Regulations on the rights and obligations of public companies under Vietnamese law

1. What is a public company?

According to Article 32 of the Securities Law 2019, a public company is regulated as follows:

– A public company is a joint stock company in one of the following two cases:

+ The company has a contributed charter capital of 30 billion VND or more and has at least 10% of the shares Voting shares are held by at least 100 investors who are not major shareholders;

+ The company has successfully conducted an initial public offering of shares through registration with the State Securities Commission according to the provisions of Clause 1, Article 16 of this Law.

– Joint stock companies specified in Point a, Clause 1 of this Article must submit the public company registration documents as prescribed. in Clause 1, Article 33 of this Law to the State Securities Commission within 90 days from the date the company completes capital contribution and has a shareholder structure that meets the provisions of Point a, Clause 1 of this Article.

– Within 15 days from the date of receipt of a complete and valid public company registration dossier of the joint stock company according to the provisions of Point a, Clause 1 of this Article or receipt of the report on the results of completing the tranche offering of a joint stock company according to the provisions of Point b, Clause 1 of this Article, the State Securities Commission is responsible for confirming the completion of public company registration, and publishing the name, business content and other information related to the public company on the information disclosure medium of the State Securities Commission.

2. What rights and obligations do public companies have?

According to Article 34 of the Securities Law 2019, the rights and obligations of public companies are stipulated as follows:

– After the State Securities Commission confirms the completion of public company registration, the public company has the following rights and obligations:

+ Announcement of information trust according to the provisions of this Law;

+ Comply with regulations on corporate governance according to the provisions of this Law;

+ Carry out centralized stock registration at the Vietnam Securities Depository and Clearing Corporation according to the provisions of Article 61 of this Law;

+ Public companies specified in Point a, Clause 1, Article 32 of this Law must register for stock trading on the trading system for unlisted securities within 30 days from the date the State Securities Commission confirms the completion of public company registration. After 02 years from the date of the first transaction on the trading system for unlisted securities, a public company has the right to submit a listing registration application when meeting the conditions for listing securities;

+ Public companies specified in Point b, Clause 1, Article 32 of this Law must list their shares or register for trading on the stock exchange system within 30 days from the date of completion of the public offering.

– In addition to the rights and obligations specified in Clause 1 of this Article, public companies have rights and obligations according to the provisions of the Enterprise Law and other relevant laws.

3. Can a public company buy back its own shares while in the process of offering or issuing shares to raise additional capital?

According to Article 36 of the Securities Law 2019, the repurchase of its own shares by a public company is regulated as follows:

– A public company repurchasing its own shares must meet the following conditions:

+ There is a decision of the General Meeting of Shareholders approving the repurchase of shares to reduce charter capital, the repurchase plan, which clearly states the quantity, implementation time, and principles for determining the repurchase price;

+ Have enough resources to buy back shares from the following sources: surplus capital, development investment fund, undistributed after-tax profits, other funds belonging to equity used to supplement charter capital according to the provisions of law;

+ There is a designated securities company to conduct transactions, except in cases where the securities company is a member of the Vietnam Stock Exchange and repurchases its own shares;

+ Meet the conditions prescribed by law in the case of a public company belonging to a conditional business and investment industry;

+ Not falling into the cases specified in Clause 3 of this Article.

– The repurchase of shares is exempt from the conditions specified in Points a, b, c and d, Clause 1 of this Article in the following cases:

+ Buy back shares at the request of shareholders according to the provisions of the Enterprise Law;

+ Buy back shares from employees according to the company’s regulations on issuing shares to employees, buy back odd shares according to the plan to issue shares to pay dividends, issue shares from equity sources;

+ Securities companies buy back their own shares to correct transaction errors or buy back odd-lot shares.

– Public companies They are not allowed to buy back their own shares in the following cases:

+ Having overdue debts based on the most recent audited annual financial statements; In case the expected time to repurchase shares is more than 6 months from the end of the fiscal year, the determination of overdue debt is based on the most recent 6-month financial statements audited or reviewed; except for the case specified in Point c, Clause 2 of this Article;

+ Is in the process of offering and issuing shares to raise additional capital, except for the case specified in Point c, Clause 2 of this Article;

+ The company’s shares are being publicly offered, except for the case specified in Clause 2 of this Article;

+ Has carried out the repurchase of shares own shares within 06 months from the date of reporting the results of the repurchase or just completing the offering or issuance of shares to increase capital no more than 06 months from the date of completion of the offering or issuance, except for the case specified in Clause 2 of this Article.

– Except for the case of repurchasing shares corresponding to the ownership ratio in the company or repurchasing shares according to a legally effective judgment or decision of the Court. of Arbitration or repurchasing shares through transactions carried out by order matching method, the company is not allowed to repurchase shares of the following subjects:

+ Internal persons and related persons of internal persons according to the provisions of this Law;

+ Owners of shares with transfer restrictions according to the provisions of law and the company’s Charter;

+ Major shareholders according to the provisions of this Law.

– A public company that repurchases its own shares according to the provisions of Clause 1 and Point a, Clause 2 of this Article must carry out procedures to reduce charter capital corresponding to the total value calculated according to par value of the shares repurchased by the company within 10 days from the date of completion of payment to repurchase shares.

– In case the company buys back shares from employees according to the company’s regulations on issuing shares to employees, the following regulations shall be followed:

+ The total number of employee shares bought back by the company to reduce charter capital must be reported at the Annual General Meeting of Shareholders;

+ The company must carry out procedures to reduce charter capital corresponding to the total value calculated according to par value of the shares repurchased by the company within 10 days from the date of reporting to the Annual General Meeting of Shareholders according to the provisions of point a of this clause.

– Securities companies and public companies that repurchase their own shares may sell the shares immediately after repurchase in the following cases:

+ Securities companies repurchase their own shares to repair transaction errors or buying back odd-lot shares;

+ Public companies buy back odd-lot shares according to the plan to issue shares to pay dividends, the plan to issue shares from equity sources;

+ Public companies buy back odd-lot shares at the request of shareholders.

– The Minister of Finance regulates in detail the repurchase of company shares public.

Thus, a public company is not allowed to buy back its own shares while in the process of offering or issuing shares to raise additional capital, except in the case of buying back its own shares to correct transaction errors or buying back odd-lot shares.