Decision No. 41/2015/QD-TTg dated September 15, 2015 of the Prime Minister on selling shares in blocks

DECISION

On block sale of shares[1]

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the November 26, 2014 Law on Management and Use of State Capital Invested in Production and Business at Enterprises;

In furtherance of the Government’s Resolution No. 40/NQ-CP of June 1, 2015, on the Government’s May 2015 regular meeting;

At the proposal of the Minister of Finance;

The Prime Minister promulgates the Decision on block sale of shares.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Decision regulates some contents on divestment of state capital at joint stock companies not yet listed or registered for trading on the unlisted public company market (Upcom) of the Hanoi Stock Exchange in which ministries, ministerial-level agencies, government-attached agencies (below referred to as line ministries), People’s Committees of provinces and centrally run cities (below referred to as provincial-level People’s Committees), state economic groups and corporations, and wholly state-owned companies act as the owner’s representative.

Article 2. Subjects of application

Subject to this Decision are:

1. Equitized enterprises which are subject to divestment.

2. The owner of state capital at joint stock companies (including line ministries and provincial-level People’s Committees) and proxy representatives of state capital  invested in other enterprises (below referred to as representatives) when conducting divestment of state capital at joint stock companies not yet listed or registered for trading at the Upcom.

3. Members’ Councils of state economic groups and corporations and wholly state-owned companies or presidents of wholly state-owned companies, proxy representatives of capital amounts invested by state economic groups and corporations and wholly state-owned companies in other enterprises when conducting divestment of state capital at joint stock companies not yet listed or registered for trading at the  Upcom.

4. State economic groups and corporations and enterprises for which decisions transferring the right to represent the owner of state capital after equitization to the State Capital Investment Corporation have been issued, are not governed by this Decision.

Article 3. Interpretation of terms

1. Block sale of shares means the sale of shares at a joint stock company specified in Article 1 of this Decision to investors in a public and transparent manner whereby each investor shall register to purchase the whole quantity of shares offered for block sale.

2. Deposit means a sum of money advanced by an investor to secure the exercise of the right to purchase shares.

3. IPO is an acronym for initial public offering.

4. Unsuccessful auction means an auction at which no investor purchases  shares (investors violate the regulation of the auction or the winner refuses to purchase shares).

5. Unsuccessful competitive offering means a competitive offering at which no investor purchases shares (investors violates the regulation of the competitive offering or the winner refuses to purchase shares or investors offer the same bids).

Chapter II

SPECIFIC PROVISIONS

Article 4. General principles

1. The block sale of shares must comply with this Decision and other relevant regulations on divestment of state capital, adhering to the principles of publicity, transparency and conformity with the organization and operation charter of the concerned joint stock company with state capital.

2. The block sale of shares shall be effected via auction at a Stock Exchange on the basis of the plan on block sale of shares approved by a competent authority in accordance with Article 5 of this Decision. The plan on block sale of shares must contain the following major details: quantity of blocks of shares put up for auction; the quantity of shares of each block; the reserve price of each block of shares put up for auction; criteria for investors participating in the auction; and plan for unsuccessful auction.

3. Investors participating in auction for block purchase of shares under this Decision are not required to make public offers for purchase of shares as prescribed by the law on securities and securities market.

4. Depending on the quantity of shares of a block and the market situation, such block may be divided into several smaller ones which must be sold at a single auction session. The quantity of shares of a block must not be lower than 5% of charter capital of a joint stock company specified in Article 1 of this Decision.

5. Cases of appointment of purchasers (not through Stock Exchanges) must comply with decisions of the Prime Minister.

6. After an enterprise conducts an IPO, shares shall be sold to strategic shareholders as follows:

- In case of selling shares to strategic shareholders according to the approved equitized plan within 12 months after the enterprise is converted into a joint stock company, to comply with the approved equitization plan or decision of the agency competent to approve the equitization plan.

- In case of selling shares to strategic shareholders after 12 months since the time the enterprise is converted into joint stock company, to comply with divestment regulations.

- In case of selling shares to strategic shareholders under another plan, to comply with the Prime Minister’s decision.

Article 5. Competence to approve plans on block sale of shares

Line ministries and provincial-level People’s Committees shall decide on plans on block sale of shares at joint stock companies at which they act as the owner’s representative after obtaining opinions of the Ministry of Finance and the Ministry of Planning and Investment; and approve state economic groups’ and corporations’ and companies’ plans on block divestment of capital at other enterprises.

Members’ Councils of state economic groups, corporations and companies or company presidents shall decide on block sale of shares at joint stock companies at which they act as the owner’s representative according to regulations and approved plans.

Particularly, line ministries and provincial-level People’s Committees shall decide on plans on block sale of state capital at parent companies of state economic groups and corporations after equitization after obtaining the Prime Minister’s approval.

Article 6. Eligible investors and conditions for block purchase of shares

1. Investors eligible for block purchase of shares are Vietnamese and foreign organizations and individuals. Domestic and foreign investors may purchase an unlimited quantity of shares. For sectors and business lines for which relevant laws and treaties to which the Socialist Republic of Vietnam is a contracting party provide for a maximum foreign ownership, the provisions of such laws and treaties shall be complied with.

2. Investors eligible for block purchase of shares must have financial capability, commit to have long-term interests in the enterprises; have plans to continue employing enterprises’ current employees and support enterprises in expanding market, improving financial capability and governance capacity, transferring and applying new technology, training human resources, and raising enterprises’ production and business efficiency and competitiveness.

3. Pursuant to Clause 2 of this Article, representatives shall set criteria for selection of investors eligible for block purchase of shares and report such to the owner for drawing up plans on block sale of shares for submission to competent authorities for approval.

Article 7. Rights and obligations of investors

1. To request the provision of relevant documents and reports and study the production and business situation of enterprises before deciding whether to purchase their shares.

2. After completing the purchase of shares and becoming shareholders of enterprises, investors shall exercise the rights and perform the obligations of shareholders according to current regulations and realize their commitments to bond their interests with and support enterprises according to the criteria for which they are selected. If failing to stick to their commitments, causing harms to enterprises, investors shall pay compensation according to current regulations.

Article 8. Determination of reserve prices and organization of auctions for block sale of shares

1. The reserve price of a block sale of shares shall be the reserve price of a share multiplied (x) by the quantity of shares of such block.

2. The reserve price of a share shall be determined based on the valuation result of a valuation institution.

3. Based on the decision approving the plan on block sale of shares already approved by a competent agency and the Regulation on auction for block sale of shares, the agency representing the owner at an enterprise, the chairperson of the Members’ Council or company president shall direct its/his/her representative to work with the Stock Exchange to develop a regulation on block sale of shares for the enterprise, in which the information disclosure period must be at least 20 days.

4. The block sale of shares shall be organized according to the Regulation on auction for block sale of shares mentioned in Clause 3 of this Article.

Article 9. Order of block sale of shares

The block sale of shares must comply with Point c, Clause 2, Article 30 of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises, specifically:

1. The block sale of shares must be effected via auction according to Article 4 of this Decision. The investor who offers the highest bid at the auction will be the winner. In case several investors offer the same bid for a block of shares, a sealed-bid competitive offering will be hold among such investors with the reserve price being the bid offered by these investors and the investor who offers the highest bid will be the winner.

In case the sealed-bid competitive offering fails (because investors once again offer the same bid), Clause 2 of this Article shall apply.

2. In case only one investor registers for share purchase or the competitive offering fails or the Prime Minister so approves in writing, shares shall be sold through direct negotiation with investors.

The sale of shares through direct negotiation with investors must comply with the following regulations:

- For parent companies of economic groups: The agencies representing the owner shall report the Prime Minister to consider and decide to sell shares through negotiation with investors.

- For companies subject to block sale of shares, the sale of shares through direct negotiation with investors shall be approved by the Prime Minister.

- For remaining enterprises: The owner’s representative shall decide to sell shares through direct negotiation with investors. When deciding to sell shares through direct negotiation with investors, the agencies representing the owner shall take responsibility before law for their decision and shall abide by the principle that the person competent to decide on capital transfer may not decide to transfer capital to an enterprise in which his/her spouse, natural father, adoptive father, natural mother, adoptive mother, natural child, child-in-law, adopted child, sibling, brother-in-law or sister-in-law acts as a manager, as well as to such persons.

- In case a competitive offering fails because investors offer the same bid, the shares in the block shall be divided equally for sale to all investors participating in the offering. The competence to decide on the sale of shares in this case must comply with this Clause.

3. In case the investor who wins the auction refuses to pay for share purchase, its/his/her deposit shall not be refunded.

Article 10. Management of proceeds from block sale of shares

Proceeds from the block sale of shares shall be handled as follows:

- Proceeds from the block sale of shares at joint stock companies at which line ministries or provincial-level People’s Committees act as the owner’s representative (after deducting reasonable expenses related to the transfer) shall be remitted to the Enterprise Reorganization and Development Support Fund.

- Proceeds from the block sale of shares at joint stock companies with capital contributions of state economic groups or corporations or wholly state-owned companies after deducting the value of these enterprises’ investment capital and transfer expenses and performing tax obligations, shall be included in these enterprises’ income from financial activities.

Article 11. Selection of consultants for formulation of divestment plans and estimation of divestment expenses

Agencies representing the owner at joint stock companies shall hire consultancy organizations to prepare divestment plans and decide on divestment expenses and take responsibility before law for their decision.

Chapter III

ORGANIZATION OF IMPLEMENTATION

Article 12. Responsibilities of the Ministry of Finance

1. To direct the State Securities Commission to promulgate the model regulation on auction for block sale of shares.

2. To coordinate with line ministries and provincial-level People’s Committees in timely handling arising problems or reporting problems that fall beyond their competence to competent authorities for consideration and decision.

Article 13. Responsibilities of line ministries, provincial-level People’s Committees, Members’ Councils of state economic groups and corporations and presidents of wholly state-owned companies

1. To direct the representative:

a/ To draw up plans on block sale of shares (covering also criteria for selection of investors eligible to purchase shares) and report such plans to competent authorities for approval;

b/ To coordinate with the Stock Exchanges to develop the Regulation on auction for block sale of shares;

c/ To coordinate with investors in studying enterprises’ production and business situation;

d/ To supervise the implementation of plans on block sale of shares. To report problems arising in the course of implementation to the owner’s representatives for handling.

2. To select and hire valuation institutions to determine the reserve price for block sale of shares; select and hire consultancy organizations to prepare divestment plans; and decide on divestment expenses.

3. To examine and supervise the implementation of plans on block sale of shares at enterprises under their management according to regulation.

4. To consider and handle according to their competence or report to competent authorities for handling problems arising in the course of implementation of plans on block sale of shares.

Article 14. Effect

1. This Decision takes effect on the date of its signing.

2. For divestment plans approved before the effective date of this Decision that need to be adjusted to carry out the block sale of shares, such adjustment must comply with this Decision.

3. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees; Members’ Councils of state economic groups and corporations, presidents of wholly state-owned companies and proxy representatives of state capital at state economic groups and corporations and companies, and other related organizations and individuals shall implement this Decision.-

Prime Minister
NGUYEN TAN DUNG