Conditions for offering shares to convert a limited liability company into a joint stock company

To convert a limited liability company into a joint stock company, what are the conditions for offering shares? What does the offering document include?

1. Can a limited liability company be converted into a joint stock company?

According to the provisions of Clause 2, Article 202 of the Law on Enterprises 2020, a limited liability company can be converted into a joint stock company by the following method:

– Converted into a joint stock company without mobilizing additional organizations and individuals to contribute capital, without selling the capital contribution to other organizations and individuals;

– Convert into a joint stock company by mobilizing other organizations and individuals to contribute capital;

– Convert into a joint stock company by selling all or part of the capital contribution to one or several other organizations and individuals;

– Combining the above methods and other methods other.

Accordingly, a limited liability company can be converted into a joint stock company according to the methods prescribed above.

2. What conditions must be met for the initial public offering of shares to convert a limited liability company into a joint stock company?

According to the provisions of Article 15 of Decree 155/2020/ND-CP, the conditions for the initial public offering of shares to convert a limited liability company into a joint stock company include:

– Having a conversion plan change the limited liability company into a joint stock company approved by the Board of members or company owner.

– Have an issuance plan approved by the Board of members or company owner; Have a plan to use the capital obtained from the offering (except in the case of an initial public offering of shares to become a public company through a change in ownership structure but not increasing the charter capital of the issuing organization) approved by the Board of Members or company owners.

– Capital contributing members or company owners must commit to jointly holding at least 20% of the issuing organization’s charter capital for at least 01 year from the date of completion of the offering.

– The stock offering meets the regulations on foreign ownership ratio in public companies according to the provisions of law.

– There is an agreement between the member whose capital is being offered and the issuing organization on the offering plan and offering price in case of offering a member’s capital contribution.

– Contributed charter capital at the time of registration for offering is VND 30 billion or more calculated according to the value recorded in the accounting books;

– Business activities for 02 consecutive years immediately preceding the year of registration for offering must be profitable, and at the same time have no accumulated losses up to the year of registration for offering;

– At least 15% of the voting shares of the issuing organization must be sold to at least 100 investors who are not major shareholders; In case the charter capital of the issuing organization is VND 1,000 billion or more, the minimum ratio is 10% of the voting shares of the issuing organization;

– The issuing organization is not under criminal prosecution or has been convicted of one of the crimes of violating the economic management order but has not had its criminal record erased;

– Have a securities company advise on the registration documents to offer shares to the public, except in cases where the issuing organization is a securities company;

– Have a commitment and must list or register to trade shares on the stock exchange system after the end of the offering;

– The issuing organization must open a escrow account to receive money to buy shares in the offering.

3. What does the application file for initial public offering of shares to convert a limited liability company into a joint stock company include?

According to the provisions of Article 16 of Decree 155/2020/ND-CP, the documents to convert a limited liability company into a joint stock company to register for the initial public offering include:

– Decision of the Board of members or company owner approving the plan to convert a limited liability company into a joint stock company, in which:

+ The conversion plan must clearly state the method of converting the business type: converting to mobilize additional capital or not mobilizing additional capital or a combination method between mobilizing additional capital and selling capital contributions of members and owners of the company;

+ The conversion plan must clearly state the expected charter capital structure of the company after conversion, including: the number of shares of the company’s members/owners, the number of shares offered to the public (including: the number of shares offered to mobilize additional capital for the issuer, the number of shares sold by members/owners of the company), the number of shares offered to other subjects (if any).

– Decision of the Board of Members or company owner approving the issuance plan, approving the plan to use capital obtained from the offering (except for the case of offering in the form of an initial public offering of shares to become a public company through changing the ownership structure but not increasing the charter capital of the issuing organization;) and through the listing or registration of stock trading on the stock trading system, in which:

+ The issuance plan clearly states: offering price or principles for determining the offering price (except in the case of offering in the form specified in Point b, Clause 1, Article 10 of this Decree), number of shares offered for sale. The offering price is the price approved by the Board of members or company owner or determined on the basis of price determination principles approved by the Board of members or company owner;

+ Capital use plan is the plan to use the additional capital mobilized for the issuing organization. In case the offering is intended to mobilize capital to implement the project, the capital use plan must include content on the plan to compensate for the shortage of capital expected to be mobilized from the offering to implement the project;

+ In case of combining the offering to mobilize additional capital for the issuing organization and offering to sell the capital owned by members or owners of the company, the issuance plan must clearly state the principle of priority distribution of shares.

– Written commitment to hold shares of capital contributing members or company owners.

– Decision of the Board of Members or company owner approving a plan to ensure that the stock offering meets regulations on foreign ownership ratio.

– Document of agreement between the member whose capital is offered for sale and the company on the offering plan and offering price (if any).

– Decision of the Board of members or company owner through the registration file to offer shares to the public. For the public offering of shares by a credit institution, the application must contain written approval from the State Bank of Vietnam on the request to increase charter capital and transfer in accordance with the law on credit institutions. For the public offering of shares by an insurance business organization, the application must contain a written approval from the Ministry of Finance on the increase of charter capital and transfer according to the provisions of law on insurance business.

– Charter of the issuing organization;

– Written commitment to meet the provisions of Points d and e, Clause 1, Article 15 of the Law this;

– Document confirmation of the bank or foreign bank branch on opening a blocked account to receive money to buy shares in the offering;

– Offering registration paper;

– Prospectus;

– Financial report;

– Lake consulting contract Registration documents for public offering of shares with a securities company, unless the issuer is a securities company.

– Underwriting commitment (if any).

– Written commitment of the Board of Directors to list or register to trade shares on the stock exchange system.

Thus, your company can carry out the work Convert from a limited liability company to a joint stock company according to the methods mentioned above. In addition, your company can offer shares to the public for the initial public offering if it meets the conditions and fully prepares the documents mentioned above.