Can foreigners buy shares in public service units converted into joint stock companies?

Can foreigners buy shares in public service units converted into joint stock companies?How long does a public service unit have to provide public services after converting into a joint stock company?

1. Can foreigners buy shares in public service units converted into joint stock companies?

Foreigners are allowed to buy shares in public service units converted into joint stock companies, according to the provisions of Clause 2, Article 6 of Decree 150/2020/ND-CP as follows:

Subjects and conditions for buying shares

1. Domestic investors

a) Domestic investor is an individual with Vietnamese nationality, an economic organization established under Vietnamese law, conducting investment and business activities in Vietnam;

b) Domestic investors are entitled to buy shares of converted public service units in unlimited quantities, except for the cases specified in Clause 4 of this Article.

2. Foreign investors

a) Foreign investors are individuals with foreign nationality or organizations established under foreign laws conducting business investment activities in Vietnam;

b) Foreign investors are entitled to buy shares of converted public service units according to the provisions of this Decree and relevant legal documents.

Foreign investors wishing to buy shares must open an account at a credit institution in accordance with Vietnamese law on foreign exchange.

According to the above regulations, a foreign investor is an individual with foreign nationality conducting business investment activities in Vietnam.

Foreign investors are entitled to buy shares of public service units converted into joint stock companies.

Thus, foreigners can buy shares in public service units converted into joint stock companies

Note: Foreigners who want to buy shares must open an account at a credit institution in accordance with Vietnamese law on foreign exchange.

2. Can foreigners buy shares of a public service unit converted into a joint stock company in USD?

Can foreigners buy shares of a public service unit converted into a joint stock company in USD? According to the provisions of Clause 1, Article 7 of Decree 150/2020/ND-CP as follows:

Payment currency and method of initial share sale

1. Domestic and foreign investors buy shares of convertible public service units in Vietnamese Dong.

2. The initial sale of shares is carried out by the following methods:

a) Public auction

– The auction method is applied in the case of public auction without distinction between investors being organizations, individuals, domestic and foreign;

– The organization of public auctions is carried out at the Stock Exchange. In case the converted public service unit has a volume of shares sold with a par value of less than 10 billion VND, the competent authority as prescribed in Article 39 may consider and decide to organize auctions at securities companies or service centers, asset auction enterprises according to the provisions of law on asset auctions (except for the case of regulations on auctions for strategic investors specified in Clause 3, Article 6 of this Decree);

– Information about the converted public service unit and the organization of the auction must be announced at the auction place, on the mass media and publicly announced on the Government Electronic Information Portal at least 20 working days before holding the share auction;

– The selling price according to the public auction method is the successful bid of each investor. Investors who win at any price will buy shares at that price but not lower than the starting price.

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Thus, according to the above regulations, foreigners who buy shares of a public service unit converted into a joint stock company in Vietnamese Dong are not allowed to use USD.

3. How long does a public service unit have to provide public services after converting into a joint stock company?

Pursuant to Clause 2, Article 9, Decree 150/2020/ND-CP has the following provisions:

Rights and obligations of public service units after converting into joint stock companies

1. After transforming into a joint stock company, the unit operates in accordance with the provisions of the Enterprise Law, the Law on Management and use of state capital invested in production and business at enterprises, specialized laws and current legal regulations.

2. After transforming into a joint stock company, a public service unit is obliged to continue providing public services for a minimum period of 05 years from the time of official transformation into a joint stock company.

3. The converted public service unit is responsible for arranging and making maximum use of the managers and employees of the public service unit at the time of conversion decision and resolving the regime for employees to quit or resign according to the provisions of law.

The joint stock company is obliged to inherit all responsibilities towards the employees from the transferred public service unit; has the right to select, arrange employment and coordinate with relevant agencies to resolve benefits for employees according to the provisions of law.

4. After being transformed into a joint stock company, a public service unit can use all the assets and capital it has received to organize and operate effectively; inherit all legal rights and interests, be responsible for debts (including tax debt, ODA re-loan debt), labor contracts and other obligations of the public service unit.

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Thus, according to the above regulations, the public service unit, after converting into a joint stock company, must provide all types of public service services within a minimum period of time. 05 years from the time of official transformation into a joint stock company.