Conditions for public company offers convertible bonds in accordance with the law

What is a public company? Conditions for a public company to offer convertible bonds according to legal regulations.

1. What is a public company?

According to the provisions of Clause 1, Article 32 of the Securities Law 2019, a public company is a joint stock company in one of the following two cases:

– A company with a contributed charter capital of VND 30 billion or more and a minimum of 10% of the voting shares held by at least 100 investors not a major shareholder;

– The company has successfully made an initial public offering of shares through registration with the State Securities Commission.

2. What are the conditions for a public company to offer convertible bonds?

According to the provisions of Article 21 of Decree 155/2020/ND-CP, the conditions for a public company to offer convertible bonds and bonds with warrants to the public are:

– Having an issuance plan and a plan to use capital obtained from the convertible bond offering, Bonds with warrants are approved by the General Meeting of Shareholders.

– There is a securities company to advise on registration documents for the public offering of convertible bonds and bonds with warrants, except in cases where the issuer is a securities company.

– There is a commitment and must list the bonds on the stock exchange system after the end of the offering sell.

– The issuing organization must open a blocked account to receive money to buy convertible bonds, bonds with warrants of the offering.

– Total value of convertible bonds, bonds with warrants calculated by par value is not greater than the total value of outstanding shares calculated by par value, unless there is an underwriting with a commitment to buy all convertible bonds, bonds with warrants for resale or Buy the remaining convertible bonds and bonds with warrants that have not yet been fully distributed.

– For a public offering with the purpose of mobilizing capital to implement the project of the issuing organization, the number of convertible bonds and bonds with warrants sold must reach at least 70% of the number of convertible bonds and bonds with warrants expected to be offered to implement the projects. The issuing organization must have a plan to compensate for the shortage of capital expected to be mobilized from the offering to implement projects.

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

– The issuing organization is not under criminal prosecution or has been convicted of one of the crimes of violating public order. economic criminal record that has not been cleared.

– Business activities of the year 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.

– There is a commitment to fulfill the obligations of the issuing organization to investors regarding issuance and payment conditions, ensuring the legal rights and interests of investors and other conditions other.

3. What do the documents for a public company to register for public bond offering include?

According to the provisions of Article 22 of Decree 155/2020/ND-CP, the public company’s registration documents for offering convertible bonds and bonds with warrants to the public include:

– Offering registration certificate sale.

– Decision of the General Meeting of Shareholders approving the issuance plan, the plan to use capital obtained from the offering, the listing of bonds on the stock trading system, in which:

+ The issuance plan clearly states:

(1) Type of bond;

(2) Number of bonds each type; interest rate or principle for calculating bond interest rates;

(3) Bond term;

(4) Bond conversion plan (conditions, term, rate or method of calculating conversion price, repayment of capital in case of not converting bonds, approval or authorization for the Board of Directors to approve a plan to ensure the issuance of shares for conversion to meet regulations on foreign ownership ratio in addition, other terms);

(5) Plan for exercising rights of warrants (conditions, term, exercise rate of rights; price or method of calculating issuance price; capital repayment; approval or authorization for the Board of Directors to approve a plan to ensure the issuance of shares to exercise rights to meet regulations on foreign ownership ratio; other terms).

Note: In case of conversion price, stock issuance price Shares to exercise rights are lower than par value, conversion and exercise of rights can only be done when the issuer has enough equity surplus to offset the negative surplus arising from issuing shares below par value;

+ Plan for using capital obtained from the offering of convertible bonds and bonds with warrants; The proposed plan uses capital obtained from the issuance of shares to exercise the rights of the warrants. The plan for using capital obtained from the bond offering must clearly determine the successful offering rate for project implementation purposes of at least 70% of the total number of bonds offered to implement the projects. The capital use plan must include content about the plan to compensate for the shortage of capital expected to be mobilized from the offering to implement projects.

– Consulting contract on registration documents for offering convertible bonds, bonds with warrants to the public with a securities company, unless the issuer is a securities company.

– Other documents related to conversion into shares (if yes).

– Written commitment of the Board of Directors on implementing bond listing on the stock exchange system after the end of the offering.

– Decision of the Board of Directors approving the offering registration documents. For the public offering of convertible bonds and bonds with warrants by credit institutions, the application must contain written approval from the State Bank of Vietnam on the plan to issue bonds to the public in accordance with the law on credit institutions.

– Charter of the issuing organization;

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

– Report on the use of capital obtained from the most recent offering audited for 02 years up to the time of submission, except in cases where the audited financial statements have detailed explanations of the use of capital obtained from the most recent offering.

– Commitment to fulfill the obligations of the issuer to investors regarding issuance conditions, payment, and ensuring legal rights and interests of investors and other conditions;

– Prospectus.

– Financial statements of the issuing organization for the most recent 02 years.

– Underwriting commitment (if any).

– Written commitment that the issuing organization is not under criminal prosecution or has been convicted for one of the crimes of violating the order of economic management that has not yet been cleared of criminal record.

Thus, in order for a public company to conduct a public bond offering, the public company needs to ensure the conditions to be allowed to offer, in addition, it is necessary to prepare all documents to complete the registration file for public bond offering.