Conditions for Private Placements of Securities under the Law on Securities

Under Clause 1, Article 31 of the Law on Securities 2019 (as amended and supplemented by Law No. 56/2024/QH15), the private placement of shares, private placement of convertible bonds, and private placement of bonds with warrants by a public company must satisfy the following conditions:

– Having a decision of the General Meeting of Shareholders approving the issuance plan and the use of proceeds from the offering; clearly defining the criteria and number of investors;

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– Participants in the offering shall include only strategic investors and professional securities investors;

– The transfer of privately placed shares, privately placed convertible bonds, and privately placed bonds with warrants is restricted for at least 03 years for strategic investors and at least 01 year for professional securities investors from the completion date of the offering, except for transfers among professional securities investors or transfers under an effective judgment or decision of a Court, an arbitral decision, or inheritance as prescribed by law;

– Private placements of shares, convertible bonds, and bonds with warrants must be at least 06 months apart from the closing date of the most recent offering;

– The offering of shares, the conversion of bonds into shares, and the exercise of warrants must comply with the regulations on foreign investor ownership ratios as prescribed by law.

What are the conditions for a public company to privately place bonds?

Under Clause 2, Article 31 of the Law on Securities 2019 (as amended and supplemented by Law No. 56/2024/QH15), the conditions for the private placement of bonds by a public company not falling under the above cases include:

– Having a decision of the General Meeting of Shareholders or the Board of Directors approving the issuance plan and the use of proceeds from the offering; clearly defining the criteria, number, and investors;

– Participants in the offering shall include only professional securities investors;

– The transfer of privately placed bonds may only be conducted among professional securities investors, except where conducted under an effective judgment or decision of a Court, an arbitral decision, or inheritance as prescribed by law;

– Full payment of principal and interest of the bonds already offered or full payment of due debts for 03 consecutive years before the bond offering (if any), except for bond offerings to creditors being selected financial institutions;

– Having the audited financial statements of the year immediately preceding the year of issuance audited by an approved audit firm;

– Satisfying financial safety ratios and operational safety assurance ratios as prescribed by law (if any).

What are the regulations on the conditions for the private placement of shares and convertible bonds by a securities company that is not a public company?

Under Clause 3, Article 31 of the Law on Securities 2019 (as amended and supplemented by Law No. 56/2024/QH15), a securities company or securities investment fund management company that is not a public company conducting a private placement of shares, private placement of convertible bonds, or private placement of bonds with warrants must satisfy the following regulations:

– Having a decision of the General Meeting of Shareholders approving the issuance plan and the use of proceeds from the offering; clearly defining the criteria and number of investors;

– Participants in the offering shall include only strategic investors and professional securities investors;

– The transfer of privately placed shares, privately placed convertible bonds, and privately placed bonds with warrants is restricted for at least 03 years for strategic investors and at least 01 year for professional securities investors from the completion date of the offering, except for transfers among professional securities investors or transfers under an effective judgment or decision of a Court, an arbitral decision, or inheritance as prescribed by law;

– Private placements of shares, convertible bonds, and bonds with warrants must be at least 06 months apart from the closing date of the most recent offering;

– The offering of shares, the conversion of bonds into shares, and the exercise of warrants must comply with the regulations on foreign investor ownership ratios as prescribed by law.

What are the regulations on the conditions for the private placement of bonds by a securities company that is not a public company?

Under Clause 4, Article 31 of the Law on Securities 2019 (as amended and supplemented by Law No. 56/2024/QH15), the conditions for the private placement of bonds by a securities company or securities investment fund management company that is not a public company and does not fall under the cases of private placement of shares, private placement of convertible bonds, or private placement of bonds with warrants include:

– Having a decision of the General Meeting of Shareholders, the Board of Directors, the Members’ Council, or the company owner approving the issuance plan and the use of proceeds from the offering; clearly defining the criteria and number of investors;

– Participants in the offering shall include only professional securities investors;

– The transfer of privately placed bonds may only be conducted among professional securities investors, except where conducted under an effective judgment or decision of a Court, an arbitral decision, or inheritance as prescribed by law;

– Having the audited financial statements of the year immediately preceding the year of issuance audited by an approved audit firm;

– Satisfying financial safety ratios and operational safety assurance ratios as prescribed by law (if any).

What are the conditions for a securities company to offer shares to existing shareholders?

Under Clause 5, Article 31 of the Law on Securities 2019 (as amended and supplemented by Law No. 56/2024/QH15), a securities company or securities investment fund management company that is not a public company offering shares to existing shareholders in proportion to their current ownership must satisfy the following conditions:

– Having a decision of the General Meeting of Shareholders approving the issuance plan and the use of proceeds from the offering; clearly defining the criteria and number of investors;

– Private placements of shares, convertible bonds, and bonds with warrants must be at least 06 months apart from the closing date of the most recent offering.

Thus, the above are the conditions that organizations must ensure when conducting private placements of securities.