shares

1. The price of shares to be sold to an investor through an auction is the price which is offered by that investor at the auction and determined as the successful bid according to auction results under Clause 4, Article 7 of this Circular. In case an equitized enterprise sells shares by the method of issuance underwriting, the equitization steering committee shall negotiate with the issuance underwriter on the guaranteed price which must not be lower than the approved reserve price.

2. Prices of preferred shares to be sold to laborers of an equitized enterprise

a/ In case the equitized enterprise holds a public auction before selling its shares to strategic investors:

- The price of shares to be sold to laborers is equal to 60% of the lowest successful bid at the auction.

- The price of shares to be additionally purchased by laborers under Point a, Clause 2, Article 48 of Decree No. 59/2011/ND-CP is the lowest successful bid at the auction.

b/ In case the equitized enterprise sells shares to strategic investors before holding a public auction:

- The price of shares to be sold to laborers is equal to 60% of the lowest sale price agreed with strategic investors (in case of direct agreement) or 60% of the lowest successful bid at the auction among strategic investors (in case of auction).

- The price of shares to be additionally purchased by laborers under Point a, Clause 2, Article 48 of Decree No. 59/2011/ND-CP is the lowest sale price agreed with strategic investors, in case of direct agreement, or the lowest successful bid, in case of auction among strategic investors.

3. Sale prices of preferred shares to be sold to the trade union organization in an equitized enterprise

a/ In case the equitized enterprise holds a public auction before selling shares to strategic investors, the price of shares to be sold to the trade union organization is equal to 60% of the lowest successful bid at the auction.

b/ In case the equitized enterprise sells shares to strategic investors before holding a public auction, the price of shares to be sold to the trade union organization is equal to 60% of the lowest sale price agreed with strategic investors or 60% of the lowest successful bid at the auction among strategic investors.

4. Prices of shares to be sold to strategic investors

a/ In case the equitized enterprise sells shares to strategic investors before holding a public auction:

The price of shares to be sold to a strategic investor is the price agreed with the equitization steering committee (in case of direct agreement) or the price offered by that investor which is determined as the successful bid at the auction among strategic investors (in case of auction among strategic investors) which must not be lower than the reserve price approved by the equitization-deciding agency.

b/ In case the equitized enterprise sells shares to strategic investors after holding a public auction:

The sale price of shares to be sold to a strategic investor is the price agreed with the equitization steering committee (in case of direct agreement) or the price offered by that investor and determined as the successful bid at the auction among strategic investors (in case of auction among strategic investors) which must not be lower than the lowest successful bid at the public auction.

Section II

ORGANIZATION OF THE INITIAL SALE OF SHARES

Article 6. Initial sale of shares

1. Based on the equitization plan approved by a competent authority (according to Appendix 1 to this Circular, not printed herein), the equitization steering committee shall direct the equitized enterprise to organize the initial sale of shares by the method of public auction, direct agreement or issuance underwriting in conformity with the structure of the joint-stock company’s charter capital, in which:

a/ The method of public auction is applied in case of auction to the public regardless of institutional investors, individual investors, domestic investors and foreign investors.

b/ The method of direct agreement is applied in the following cases:

- Sale of shares to strategic investors before or after a public auction;

- Sale of unsold shares to investors that have participated in the auction under Clause 2, Article 40 of Decree No. 59/2011/ND-CP;

- Sale of shares left after an unsuccessful auction to investors.

c/ The method of issuance underwriting is applied in case of initial sale of shares and/or sale of shares to strategic investors of the equitized enterprise.

2. Within 3 months after the equitization plan is approved by a competent authority, the equitized enterprise shall complete the initial sale of shares by the approved method, including the case of changing the method of selling shares under Clause 3, Article 6 of this Circular.

3. When it is necessary to change the method of selling shares against the approved plan, the equitization steering committee shall report such to the equitization-deciding agency for consideration and decision within 15 days after the equitization plan is approved by a competent authority.

4. Opening of frozen accounts

The equitized enterprise shall open a separate account at a commercial bank to freeze proceeds from its equitization under Section III of this Circular. An equitized commercial bank shall open a frozen account at another commercial bank. The time limit to open a frozen account is 15 days after the equitization plan is approved.

5. Sale of shares to strategic investors

a/ Based on the amount of the enterprise’s charter capital, characteristics of its production and business lines and development requirements, the equitization steering committee shall establish criteria for selection of strategic investors and submit them to the equitization-deciding agency for approval. The maximum number of strategic investors allowed to purchase shares of an equitized enterprise is 3.

For enterprises with a state capital amount of over VND 500 billion (after their financial settlement and valuation) conducting business operations in specific areas or sectors (insurance, banking, post and telecommunications, aviation, coal mining, petroleum exploitation and mining of other precious and rare minerals) and parent companies of groups or corporations, which are required to select in advance strategic investors, equitization-deciding agencies shall report to the Prime Minister for decision criteria for selection of strategic investors, methods of sale and quantity of shares salable to strategic investors.

b/ On the basis of the list of strategic investors meeting selection criteria approved by the equitization-deciding agency, the equitization steering committee shall elaborate and implement a plan on the sale of shares to strategic investors on the following principles:

- In case there are at most 3 strategic investors registering to purchase shares and the quantity of shares these investors register to purchase is larger than the quantity of shares salable to them, an auction shall be held among these strategic investors according to current law; if the quantity of shares these investors register to purchase is equal to or less than the quantity of shares salable to them, the equitization steering committee shall negotiate with these investors on the quantity of salable shares and the sale price of shares and report such to the equitization-deciding agency for approval or decide on such matters by itself as authorized by the equitization-deciding agency.

- In case there are more than 3 strategic investors registering to purchase shares, the equitization steering committee shall elaborate a regulation on organization of auction among strategic investors, following the principles prescribed in this Circular.

c/ In case of auction, strategic investors shall be selected based on their bids in the descending order until all shares are sold out, but the number of strategic investors must not exceed 3 and the lowest successful bid at the auction among strategic investors must not be lower than the reserve price approved by the equitization-deciding agency (in case shares are sold to strategic investors before a public auction is held) or the lowest successful bid at the public auction (in case shares are sold to strategic investors after a public auction is held). The equitization-deciding agency shall approve the list of selected strategic investors based on auction results.

Article 7. Method of public auction

1. Organizing share auction

a/ Auction at an intermediary institution (securities company), if the quantity of shares put up for auction is valued at under VND 10 billion (calculated based on their par value).

If no intermediary institution accepts to hold the share auction, the equitization steering committee shall directly hold it at the enterprise.

b/ Auction at a stock exchange, if the quantity of shares put up for auction is valued at VND 10 billion or more (calculated based on their par value).

c/ If an equitized enterprise selling a quantity of shares valued at under VND 10 billion based on their par value wishes to have it auctioned at a stock exchange, the agency competent to decide on and approve the equitization plan shall decide on this issue.

2. Preparing for the auction

a/ The auctioneer shall issue a decision to establish a share auction council and a share auction regulation according to law.

b/ At least 20 working days before the auction is held, the equitization steering committee shall disclose information on the equitized enterprise. The information sheet shall be made according to Appendix 2 to this Circular (not printed herein).

For large-sized enterprises with a state capital amount of over VND 500 billion (after their financial settlement and valuation) conducting business operations in specific areas and sectors (insurance, banking, post and telecommunications, aviation, coal mining, petroleum exploitation and mining of other precious and rare minerals) and parent companies of groups and corporations, there must be an English translation of the information sheet.

c/ The equitization-deciding agency shall consider and decide on or authorize the equitization steering committee to decide on the reserve price of shares in the decision approving the equitization plan and disclose the reserve price together with information on the enterprise.

d/ The equitization steering committee shall coordinate with the auctioneer in giving explanations about the enterprise to investors (when necessary).

3. Conducting the auction

a/ Within the time limit prescribed in the share auction regulation, investors shall register the quantity of shares they wish to purchase and pay deposits according to Point a, Clause 1, Article 10 of this Circular. The auctioneer shall provide auction forms to investors.

Foreign investors shall comply with Clause 2, Article 6 of Decree No. 59/2011/ND-CP.

b/ Within the time limit prescribed in the share auction regulation, investors shall write their offered prices (bids) in auction forms and submit them:

- Directly at the enterprise (in case the auction is held by the equitization steering committee at the enterprise); directly at the intermediary financial institution (in case the auction is held by an intermediary financial institution) or directly at auction agents (in case the auction is held by a stock exchange).

- By post as prescribed in the share auction regulation.

4. Determination of auction results

a/ Auction results shall be determined on the principle of selecting offered prices in the descending order until all shares on sale are sold out but these offered prices must not be lower than the reserve price. In case many investors (including foreign ones) offer the same price at the lowest successful bid but the remaining quantity of shares is smaller than the total quantity of shares these investors have registered to purchase, the quantity of shares each investor allowed to purchase shall be determined as follows:

In case current laws contain provisions on the maximum rate of shares to be purchased by foreign investors, auction results shall be determined on the above principle but the quantity of shares to be purchased by foreign investors must not exceed the prescribed maximum rate.

b/ Within 3 working days after the auction finishes, based on auction results, the auctioneer, auction council, representative of the equitization steering committee and representative of the enterprise shall jointly make and sign a record on determination of auction results according to Appendix 3 to this Circular (not printed herein).

c/ Within 3 working days after making a record on determination of auction results, the equitization steering committee and the auctioneer shall jointly disclose share auction results and collect share purchase money.

5. In case of an unsuccessful auction, the equitization steering committee shall report such to the equitization plan-approving agency for decision to further publicly offer for sale the quantity of unsold shares by the method of direct agreement under Clause 3, Article 8 of this Circular.

6. If violating the auction regulation, investors cannot receive back their deposits. Violations of the auction regulation include: offering a price lower than the reserve price; waiving the right to purchase the quantity of bid shares and other cases as provided in the auction regulation.

Article 8. Method of direct agreement

1. Sale of shares to strategic investors

a/ Within 20 days after the equitization plan is approved by a competent authority, the equitization steering committee shall coordinate with the equitized enterprise in negotiating with strategic investors on the quantity of shares they are allowed to purchase and the sale prices of shares and report negotiation results to the equitization-deciding agency for the latter to, within 10 days after receiving the equitization steering committee’s report, approve or authorize the equitization steering committee to decide on negotiation results.

b/ In case shares are sold to strategic investors before a public auction is held, based on approved results of negotiation on the sale of shares with strategic investors, the equitization steering committee shall direct the enterprise and strategic investors to sign share sale/purchase contracts. The time limit for completing the signing of contracts with strategic investors by the method of direct agreement is 15 days after a competent agency approves the results of negotiation on the sale of shares to strategic investors.

c/ In case shares are sold to strategic investors after a public auction is held, based on the record on determination of auction results prescribed in Clause 4, Article 7 of this Circular, the equitization steering committee shall direct the enterprise and strategic investors in signing share sale/purchase contracts within 10 days after such record is made.

2. Sale of unsold shares to investors having participated in the auction

a/ Within 5 working days after the deadline for payment of share purchase money prescribed in the share auction regulation, the equitization steering committee shall direct the enterprise to make a list of unsold shares specified in Clause 1, Article 40 of Decree No. 59/2011/ND-CP and further publicly offer them for sale to investors that have participated in the auction.

b/ Based on the results of negotiation on the sale of shares with investors that have participated in the auction, the equitization steering committee shall direct the enterprise and investors in signing share sale/purchase contracts. The time limit for completing the signing of share sale/purchase contracts is 15 days after investors register to purchase shares.

3. In case of unsuccessful auction

a/ Within 3 working days after the deadline for registration for participation in the share auction, the auctioneer shall notify the equitization steering committee and the equitized enterprise of the unsuccessful auction. The equitization steering committee shall report such to the equitization plan-approving agency for consideration and decision to adjust the reserve price, which, however, must not be lower than the par value, so as to further publicly offer for sale the quantity of unsold shares after the public auction and the quantity of shares which employees and the trade union organization in the enterprise refuse to purchase under the approved plan (if any) within 20 days after the deadline for registration for participation in the share auction.

b/ The equitization steering committee shall disclose information on the public offer for sale of unsold shares by the method of direct agreement (including also information on the equitized enterprise according to Appendix 2 to this Circular) at least 5 days before investors register to purchase shares.

c/ Based on the results of negotiation on the sale of shares with investors, the equitization steering committee shall direct the enterprise and investors in signing share sale/purchase contract. The time limit for completing share sale/purchase contracts is 10 days after investors register to purchase shares.

4. If some shares remain unsold after being publicly offered for sale by the method of direct agreement under Clauses 2 and 3, Article 8 of this Circular, the equitization steering committee shall report such to the equitization plan-approving agency to adjust the structure of charter capital for transformation of an enterprise with 100% state capital into a joint-stock company before organizing the first shareholders’ general meeting.

For an enterprise which is equitized in the form of selling part or the whole of the state capital portion in combination with issuing additional stocks, the structure of charter capital shall be adjusted on the principle that the quantity of sold shares shall be regarded as shares additionally issued under the approved plan. In case the total quantity of shares sold (including those sold by the method of public auction) is larger than the quantity of shares to be additionally issued under the approved plan, the difference shall be regarded as shares sold from the state capital portion.

Article 9. Method of issuance underwriting

1. Within 20 days after the equitization plan is approved by a competent authority, the equitization steering committee shall negotiate with the issuance underwriter on the quantity and price of guaranteed shares and report such to the equitization-deciding agency for the latter to approve or authorize the equitization steering committee to decide on such issues within 10 days after receiving the equitization steering committee’s report. In case shares are sold to strategic investors after a public auction is held, the guaranteed price must not be lower than the lowest successful bid at the public auction.

2. The equitization steering committee shall sign a contract with the issuance underwriter within 5 working days after obtaining the competent authority’s approval or authorization.

3. The issuance underwriter shall distribute or sell guaranteed shares according to the underwriting contract. In case shares are not fully sold out, the issuance underwriter shall purchase the remaining quantity of shares at the guaranteed price as committed in the underwriting contract.

4. The issuance underwriter is entitled to an underwriting charge as agreed with the equitization steering committee at a rate within the underwriting charge bracket provided by the Ministry of Finance. Issuance underwriting charges shall be regarded as equitization expenses.

5. Upon completion of the share distribution and sale process, the equitization steering committee shall coordinate with the enterprise and the issuance underwriter in examining and reviewing contents of the issuance underwriting contract for contract liquidation according to regulations.

Section III

MANAGEMENT AND USE OF PROCEEDS FROM EQUITIZATION

Article 10. Management of deposits and payment of share purchase money

1. Management of deposits

a/  Share auction:

- At least 5 working days before the auction day provided in the auction regulation, investors (including also strategic investors in case of an auction among strategic investors) shall deposit 10% of the value of shares they register to purchase at the reserve price into the auctioneer’s account.

- Within 5 working days after the sale of shares completes, the auctioneer shall refund deposits to investors who have lawfully participated in the auction but are not eligible to purchase shares. The auctioneer shall transfer deposits which are not required to be refunded to investors into the equitized enterprise’s frozen account for handling according to regulations on the management and use of proceeds from equitization.

b/ Method of direct agreement:

- When registering for share purchase, strategic investors shall concurrently pay deposits into the equitized enterprise’s account. The deposit amount of each investor is equal to 10% of the value of shares such investor registers to purchase at the approved reserve price (in case shares are sold to strategic investors before a public auction is held) or the approved tentative sale price (in case shares are sold to strategic investors after a public auction is held) which, however, must not be lower than the lowest successful bid at the public auction.

- Investors that have participated in the public auction and further purchase unsold shares or investors that register to purchase shares left after an unsuccessful auction under Clause 3, Article 8 of this Circular shall deposit 10% of the value of shares they register to purchase at the approved offered price into the auctioneer’s account when making registration for share purchase.

- Within 5 working days after completing the sale of shares by the method of direct agreement, the equitized enterprise or the auctioneer shall refund deposits to investors that have registered to purchase shares but cannot reach an agreement and transfer the remainder into the equitized enterprise’s frozen account for handling according to regulations on management and use of proceeds from equitization.

c/ Method of issuance underwriting:

When signing an issuance underwriting contract, the issuance underwriter shall deposit 10% of the value of the quantity of guaranteed shares as agreed in the underwriting contract into the equitized enterprise’s frozen account.

2. Payment of share purchase money

a/ Investors shall pay share purchase money as follows:

- In case of a public auction held by an auctioneer (including also auction among strategic investors), within 10 days after auction results are disclosed, investors shall complete the sale/purchase of shares and transfer money into the auctioneer’s account as provided in the auction regulation. Within 5 working days after the deadline for payment of share purchase money applicable to investors, the auctioneer shall transfer proceeds from the sale of shares into the equitized enterprise’s frozen account.

- In case the equitization steering committee directly holds a public auction at the enterprise under Point a, Clause 1, Article 7 of this Circular, within 10 days after  auction results are disclosed, investors shall complete the sale/purchase of shares and transfer share purchase money into the equitized enterprise’s frozen account.

- In case of direct agreement, within 5 working days after the date of signing share sale/purchase contracts, investors (including strategic investors) shall pay share purchase money.

- In case of issuance underwriting:

Within 10 days after completing the sale and purchase of shares, the issuance underwriter shall transfer money into the equitized enterprise’s frozen account.

b/ For an investor eligible to purchase shares according to auction results or agreement, its/his/her deposit shall be included in the total amount payable for share purchase. If the deposit is larger than the payable amount, the difference shall be refunded to the investor within 3 working days after the deadline for payment of share purchase money applicable to investors.

c/ Past the above-said payment deadline, if investors fail to pay or pay insufficiently money amounts payable for share purchase, unpaid shares shall be regarded as unsold shares and handled according to Article 40 of Decree No. 59/2011/ND-CP.

3. Payment for share sale and purchase shall be made in Vietnam dong in cash or via bank transfer.

Article 11. Proceeds from the sale of shares

1. Within 15 days after completing the sale of shares, the equitization steering committee shall determine the amount to be left at the enterprise and the amount to be remitted into the fund so as to direct the equitized enterprise in transferring money from its frozen account to the fund under Clause 5, Article 43 of Decree No. 59/2011/ND-CP. Within 5 working days, the fund-managing agency shall issue a notice of certification of the transferred money amount to the equitized enterprise and the commercial bank where the enterprise opens its frozen account.

2. Within 5 working days after receiving a notice of certification from the fund-managing agency, the equitized enterprise shall transfer the amount to be left at the enterprise from the frozen account to its account for management and use according to regulations. The commercial bank where the equitized enterprise opens the frozen account shall transfer money from the frozen account to the equitized enterprise’s account only after obtaining the fund-managing agency’s certification.

3. Handling of proceeds from equitization in some specific cases:

a/ In case of selling the state capital portion

Proceeds from equitization shall be handled under Clause 1, Article 42 of Decree No. 59/2011/ND-CP.

b/ In case of keeping unchanged the state capital portion and issuing additional stocks to increase charter capital, proceeds from equitization shall be handled as follows:

- Part of the proceeds shall be left at the enterprise in proportion to the quantity of additionally issued shares calculated based on their par value.

- The surplus amount (difference between the proceeds from equitization and the total par value of additionally issued shares) shall be used to cover equitization expenses under Article 12 of this Circular and support the enterprise in implementing policies toward redundant laborers. The remainder (if any) shall be handled under Point b, Clause 2, Article 42 of Decree No. 59/2011/ND-CP, in which the difference arising from the sale of additionally issued shares left at the joint-stock company (A) is determined as follows:

- If the surplus capital amount is insufficient to cover equitization expenses and support the enterprise in implementing policies toward redundant laborers, it shall be added with the funding source prescribed at Point b, Clause 1, Article 42 of Decree No. 59/2011/ND-CP.

c/ In case of selling the state capital portion in combination with issuing additional stocks, proceeds from equitization shall be handled as follows:

- Part of it shall be remitted to the fund provided in Clause 3, Article 21 of Decree No. 59/2011/ND-CP in proportion to the value of state-held shares sold at their par value.

- Part of it shall be left at the enterprise in proportion to the value of additionally issued shares calculated based on their par value.

- The surplus amount (difference between the total proceeds from equitization and the total par value of sold state-held shares plus (+) additionally issued shares) shall be used to cover equitization expenses under Article 12 of this Circular and support the enterprise in implementing policies toward redundant laborers. The remainder (if any) shall be distributed as follows:

The amount to be left at the enterprise in proportion to the quantity of additionally issued shares (B) is determined as follows:

The rest (if any) shall be remitted to the fund under Clause 3, Article 21 of Decree No. 59/2011/ND-CP.

- If the surplus amount is insufficient to cover equitization expenses and support the enterprise in implementing policies toward redundant laborers, it shall be added with the funding source provided at Point b, Clause 1, Article 42 of Decree No. 59/2011/ND-CP.

4. Any positive or negative difference between the actual value of the state capital portion in the enterprise at the time of its official transformation into a joint stock and the value at the time of its valuation shall be handled according to Clauses 3 and 4, Article 21 of Decree No. 59/2011/ND-CP.

5. After obtaining a certificate of registration for transformation into a joint-stock company, the equitized enterprise shall officially determine the remittable amount and finalize expenses paid to laborers and equitization expenses and report them to the equitization steering committee for reporting to the equitization-deciding agency for approval and sending to the Ministry of Finance (the Enterprise Finance Department).

Article 12. Equitization expenses

1. Equitization expenses are spent amounts related to the equitization of an enterprise from the time of decision on the equitization to the time of handover between the enterprise and the joint-stock company. Equitization expenses must have sufficient and valid vouchers according to current state regulations.

2. The director general or director of the enterprise shall decide on spending contents and levels within the limits prescribed in Clause 4, Article 12 of this Circular to serve the equitization and take responsibility for the lawfulness of these expenses.

3. Equitization expenses include:

a/ Direct expenses at the enterprise:

- Expenses for training in enterprise equitization;

- Expenses for asset inventory and valuation;

- Expenses for elaboration of the equitization plan and formulation of the company charter which must not exceed 10% of the total maximum equitization expense limits prescribed in Clause 4, Article 12 of this Circular;

- Expenses for organizing an employees’ general meeting to serve the equitization;

- Expenses for publicity and disclosure of information on the enterprise;

- Expenses for the sale of shares in which auction or issuance underwriting expenses shall be agreed between the equitized enterprise and the auctioneer or issuance underwriter.

- Expenses for the first shareholders’ general meeting.

b/ Expenses for hiring auditors and consultants to carry out enterprise valuation and sale of shares shall be decided by the equitization-deciding agency or equitization steering committee (if authorized). Expenses for consultancy on the sale of shares shall be paid according to the contract signed between the involved parties and auction results.

c/ Remuneration for the equitization steering committee and its assisting team.

The maximum remuneration level for each member of the equitization steering committee and assisting team is VND 2,500,000/month and VND 1,500,000/month, respectively.

d/ Other expenses related to the enterprise equitization, which must not exceed 10% of the total maximum equitization expense limits prescribed in Clause 4, Article 12 of this Circular.

4. Total maximum equitization expense limits shall be determined based on the book value as follows:

- VND 200 million, for an enterprise valued at under VND 30 billion.

-  VND 300 million, for an enterprise valued at between VND 30 billion and 50 billion.

- VND 400 million, for an enterprise valued at between over VND 50 billion and 100 billion.

- VND 500 million, for an enterprise valued at over VND 100 billion.

In case an enterprise applies the method of issuance underwriting and, as a result, equitization expenses exceed the prescribed limit, the equitization steering committee shall report such to the equitization-deciding agency for consideration and approval in the equitization plan.

5. In case of equitization of a whole state economic group or corporation or its parent company, the equitization steering committee shall direct the equitized enterprise in estimating equitization expenses for reporting to competent agencies for approval under the equitization plan (including cases in which estimated equitization expenses are higher than the limit prescribed in Clause 4, Article 12 of this Circular) and sending to the Ministry of Finance (the Enterprise Finance Department) for supervision.

6. Equitization expenses shall be covered with proceeds from the equitization according to Article 11 of this Circular. In case of keeping unchanged the existing state capital portion and issuing additional stocks or selling the state capital portion in combination with issuing additional stocks, if the difference arising due to the sale of additionally issued shares is insufficient to cover equitization expenses, it shall be added with the fund provided at Point b, Clause 1, Article 42 of Decree No. 59/2011/ND-CP.

Chapter III

ORGANIZATION OF IMPLEMENTATION

Article 13. Responsibilities of the equitization steering committee

1. To submit to the equitization-deciding agency for decision criteria for selection of strategic investors, quantity of shares put up for auction and reserve price.

2. To check and complete equitization-related information.

3. To disclose (or provide to auctioneers) sufficient and accurate information on the enterprise before conducting the sale of shares according to regulations.

4. To send equitization-related documents and a written registration for auction organization, made according to the form provided in Appendix 4 to this Circular (not printed herein) and sign a contract with a stock exchange or an intermediary financial institution, in case of auction through these institutions.

5. To coordinate with the auctioneer in publicly disclosing to investors information relating to the enterprise and the auction at least 20 days before the auction date.

6. To supervise the share auction in case the auction is held at a stock exchange or an intermediary institution. To take responsibility for the share auction, in case the auction is held at the enterprise under this Circular.

7. To keep confidential prices offered by investors until official results are disclosed.

8. To summarize and report share auction results to the equitization plan-approving agency.

9. To report to the equitization-deciding agency for approval equitization expenses, payments to redundant laborers and the remittable amount of proceeds from equitization, and concurrently send them to the Ministry of Finance (the Enterprise Finance Department).

10. The equitization steering committee shall comply with this Circular and its part-time members shall take responsibility before the equitization-deciding agency for their assigned tasks related to the sale of shares and management and use of proceeds from equitization.

Article 14. Responsibilities of the equitized enterprise

1. To open a frozen account and manage and use proceeds from its equitization according to this Circular.

2. To provide sufficient and accurate documents and information on the enterprise (including the equitization plan, draft organization and operation charter of the joint-stock company) before selling shares under this Circular.

3. Upon completion of the equitization process, to finalize equitization expenses and funds to support its redundant laborers and report them to the equitization steering committee for submission to competent agencies for decision and approval.

4. To remit proceeds from its equitization according to this Circular. In case of late payment, to pay interest thereon according to Clause 6, Article 43 of Decree No. 59/2011/ND-CP.

5. If committing violations or failing to comply with this Circular and causing damage, the equitized enterprise and related persons shall pay compensations according to law.

Article 15. Responsibilities of the auctioneer (stock exchanges and intermediary financial institutions)

1. To request the enterprise to provide sufficient documents and information on the equitization according to regulations.

2. To notify the time and place of the auction to the equitization steering committee and the enterprise.

3. At least 20 days before the auction is held, to publicize at the enterprise and auction place and in the mass media (on three consecutive issues of a national newspaper and a newspaper of the locality where the enterprise is headquartered) information relating to the sale of shares  (according to Appendix 5 to this Circular, not printed herein).

4. To provide investors with information relating to the equitized enterprise (according to Appendix 2 to this Circular), equitization plan, draft organization and operation charter of the joint-stock company and written registrations for participation in the auction (according to Appendices 6a and 6b to this Circular, not printed herein) and other information relating to the auction according to regulations.

If disclosing inaccurate or false information compared to information and data supplied by the equitization steering committee and the enterprise, the auctioneer shall pay compensations according to law.

5. To receive written registrations for participation in the auction, examine the eligibility to participate in the auction and issue auction forms to eligible investors.

To notify and refund deposits, if any, to investors ineligible for the auction.

6. To coordinate with related organizations and individuals in making a record on determination of auction results, disclosing auction results and collecting share purchase money according to regulations.

7. To keep confidential prices offered by investors until official results are disclosed. To take responsibility for the determination of auction results according to regulations.

Article 16. Responsibilities of the equitization plan-approving agency

1. To approve the equitization plan to serve the sale of shares and management and use of proceeds from equitization according to this Circular.

2. To examine and supervise the equitization steering committee and the equitized enterprise in selling shares according to the approved plan and in managing and using proceeds from equitization according to regulations.

3. To direct and urge the joint-stock company to remit proceeds from equitization to the fund under Clause 3, Article 21 of Decree No. 59/2011/ND-CP.

4. To approve the finalization of equitization expenses and funds for redundant laborers and proceeds from equitization and concurrently send them to the Ministry of Finance (the Enterprise Finance Department).

Article 17. Responsibilities of the Ministry of Finance

1. To guide agencies, organizations and equitized enterprises in selling shares and managing and using proceeds from equitization under this Circular and relevant documents.

2. To examine and supervise the observance of this Circular and relevant documents in the sale of shares and management and use of proceeds from equitization.

3. To coordinate with agencies, organizations and equitized enterprises in handling matters arising in the sale of shares and management and use of proceeds from equitization.

4. To assign the State Securities Commission to elaborate and promulgate a share auction regulation according to regulations.

Article 18. Responsibilities of investors

Investors purchasing shares (including strategic investors) shall comply with regulations on the right to purchase shares, the share auction regulation and this Circular.

Article 19. Effect

1. This Circular takes effect on February 15, 2012, and replaces relevant contents of the Ministry of Finance’s Circular No. 146/2007/TT-BTC of December 6, 2007, guiding some financial issues in the transformation of enterprises with 100% state capital into joint-stock companies under the Government’s Decree No. 109/2007/ND-CP of June 26, 2007.

2. Any problems arising in the course of implementation should be reported to the Ministry of Finance for consideration and settlement.-

For the Minister of Finance
Deputy Minister
TRAN VAN HIEU