Decree No. 01/2010/ND-CP dated January 04, 2010 of the Government on private placement of shares

THE GOVERNMENT

Decree No. 01/2010/ND-CP of January 4, 2010, on private placement of shares

THE GOVERNMENT

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

Pursuant to the November 29, 2005 Law on Enterprises;

Pursuant to the November 29, 2005 Law on Investment;

Pursuant to the June 29, 2006 Law on Securities;

At the proposal of the Minister of Finance,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Decree provides for activities of private placement of shares and sanctioning of administrative violations in these activities of joint-stock companies established and operating in the territory of the Socialist Republic of Vietnam (below collectively referred to as placing institutions).

Joint-stock companies established and operating under foreign laws may not privately place shares in the territory of the Socialist Republic of Vietnam, unless otherwise provided by a treaty to which the Socialist Republic of Vietnam is a contracting party.

Article 2. Subjects of application

1. Joint-stock companies

2. Enterprises, excluding wholly state-owned enterprises transformed into joint-stock companies.

Article 3. Application of laws

Private placement of shares by enterprises engaged in conditional business lines must comply with this Decree and other relevant specialized laws.

Article 4. Interpretation of terms

In this Decree, the following terms are construed as follows:

1. Private placement of shares means a direct placement of shares or the right to purchase shares to any of the following entities not through the mass media:

a/ Professional securities investors;

b/ Fewer than 100 non-professional securities investors.

2. Public company means a joint-stock company satisfying the conditions specified in Articles 25 and 26 of the Law on Securities.

Article 5. Share par value

1. Shares to be privately placed in the territory of the Socialist Republic of Vietnam shall be denominated in Vietnam dong.

2. The par value of shares to be privately placed is 10,000 (ten thousand) Vietnam dong.

Chapter II

TASKS AND POWERS OF STATE AGENCIES COMPETENT TO MANAGE PRIVATE PLACEMENT OF SHARES

Article 6. State agencies competent to manage private placement of shares

State agencies competent to manage private placement of shares (below collectively referred to as competent state agencies) include:

1. The State Bank of Vietnam, in case placing institutions are credit institutions;

2. The Ministry of Finance, in case placing institutions are share insurance businesses;

3. The State Securities Commission, in case placing institutions are joint-stock securities companies, joint-stock fund management companies and public companies (except public companies engaged in the credit or insurance domain);

4. Provincial-level Planning and Investment Departments and management boards of industrial parks, export processing zones, hi-tech parks and economic zones, in case placing institutions are joint-stock companies other than those defined in Clauses 1, 2 and 3 of this Article.

Article 7. Tasks and powers of competent state agencies

1. To receive dossiers of registration for private placement of shares under this Decree and relevant laws.

In case of incomplete and invalid dossiers of registration for private placement of shares, competent state agencies shall, within 10 days after receiving these dossiers, request in writing placing institutions to supplement or modify their dossiers.

2. Within 15 days after receiving complete and valid registration dossiers, to notify such to registering institutions and publish on their websites lists of institutions registered for share placement under their management, made according to a set form provided in an appendix to this Decree (not printed herein).

In case placing institutions are enterprises engaged in conditional business lines, if relevant laws otherwise provide for, the order and procedures for receiving and processing dossiers must comply with these laws.

The order and procedures for receiving and processing dossiers for registration of private placement of shares shall be publicized at competent agencies.

3. No later than the 5th every month, to send to the Ministry of Finance (the State Securities Commission) written and electronic lists of institutions which registered for private placement of shares in the last month with complete and valid dossiers, made according to a set form provided in an appendix to this Decree (not printed herein).

4. No later than the 25th every month, the Ministry of Finance (the State Securities Commission) shall sum up and publish a list of placing institutions of all economic sectors which registered in the last month, made according to a set form provided in an appendix to this Decree (not printed herein).

5. To supervise activities of private placement of shares and handle according to their competence violations of this Decree’s provisions on private placement of shares.

Chapter III

PRIVATE PLACEMENT OF SHARES

Article 8. Conditions on a private placement of shares

1. The placing institution is an enterprise defined in Article 2 of this Decree.

2. There is a decision of the Shareholders General Meeting or the Board of Directors adopting a plan on private placement of shares and a plan on use of proceeds from the placement according to the company charter or under the authority given by the Shareholders General Meeting to the Board of Directors (for joint-stock companies); or authority of the Members Council or the company owner (for limited liability companies transformed into joint-stock companies); the enterprise owner, for wholly foreign-owned enterprises; or the Board of Directors, for joint-venture enterprises (for foreign-invested enterprises transformed into joint-stock companies).

The placement plan must clearly identify investors eligible for placement of shares that will be fewer than 100 in number and restricted from transferring shares within at least one year after the placement is completed.

In case shares are placed to strategic partners, the placing institution shall elaborate criteria for identifying and selecting strategic partners. These strategic partners must be domestic or overseas organizations and individuals that have adequate financial capability, are capable of business administration, transfer of new technologies, supply of raw materials and materials, market development, and commit to attach their long-term benefits to the enterprise.

Persons with interests related to the private placement of shares may not vote to adopt the Shareholders General Meeting’s resolution on the placement.

3. The placing institution sends a complete and valid dossier of registration for private placement of shares as specified in Article 9 of this Decree to a competent state agency at least 20 days before the projected date of placement, unless otherwise provided by a specialized law.

4. In case the placing institution is an enterprise engaged in conditional business lines, it shall, apart from satisfying the conditions specified in Clauses 1, 2 and 3 of this Article, satisfy the conditions specified by relevant specialized laws.

5. The interval between two consecutive private placements of shares must be at least 6 months.

6. Regulations on capital holding cap and investment forms must be complied with in case foreign investors are involved.

Article 9. Dossiers of registration for private placement of shares

A dossier of registration for private placement of shares comprises:

1. A report on private placement of shares, made according to a set form provided in an appendix to this Decree (not printed herein).

2. A decision of the Shareholders General Meeting or the Board of Directors (for joint-stock companies); or the Members Council (for limited liability companies transformed into joint-stock companies); or the enterprise owner of the wholly foreign-owned enterprise or the Board of Directors of the joint-venture enterprise (for foreign-invested enterprises transformed into joint-stock companies) adopting a plan on private placement of shares and a plan on use of proceeds from the placement. These plans must have principal contents specified in Appendix I to this Decree (not printed herein).

3. A resolution of the Shareholders General Meeting or the Board of Directors according to the company charter or authorization by the Shareholders General Meeting approving the criteria for strategic partners and employees, in case of placement of shares to strategic partners and employees of the company.

4. A decision of the Board of Directors approving the list of strategic partners and employees, in case of placement of shares to strategic partners and employees of the company.

5. Documents providing information on the placement to investors as specified in Clause 3, Article 10 of this Decree.

6. Documents evidencing the satisfaction of the condition on shareholding rate of foreign investors and compliance with regulations on investment forms, in case shares are placed to foreign investors.

7. Other documents specified by relevant laws.

Chapter IV

OBLIGATIONS OF PLACING INSTITUTIONS

Article 10. Obligations of a placing institution upon private placement of shares

1. Within 90 days before or during the private placement of shares, to refrain from advertising the placement on the mass media, except cases of information disclosure under the securities law and relevant legal documents. The information disclosure must not contain details which purport to advertise the private placement of shares or solicit interested parties.

2. To send to a competent state agency a dossier of registration for private placement of shares under Articles 8 and 9 of this Decree; to modify or supplement its dossier at the request of the competent state agency before conducting the placement. Past 15 days after the time limit prescribed in Clause 2, Article 7 of this Decree, if the placing institution receives no opinions of the competent state agency, it may privately place shares according to the registered dossier.

3. To provide information on the placement to investors according to Appendix II to this Decree (not printed herein).

4. To organize the placement according to the plan registered with the competent state agency.

5. Securities purchase payment must be transferred to a frozen account at a commercial bank until the placement is completed.

6. Public companies shall, apart from complying with Clauses 1, 2, 3, 4 and 5 of this Article, comply with the securities law.

Article 11. Obligations of a placing institution after a private placement of shares

1. Within 10 days after the placement is completed, to send a report on placement results and a list of shareholders (made according to a set form provided in an appendix to this Decree, not printed herein) to a competent state agency, and concurrently publish placement results on its website (if any).

2. To use capital mobilized from the placement according to the approved plan under Clause 2, Article 8 of this Decree. In case the capital use purpose changes, it shall disclose information on the reason for such change and a decision of the Shareholders General Meeting or the Board of Directors (as authorized by the Shareholders General Meeting) on the change.

3. To submit to a competent state agency and publicize its financial statements under the accounting law.

4. Upon information disclosure, to concurrently report to a competent state agency on disclosed information. The information disclosure shall be conducted by the enterprise’s lawful representative or an authorized person. The enterprise’s lawful representative shall take responsibility for information disclosed by the authorized person.

5. Apart from the obligation to disclose information under this Decree, to report on and disclose information under other relevant laws.

6. When becoming a public company as a result of the private placement of shares, to register itself as a public company under the Securities Law.

7. A placing institution that becomes a public company as a result of the transfer of shares among its shareholders, within 7 days after certifying the share transfer which results in an increase in the number of its shareholders to over 100 under Article 25 of the Securities Law, shall:

a/ Notify in writing all shareholders of the fact that it has become a public company and the plan on public company registration;

b/ Send to a competent state agency a plan on public company registration and a list of shareholders at the latest time;

c/ Carry out procedures for public company registration within 90 days under Articles 25 and 26 of the Securities Law.

Article 12. Restriction on certification of transfer of privately placed shares

1. Placing institutions may not certify share transfers during the period of transfer restriction according to placement plans registered with competent state agencies.

2. In case placing institutions become public companies as a result of private placement, they may not certify share transfers during the time of public company registration.

Chapter V

HANDLING OF VIOLATIONS

Section 1. PRINCIPLES FOR HANDLING OF VIOLATIONS, FORMS OF SANCTIONING ADMINISTRATIVE VIOLATIONS AND SANCTIONING COMPETENCE

Article 13. Principles for handling of violations

1. Organizations and individuals that violate this Decree and provisions of relevant laws on private placement of shares shall, depending on the nature and severity of their violations, be disciplined, administratively sanctioned or examined for penal liability. If causing material damage, they shall pay compensations under law.

2. The sanctioning of administrative violations in private placement of shares must comply with this Decree and the law on sanctioning of administrative violations.

Article 14. Forms of sanctioning of administrative violations and consequence remedies

1. Organizations and individuals that violate this Decree are subject to either of the following principal sanctions:

a/ Caution;

b/ Fine.

2. Depending on the nature and severity of their violations, violators may also be subject to either or both of the following additional sanctions:

a/ Suspension of private placement of shares for a definite time;

b/ Confiscation of all illicit gains from the commission of violations.

3. In addition to the sanctions specified in Clauses 1 and 2 of this Article, violators may also be obliged to take one or several of the following consequence remedies:

a/ Forcible compliance with legal provisions against acts of administrative violation;

b/ Forcible cancellation or correction of falsified or untruthful information;

c/ At the request of investors, forcible recall of placed shares and refund of deposits or purchase payments plus demand deposit interests to investors within 30 days after the private placement of shares is cancelled.

Article 15. Statute of limitations for sanctioning

The statute of limitations for sanctioning an administrative violation in private placement of shares activities is 2 years after this violation is committed.

Article 16. Competence to sanction administrative violations

Competent state agencies defined in Article 6 of this Decree shall administratively sanction violations of the law on private placement of shares.

Article 17. Procedures for sanctioning administrative violations

Procedures for sanctioning administrative violations in private placement of shares comply with the Ordinance on Handling of Administrative Violations and other relevant legal documents.

Section 2. ADMINISTRATIVE VIOLATIONS, SANCTIONING FORMS AND LEVELS

Article 18. Violations of regulations on placement dossiers, conditions and organization

1. A fine of between VND 30,000,000 and 40,000,000 shall be imposed on placing institutions and organizations and individuals participating in the compilation and certification of placement dossiers that commit any of the following violations:

a/ Compiling a placement dossier containing falsified information which may cause investors’ misunderstanding or inaccurate or inadequate information as prescribed by law;

b/ Submitting a placement dossier beyond the submission time limit or failing to supplement or modify placement dossiers submitted to a competent state agency under Clause 2, Article 10 of this Decree.

2. A fine of between VND 40,000,000 and 50,000,000 shall be imposed on placing institutions that conduct private placement of shares without having registered them with competent state agencies.

3. A fine of between VND 50,000,000 and 70,000,000 shall be imposed on placing institutions and organizations and individuals participating in the compilation and certification of placement dossiers or organization of placements that commit any of the following violations:

a/ Forging documents in placement dossiers, causing damage to investors;

b/ Conducting placements without satisfying the placement conditions specified in Article 8 of this Decree;

c/ Conducting placements not according to placement plans included in placement dossiers submitted to competent state agencies;

d/ Using capital mobilized from placements not according to registered plans under Clause 2, Article 8 of this Decree, except cases of change of the capital use purpose under Clause 2, Article 11 of this Decree.

4. A fine of between VND 70,000,000 and 100,000,000 shall be imposed on placing institutions that employ deceitful tricks in conducting placements in contravention of law.

5. Additional sanctions:

a/ Suspension of a placement for 30 days, for violations specified in Clause 3 of this Article. During the suspension period, the placing institution shall remedy its violation;

b/ Forcible cancellation of a placement if the placing institution fails to remedy its violation after the suspension period.

6. Application of consequence remedies:

a/ Forcible compliance with legal provisions on private placement of shares;

b/ Forcible recall of placed shares, refund of share deposits or purchase payments plus demand deposit interests to investors if these investors request the cancellation of their subscriptions within 30 days after the private placement of shares is suspended under Point a, Clause 5 of this Article.

Article 19. Violations of regulations on reporting and information disclosure

1. A caution shall be served or a fine of between VND 10,000,000 and 20,000,000 shall be imposed on placing institutions that fail to report or disclose information or fail to report or disclose information in an adequate and timely manner or within the prescribed time limit under Clause 3, Article 10 or Article 11 of this Decree.

2. A fine of between VND 20,000,000 and 30,000,000 shall be imposed on placing institutions that disclose information containing falsified or untruthful details.

3. A fine of between VND 40,000,000 and 50,000,000 shall be imposed on placing institutions that advertise share placements on the mass media.

4. Application of consequence remedies:

a/ Forcible compliance with regulations on reporting and information disclosure, for violations specified in Clauses 1 and 2 of this Article;

b/ Forcible cancellation and correction of falsified or untruthful information, for violations specified in Clause 2 of this Article.

Article 20. Violations of regulations on certification of transfer of privately placed shares

1. A fine of between VND 10,000,000 and 30,000,000 shall be imposed on placing institutions and their affiliated persons that certify share transfers during the period of transfer restriction specified in Article 12 of this Decree.

2. Application of consequence remedies:

Forcible compliance with regulations on period of share transfer restriction.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 21. Effect

This Decree takes effect on February 25, 2010.

Article 22. Organization of implementation

1. The Minister of Finance shall guide the implementation of this Decree.

2. Ministers, heads of ministerial-level agencies and government-attached agencies, chairpersons of provincial-level People’s Committees, and concerned organizations and individuals shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG