Law on Securities Overview
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Questions and Answers

What does the Law on Securities regulate?

Activities regarding securities and securities markets.

Who are the applicable entities under the Law on Securities?

  • Vietnamese organizations and individuals
  • Foreign organizations and individuals
  • State regulators on securities
  • All of the above (correct)

    • Match the following terms with their definitions:

    Securities = Assets like shares, bonds, and derivatives. Investor = An organization or individual participating in securities investment. Major shareholder = A shareholder owning 5% or more of voting shares. Public offering = An offer for sale of securities to the public via various methods.

    What is defined as 'securities' according to the law?

    <p>Assets including shares, bonds, investment fund certificates, rights, derivatives, and other types as stipulated by the Government.</p> Signup and view all the answers

    A bond certifies the lawful rights and interests of an owner of a part of the debt of the issuing organization.

    <p>True</p> Signup and view all the answers

    What is the role of a securities broker?

    <p>Acting as an intermediary in the purchase or sale of securities for a client.</p> Signup and view all the answers

    What is a private placement of securities?

    <p>Offering securities to less than 100 investors</p> Signup and view all the answers

    A ______ is an offer for sale of securities via the mass media to more than 100 investors.

    <p>public offering</p> Signup and view all the answers

    What is an investment fund certificate?

    <p>A type of securities certifying ownership of a capital contribution portion in a public fund.</p> Signup and view all the answers

    An insider is someone holding an important position in management and administration of a company.

    <p>True</p> Signup and view all the answers

    Who is responsible for the State administration of securities and the securities market in Vietnam?

    <p>The Ministry of Finance</p> Signup and view all the answers

    Which of the following is NOT a duty of the Ministry of Finance regarding the securities market?

    <p>Issuing securities to the public</p> Signup and view all the answers

    The State Securities Commission operates independently from the Ministry of Finance.

    <p>False</p> Signup and view all the answers

    What must the conditions be for an initial public offering of shares by a joint stock company?

    <p>Minimum paid-up charter capital of 30 billion dong, profitable business operations in the last two years, an issuance plan approved by shareholders, minimum sale of shares to investors, and commitment from major shareholders.</p> Signup and view all the answers

    Which of the following is NOT a prohibited act in securities and securities markets?

    <p>Creating an incomplete financial statement</p> Signup and view all the answers

    A securities professional investor must hold a portfolio of listed securities valued at ____ million dong.

    <p>two</p> Signup and view all the answers

    What is the par value of a share offered to the public in Vietnam?

    <p>10,000 Vietnamese dong</p> Signup and view all the answers

    The issuer must conduct a public offering if they have no overdue debts payable of more than one year.

    <p>True</p> Signup and view all the answers

    Which of the following public offers of securities does not require registration? (Select all that apply)

    <p>An offer of debt instruments of the Government</p> Signup and view all the answers

    What is required for an issuer to undertake underwriting for public offering of securities?

    <p>The issuer must be a licensed securities company and not be an affiliate of the issuer.</p> Signup and view all the answers

    Name one document required in an application for registration of an initial public offering of shares.

    <p>Prospectus</p> Signup and view all the answers

    The prospectus for a public offering of bonds does not need to include a report on usage of proceeds.

    <p>False</p> Signup and view all the answers

    What must an issuer submit along with their application for public offering of securities?

    <p>A decision from the company owner</p> Signup and view all the answers

    An issuer is obliged to ________ the application if they discover any inaccurate information.

    <p>amend or supplement</p> Signup and view all the answers

    Match the document with its requirement for the application of public offering of securities:

    <p>Prospectus = Summarized information about the issuer Resolution of the General Meeting = Approval of the issuance plan Bank certification = Proof of escrow account Undertaking of underwriting = Agreement to underwrite the issuance</p> Signup and view all the answers

    What is needed from an auditing organisation regarding financial statements?

    <p>An unqualified opinion audit</p> Signup and view all the answers

    An issuer must disclose any important information that arises after registration within 14 working days.

    <p>False</p> Signup and view all the answers

    Which circumstance does NOT allow entities to conduct a tender offer?

    <p>Redemption of shares by a public company</p> Signup and view all the answers

    A public company can redeem its own shares if it has overdue payable debts.

    <p>False</p> Signup and view all the answers

    What must a public company have to redeem its own shares?

    <p>Decision of General Shareholder Meeting and a plan for redemption.</p> Signup and view all the answers

    The government shall provide specific regulations on __________ for shares of public companies.

    <p>tender offers</p> Signup and view all the answers

    What must a public company ensure while conducting shareholder meetings?

    <p>Use of modern IT to allow online attendance</p> Signup and view all the answers

    What is one responsibility of the Board of Directors of a public company?

    <p>Ensure the company operates in compliance with laws and the company charter.</p> Signup and view all the answers

    Shareholders have the right to request for suspension, cancellation of __________ made by the general shareholder meeting.

    <p>resolutions</p> Signup and view all the answers

    A public company can redeem shares from shareholders who are under transfer restrictions.

    <p>False</p> Signup and view all the answers

    What should be submitted to the State Securities Commission prior to the redemption of shares?

    <p>Report of share redemption and decision of general shareholder meeting.</p> Signup and view all the answers

    What is required for a public company regarding candidate disclosure for the Board of Directors?

    <p>Disclose ten days prior to the Shareholders' General Meeting</p> Signup and view all the answers

    Members of the Board of Directors have the right to use information obtained through their position for personal gain.

    <p>False</p> Signup and view all the answers

    What must a public company ensure regarding conflict of interest and information disclosure?

    <p>Avoidance of conflicts of interest and transparency in information disclosure.</p> Signup and view all the answers

    Which entity has the authority to organize securities trading markets in Vietnam?

    <p>Vietnam Stock Exchange and its subsidiaries</p> Signup and view all the answers

    What is the minimum percentage of charter capital that must be held by the State in Vietnam Stock Exchange?

    <p>More than 50%</p> Signup and view all the answers

    The charter of Vietnam Stock Exchange contains the ______ rights and obligations of capital contributing members or shareholders.

    <p>rights and</p> Signup and view all the answers

    What must the Prime Minister approve regarding Vietnam Stock Exchange?

    <p>The managerial and executive apparatus of the exchange</p> Signup and view all the answers

    Vietnam Stock Exchange does not require approval from the State Securities Commission for its operational rules.

    <p>False</p> Signup and view all the answers

    What is a duty of the Vietnam Stock Exchange regarding securities trading?

    <p>To promulgate rules on securities listing and trading.</p> Signup and view all the answers

    What must the State Securities Commission provide in case of refusal?

    <p>A written notice specifying its reasons for the refusal.</p> Signup and view all the answers

    A certificate of acceptance from the State Securities Commission confirms that the application file for registration satisfies all conditions and procedures stipulated by law.

    <p>True</p> Signup and view all the answers

    How long does the issuing organization have to make an issue announcement after the acceptance certificate becomes effective?

    <p>Seven (7) days.</p> Signup and view all the answers

    What is the minimum registration period for investors to purchase securities?

    <p>Twenty (20) days.</p> Signup and view all the answers

    Within how many days must the issuer complete the distribution of securities after the acceptance certificate's effectiveness?

    <p>Ninety (90) days.</p> Signup and view all the answers

    The State Securities Commission can suspend a public offering for a maximum of ninety (90) days.

    <p>False</p> Signup and view all the answers

    The issuer must announce the suspension of the public offering within _____ days from the date the offering tranche is suspended.

    <p>seven (7)</p> Signup and view all the answers

    Which of the following is NOT a reason for cancelling a public offer of securities?

    <p>Non-compliance with tax regulations</p> Signup and view all the answers

    What is the lock-up period for strategic investors after a private placement of shares?

    <p>A minimum of three (3) years.</p> Signup and view all the answers

    What defines a public company according to the law?

    <p>A company with a charter capital of at least 30 billion dong and at least 10% of shares owned by at least 100 shareholders</p> Signup and view all the answers

    How long does an issuer have to submit a public company registration application after capital contribution?

    <p>Ninety (90) days.</p> Signup and view all the answers

    Study Notes

    Overview

    • This law regulates securities, securities market activities, rights and duties of participants and state administration over securities and securities markets.
    • Law applies to Vietnamese and foreign organizations and individuals engaging in securities market activities.
    • State regulators, other organizations, individuals, and authorities related to securities activities are also subject to this law.
    • Activities must comply with provisions of this Law and relevant laws.

    Definitions

    • Securities: These include shares, bonds, investment fund certificates, rights, covered warrants, share purchase rights, depository receipts, derivatives and other types of securities as prescribed by the Government.
    • Shares: These are securities certifying ownership of a portion of the shareholding in the issuing organization.
    • Bonds: These are securities certifying ownership of a portion of the debt of the issuing organization.
    • Investment Fund Certificates: These are securities certifying ownership of a capital contribution portion in a public fund.
    • Rights: These are securities issued with accompanying bonds or preference shares, giving the owner a right to purchase a fixed amount of ordinary shares at a pre-determined price during a specified period.
    • Covered Warrants: These are securities with assets as collaterals, issued by a securities firm, giving the owner a right to purchase or sell an underlying security at a specific price.
    • Share Purchase Rights: These are securities issued by joint stock companies, giving existing shareholders a right to purchase new shares.
    • Depository Receipts: These are securities based on securities of an organization, established and operating legally in Vietnam.
    • Derivatives: These are financial instruments in the form of contracts, including options, futures and forwards. They determine rights and duties of contract parties with respect to the payment and delivery of specific amounts of underlying assets at a pre-determined price.
    • Underlying Assets of Derivatives: This refers to securities, securities index or other assets used as a basis to determine derivatives values.
    • Option Contracts: These are derivatives specifying the right of the purchaser and the duty of the seller to perform one of the following transactions: purchase or sell certain amount of underlying assets at a pre-determined price or pay for the differences between the values of underlying assets.
    • Futures Contracts: These are listed derivatives specifying an undertaking among the contract parties to perform one of the following: purchase or sell certain amount of underlying assets at the specified price or pay for the differences between the values of underlying assets.
    • Forwards Contracts: These are derivatives traded on the negotiable basis, specifying an undertaking among the contract parties to purchase or sell certain amount of underlying assets at the specified price.
    • Securities and Securities Activities: These include offering, listing, trading, businesses, securities investment, securities related services provision, information disclosure, corporate governance of public companies and other activities as stipulated in this Law.
    • Securities Investment: This refers to purchasing, selling or holding securities on the securities markets.
    • Investor: An organization or individual who participates in investment in the securities market.
    • Strategic Investor: An investor chosen by the General Shareholder Meeting based on financial capacity, technology qualifications and a commitment to cooperate with the company for at least 3 years.
    • Major Shareholder: A shareholder who owns directly or indirectly five per cent or more of the voting shares of an issuer.
    • Public Offering of Securities: This refers to an offer for sale of securities via one of the following methods: via mass media, to one hundred (100) or more investors, or to several undefined investors.
    • Private Placement of Securities: This refers to an offer for sale of securities which does not fall under the public offering methods. It can be an offer to less than one hundred (100) investors or only to professional investors.
    • Issuer: An organization conducting an offer of issuance of securities.
    • Approved Auditing Organization: An independent auditing organization approved by the State Securities Commission to provide audits.
    • Prospectus: A document or electronic data publicising accurate, truthful and objective information about an offer or listing of securities by an issuer.
    • Listing: To make eligible securities to the listing requirements to be traded on trading system for listed securities.
    • Trading Registration: To make available securities to be traded on trading system for unlisted securities.
    • Securities Trading Systems: These include trading systems for listed and unlisted securities, organized and operated by the Vietnam Stock Exchange.
    • Securities Trading Market: This is a venue or form for information exchange in order to collate buying and selling orders and to trade securities.
    • Securities Business: These include securities brokerage, proprietary, underwriting, securities investment consultancy, securities investment fund management, securities investment portfolio management and securities related services provision.
    • Securities Brokerage: Acting as an intermediary in the purchase or sale of securities for a client.
    • Securities Proprietary: A securities company which purchases and sells securities for itself.
    • Underwriting: The conduct of undertaking to an issuer to purchase a portion or all of securities of the issuer for re-sale, or to purchase the amount of the remaining undistributed securities of the issuer or make best effort to distribute securities to the public.
    • Securities Investment Consultancy: The provision of analysis results, analysis reports and making recommendations with respect to buying, selling or holding of securities to investors.
    • Securities Registration: Recording information on issuers, securities of issuers and owners of securities.
    • Securities Depository: The receipt of securities for deposit, preservation, transfer and delivery on behalf of clients, and assistance to clients to exercise their rights related to such securities.
    • Securities Portfolio Management: The conduct of management, pursuant to authorization [or entrustment] from each investor, of the purchase, sale and holding of securities and other assets.
    • Securities Investment Fund Management: The conduct of management of the purchase, sale and holding of securities and other assets of securities investment fund.
    • Securities Investment Fund: A fund established from capital contributions of investors in order to make a profit from investment in securities, whereby the investors do not have daily control over the investment decision-making of the fund.
    • Public Fund: A securities investment fund which makes a public offering of fund certificates.
    • Open-ended Fund: A public fund whose fund certificates as offered to the public shall be redeemed at the request of investors.
    • Close-ended Fund: A public fund whose fund certificates as offered to the public shall not be redeemed at the request of investors.
    • Members Fund: A securities investment fund with from two (02) to ninety nine (99) capital contributing members, all of which shall be professional investors.
    • Exchange Traded Fund: An open ended fund which is formed from the acceptance and exchange of underlying securities portfolio for fund certificates. Exchange traded fund certificates are permitted to be listed and traded on the trading system for listed securities.
    • Real Estate Investment Fund: A securities investment fund which invests mainly in real estate and securities of issuers that are real estate businesses having revenues gained from owning and real estate businesses of at least 65% of total revenues in accordance with the latest financial statements.
    • Inside Information: Information related to a public company, listed company, trading registration company, public fund or public securities investment company which has not yet been disclosed and which, if disclosed, could have a major impact on the price of the securities of such organizations.
    • Insider: A person holding an important position in the administration and management apparatus of an enterprise, public fund, public securities investment company, which includes:
      • An insider of an enterprise, which is a chairman of board of directors, chairman of board of members, chairman of the enterprise, members of board of directors, members of board of members, legal representative of the enterprise, general director (or director), deputy general director (or deputy director), chief financial officer, chief accountant and equivalent management titles elected by the general shareholders meeting or appointed by the board of directors, board of members or chairman of the enterprise.
      • An insider of a public fund or public securities investment company, which is a member of the representative board of public fund, member of board of directors of the public securities investment company, managing director of public fund, managing director of public securities investment company, insider of fund management company investing in securities.
    • Affiliated Person: An individual or organization with interactive relations in the following circumstances:
      • An enterprise or insiders of the enterprise; public fund, public securities investment company and their insiders.
      • An enterprise; and the organizations and individuals who own more than ten (10) per cent of the voting shares or capital contribution of the enterprise.
      • An organization or individual within a relationship with another organization or individual directly or indirectly controls or is controlled by such another organization or individual; or jointly with such another organization or individual is subject to the same control.
      • An individual, parents, adopted parents, parents in law, spouses, children, adopted children, daughters in law, sons in law, siblings, brothers in law, sisters in law of any such individual.
      • Securities investment fund management company and securities investment fund, securities investment company managed by such securities investment fund management company.
      • A contractual relationship in which an organization or individual is the representative of the other.
      • Other organization or individual who is affiliated in accordance with the Enterprise Law.
    • Securities Practitioner: A person who is granted a securities practitioner certificate by the State Securities Commission and works at a securities company, securities investment fund management company, branch of a foreign securities company in Vietnam and branch of foreign fund management company in Vietnam (hereafter referred as branch of foreign securities company, fund management company in Vietnam), securities investment company.
    • Listed Company, Trading Registration Company: A company which has issued securities listed or registered for trading on the securities trading system.

    Principles on Securities & Securities Market Activities

    • Respect for rights of ownership and other rights related to assets in activities of securities and securities markets. This includes rights to freely trade, invest, conduct business and provide securities related services.
    • Fairness, publicity, and transparency.
    • Protection of lawful rights and interests of investors.
    • Self-responsibility for risks.

    Policy on Securities Market Development

    • State policy encourages and facilitates local and foreign organizations and individuals to participate in investment and securities market activities aimed at raising medium and long term capital.
    • State policy ensures the securities market operates fairly, publicly, transparently, safely, and effectively through administration and supervision.
    • State policy invests in modernizing infrastructure for the operation of the securities market, developing manpower resources, and providing and disseminating information about securities and securities markets.

    Measures To Ensure Security and Safety of Securities Markets

    • Supervising security and safety of securities markets.
    • Coping with and overcoming incidents, events, and fluctuations affecting the safety, stability, and integrity of securities markets.
    • Halting or suspending transactions of one or some listed or trading registered securities on the securities trading system.
    • Halting or suspending, partly or all activities, or resuming trading activities of the Vietnam Stock Exchange.
    • Halting or suspending partly or all activities, or resuming activities of registration, depository, clearing, and settlement of Vietnam Securities Depository and Clearing Corporation.
    • Prohibiting permanently or non-permanently holding positions at securities companies or conducting activities of securities and securities markets.
    • Seizing securities accounts and requiring competent persons to freeze monetary accounts in relation to securities market violations.

    State Administration of Securities and Securities Market

    • The Government exercises State administration of securities and the securities market.
    • The Ministry of Finance is responsible before the Government to exercise State administration of securities and the securities market. It has the following duties and powers:
      • To submit to the Government strategies, a master plan, and policies for the development of the securities market.
      • To submit to the competent body for promulgation or to promulgate legal documents on securities and the securities market.
      • To direct the State Securities Commission in implementation of the strategies, plans, master plans, and policies for development of the securities market.
    • Ministries and ministerial equivalent bodies shall, within the scope of their respective duties and powers, co-ordinate with the Ministry of Finance to exercise State administration of securities and the securities market.
    • People's committees at all levels, within the scope of their respective duties and powers, exercise State administration of securities and the securities market within their localities.

    State Securities Commission

    • The State Securities Commission is a body under the Ministry of Finance, performing the functions of consulting and assisting the Minister of Finance with respect to the state administration on securities and securities markets, to organize the legal implementation regarding securities and securities markets in accordance with the hierarchy and authorisation of the Minister of Finance, and to carry on the following duties and powers:
      • To submit to the Minister of Finance for promulgation or for further submission to the competent authorities for promulgation of legal documents on securities and securities markets, strategies, plans, master plans on securities markets development.
      • To direct the Vietnam Stock Exchange, Vietnam Securities Depository and Clearing Corporation and other organizations operating in the securities market in carrying out the functions and tasks as mandated by law on securities and securities market.
      • To supervise securities market activities and organizations operating in the securities market.
      • To examine and approve, in accordance with the prescribed procedures, the issuance of securities by organizations, registration of securities trading, licensing of securities businesses, establishment and operation of securities investment funds, and other activities related to securities market.
      • To decide to suspend, partly or all, securities trading activities or to resume trading activities, to suspend the activities of organizations operating in the securities market.
      • To consider and decide on the application of measures to ensure the security and safety of securities market.
      • To handle and resolve complaints, reports, and violations in securities market activities in accordance with the law.
      • To participate in international cooperation in the field of securities and securities markets.
      • To provide guidance, training, and promotion to the securities sector.
      • To collect and disseminate information on securities and securities markets.
      • To develop and submit to the Minister of Finance for approval, plans, master plans and policies for the development of the securities market.
      • To coordinate with ministries, ministerial-level agencies, and People's Committees at all levels in the implementation of the policies of the State on securities and the securities market.
      • To propose to the Minister of Finance to award, revoke, and suspend the granting of securities practitioner certificates to qualified individuals.
      • To propose to the Minister of Finance to promulgate legal documents and to supervise the implementation of relevant legal documents on securities and securities markets.
      • To perform other functions and tasks as mandated by the Minister of Finance, the Government, and other competent authorities.

    State Securities Commission Functions

    • The State Securities Commission is responsible for regulating and supervising securities markets in Vietnam.
    • The State Securities Commission has extensive powers, including licensing securities practitioners, approving securities trading systems, and managing activities related to securities markets.
    • In critical situations affecting the security of the securities market, the State Securities Commission reports to the Ministry of Finance, the Government, and the Prime Minister.
    • The State Securities Commission gathers statistics and makes forecasts regarding the securities market, provides professional training, and disseminates information about securities and the securities market to the public.

    Securities Professional Investors

    • A securities professional investor possesses financial capacity or qualifications related to securities.
    • These individuals or institutions include companies with a certain minimum charter capital, specialized financial companies, and individuals with large investments in listed securities or high taxable incomes.

    Prohibited Acts in Securities Activities

    • Engaging in fraudulent activities, such as creating false information, misleading information, or concealing essential details, is strictly prohibited.
    • Using inside information for personal gain or sharing such information is considered illegal.
    • Manipulating the price of securities by creating artificial supply and demand, colluding with others to trade, or using other methods to influence the market is also prohibited.
    • Conduct securities businesses or provide related services without a license or approval from the State Securities Commission is illegal.

    Public Offering of Securities

    • Securities offered to the public in Vietnam are denominated in Vietnamese dong.
    • The public offer of securities can take various forms, including initial public offerings (IPOs), additional public offerings, and other methods.
    • There are specific requirements for public offerings, including minimum charter capital, profitability requirements, and issuance plans.
    • Public companies must register their public offering of securities with the State Securities Commission, except for specific exemptions like government bond offerings.
    • Underwriting for public offerings can be conducted by securities companies and other organizations that meet specific criteria.
    • Applications for public offerings must include detailed information regarding the issuer, the offering plan, and the usage of proceeds.

    Application for Registration of a Public Offering of Securities

    • Public offering of bonds requires documents:
      • Request for registration
      • Documents stipulated in Clause 1 of this Article
      • Resolution of the General Meeting of Shareholders, Board of Directors or Board of Members or company owner
      • Undertaking from the issuer
      • Credit rating report
      • Consultancy contract with a securities company
      • Certification of a bank to open an escrow account
      • Underwriting for the issuance (if any)
    • Public offering of convertible bonds requires documents:
      • Request for registration
      • Documents stipulated in Clause 1 and 2 of this Article
      • Resolution of the General Meeting of Shareholders
      • Undertaking from the issuer
      • Documents regarding the conversion into shares
      • Underwriting for the issuance (if any)
    • Public offering of investment fund certificates requires documents:
      • Request for registration
      • Prospectus
      • Proposed charter of the securities investment fund
      • Contract in principle for supervision
      • Undertaking to underwrite the issuance (if any)

    Prospectus for a Public Offering of Securities

    • Public offering of shares or bonds requires a prospectus with the following information:
      • Summarized information about the issuer
      • Information related to the offering and securities offered
      • Financial statements of the issuer for the last two years
      • Other information as per the sample form
    • Public offering of investment fund certificates requires a prospectus with the following information:
      • Type and size of the securities investment fund
      • Investment objectives, strategy, and risk
      • Summary of the draft charter
      • Plan for issuance of the fund certificates and guidelines for investment
      • Summarized information regarding the securities investment fund management company and custodian bank
      • Other information as per the sample form

    Financial Statements

    • Financial statements must be prepared in accordance with the laws on accounting.
    • Parent companies must lodge consolidated financial statements.
    • Annual financial statements must be audited by an approved auditing organisation.
    • Unaudited financial statements for the previous year may be accepted if the application is lodged within 60 days from the date of ending the annual accounting period.
    • Additional financial statements up until the most recent month or quarter must be prepared if the application is lodged more than 90 days after the last date of the accounting period.

    Approved Auditing Organisation and Auditor

    • The State Securities Commission reviews, approves, and discloses the list of auditing organisations and auditors who conduct practices of auditing for public related interest organisations in the field of securities.
    • Public related interest organisations include public companies, listed companies, trading registration organisations, organizations conducting public offering, securities firms, securities investment fund management companies, securities investment companies, and securities investment funds.
    • Approved auditing organisations must comply with independent auditing laws and have the following responsibilities:
      • Reporting any change regarding name, address, business sector, list of auditors, or eligibility to conduct audits to the State Securities Commission
      • Providing information and figures relating to their audits upon request
      • Reporting significant violations detected in the organisations being audited
      • Protecting confidential information

    Responsibilities of Organisations and Individuals

    • The issuer is liable for the accuracy, truthfulness, and completeness of the application for registration.
    • The organization providing consultancy on the issuance, underwriter, approved auditing organization, signatory to the audit report, and any other organization or individual certifying the application are liable within their scope.

    Cancellation of Public Offering of Securities

    • The State Securities Commission may cancel a public offer of securities under the following circumstances:
      • Deficiencies which resulted in suspension of the offer tranche are not remedied in the specified time.
      • The initial public offering of shares fails to meet the minimum threshold of voting shares sold to at least 100 investors.
      • The offering of additional shares to the public fails to meet the condition on raising sufficient capital for the project implementation of the issuer.
      • Public offering is canceled according to a court verdict or decision, decision of an arbitrator, or a competent authority decision.

    Issuer Obligations

    • An issuer who cancels an offer tranche must announce the cancellation within 7 days, recall all issued securities, and refund investors within 15 days.
    • After the 15-day refund period, the issuer must compensate investors for their losses in accordance with the undertakings made to investors.
    • Issuers who have completed a public offering of shares must register as a public company with the State Securities Commission.
    • Issuers who have completed a public offering of securities must register their listing/trading of securities within 30 days.
    • Issuers who complete a public offering of bonds must comply with the information disclosure obligations defined in the law.

    Private Placement

    • Private placement of securities by an issuer that is not a public company is conducted in accordance with the Law on Enterprises and other relevant laws.
    • Public companies have special requirements to conduct private placements of shares, convertible bonds, and bonds attached with warrants.
    • In private placements, only strategic investors or professional investors may participate.
    • There must be a minimum lock-up period for shares or convertible bonds/bonds attached with warrants of 3 years for strategic investors and 1 year for professional investors.
    • There must be a minimum interval of 6 months between tranches of private placements of shares or convertible bonds/bonds attached with warrants.
    • Private placement of shares or convertible bonds/bonds attached with warrants shall comply with foreign ownership limits as stipulated by law.
    • Public companies who are not issuing shares, convertible bonds or bonds attached with warrants have additional requirements to conduct private placement of bonds.
    • These include:
      • A decision from the general meeting of shareholders or board of directors passing a plan on the issuance and usage of proceeds from the offering.
      • Participation by professional investors only.
      • Transfers that can only be made by professional investors.
      • Repayment of principles and interests of bonds within 3 consecutive years prior to the offer.
      • An audited annual financial statement of the preceding year.
      • Meeting the financial adequacy and safety ratios stipulated by law.

    Public Companies

    • A public company is a joint stock company with a charter capital of at least 30 billion dong and 10% of voting shares owned by at least 100 individual shareholders who are not major shareholders.
    • Alternatively, a public company is a joint stock company which has conducted a successful initial public offering of shares registered with the State Securities Commission.
    • Joint stock companies that meet the first requirement must register as public companies with the State Securities Commission within 90 days of completing their capital contribution.
    • The State Securities Commission confirms public company registration within 15 days of receiving a complete and valid application.
    • A public company registration application must include the following documents:
      • A request for public company registration
      • Charter of the company
      • Business registration certificate of the company
      • Information disclosure statement on the company, which includes summarized information about organizational structure, business activities, managerial organization, shareholding structure, assets, financial status, and other information.
      • The most recent year financial statements audited by an independent auditing company.

    Public Company Rights and Obligations

    • Public companies must disclose information as stipulated in the Law on Enterprises and other relevant laws.
    • They must comply with the regulations on corporate governance.
    • Public Companies must register their shares at the Vietnam Securities Depository and Clearing Corporation.
    • A public company that meets the first definition of a public company must register securities trading within 30 days of the State Securities Commission confirming their registration.
    • These companies have the right to submit a listing registration application after 2 years of trading on the trading system for unlisted securities, if they meet the listing conditions for securities trading.

    Tender Offers

    • A tender offer must be registered with the State Securities Commission when an individual/organization intends to purchase voting shares or closed-ended investment fund certificates to reach a direct or indirect ownership of 25% or more of the number of currently circulating shares or closed investment fund certificates.
    • A tender offer must also be registered when an individual/organization holding 25% or more of voting shares or fund certificates in a public company or close-ended fund intends to purchase additional shares, leading to a direct or indirect ownership of 35%, 45%, 65%, 75%, or more of the currently circulating voting shares or fund certificates.
    • A tender offer must be registered when an individual/organization that holds 80% or more of voting shares or fund certificates in a public company/closed-ended fund intends to purchase additional shares from the remaining shareholders within 30 days, under the same conditions on tender offer prices and payment methods as the original tender offer.
    • An individual/organization shall not have to conduct a tender offer if they gain ownership of the shares/certificates as a result of the following:
      • Purchasing newly issued shares or fund certificates in accordance with an issuance plan passed by the General Shareholder Meeting of a public company or Board of Representatives of the closed fund.
      • Receiving currently circulating voting shares or fund certificates with the approval of the General Shareholder Meeting of the public company or Board of Representatives of the closed fund.
      • Transfer of shares between companies that operate as a group of companies including economic groups, corporations, and parent-subsidiary companies, and that do not result in cross ownership as stipulated in the Law on Enterprise.
      • Any organization, individual who owns shares as a result of splitting, separation, merger, and acquisition of an enterprise.
      • Donation or inheritance of shares or investment fund certificates.
      • Transfer of shares or investment fund certificates pursuant to a verdict or decision of a court as coming effective;
      • Decision of an arbitrator

    Public Company Share Redemption

    • When a public company redeems its own shares, it must comply with the following conditions:

      • A decision from the General Shareholder Meeting to pass a plan for share redemption.
      • Sufficient resources to fund the share redemption from capital surplus, development investment fund, undistributed after-tax profits, other funds belonging to the owner’s capital, and funds that are eligible to be used for adding to the charter capital in accordance with law.
      • A securities firm is delegated to conduct the trading, except for securities firms that are members of the Vietnam Stock Exchange, who can redeem their own shares.
      • Meeting other conditions stipulated by law, if the public company has conditional businesses.

    • The following cases are exempt from the above conditions:

      • Redemption of shares upon request from shareholders as stipulated in the Enterprise Law.
      • Redemption of shares of employees in accordance with the rule on issuance of shares to employees or the redemption of odd shares in accordance with the issuance of shares for dividend payment.
      • Share buybacks by a securities firm to correct trading errors or redeem odd shares.

    • Public companies shall not redeem their own shares if the following conditions are met:

      • There are overdue payable debts in accordance with the latest audited annual financial statements.
      • The company is in the process of offering or issuing shares to raise additional capital.
      • Redemption of shares that are the target of a tender offer.
      • Redemption of shares within 6 months of reporting the redemption results of completing the offer or issuance of shares to raise additional capital.

    • Public companies are also prohibited from redeeming shares owned by the following entities unless they are redeeming them in accordance with the ownership percentage in the company, or in compliance with court verdicts, decisions coming effective legally, decisions of arbitrators, or via transactions conducted pursuant to the order matching method.

      • Inside persons, or affiliated persons of inside persons as stipulated in the Law on Enterprises.
      • Shareholders with transfer restrictions, as stipulated by laws.
      • Major shareholders.

    • A public company that redeems its own shares must complete the procedure for charter capital decrease within 10 days of completing payment for share redemption.

    • Public companies redeeming shares owned by employees must report the total amount of shares bought back at the annual general shareholder meeting and carry out the procedure for charter capital decrease corresponding to the total value as calculated in accordance with the face value of shares bought back within 10 days of reporting this information at the annual general shareholder meeting.

    • Securities firms and public companies who redeem their own shares are permitted to sell these shares right after redemption in the following cases:

      • Securities firms redeem their own shares to correct trading errors or redeem odd shares.
      • Public companies redeem odd shares in accordance with the share issuance plan for dividend payment, share issuance plan from the owner’s capital.
      • Public companies redeem odd shares upon request of shareholders.

    Share Redemption Reporting

    • Public companies must submit detailed reports to the State Securities Commission (SSC) before share redemption.
    • These reports should include:
      • The purpose of the redemption.
      • Total shares registered for redemption.
      • Resources allocated for the redemption process.
      • The trading method employed.
      • Tentative timeline for the redemption process.
      • The method used to determine the redemption price (including price range).
    • The SSC reviews these reports within 7 working days.
    • If the reports are complete and valid, the SSC informs the company in writing.
    • If the reports are incomplete or invalid, the SSC sends a notification requesting corrections and supplements.
    • The SSC can reject the reports. If so, it must provide written reasons for the rejection.
    • The company must disclose redemption-related information on its website, through the SSC, and the Vietnam Stock Exchange (VSE) within 7 working days of receiving notification from the SSC.
    • Share redemption is undertaken after this 7-day disclosure period.
    • Within 10 working days of completing the redemption transactions, the company reports trading results to the SSC and publicly discloses the information.
    • If the company fails to redeem all planned shares, it must report this to the SSC along with the reasons for the incompletion.
    • Redemption must be completed within 30 days from the commencement of the transaction, as per the disclosed timeline.

    Cancellation of Public Company Status

    • If a company's contributed capital falls below 30 billion dong, as per the most recent audited financial statements, or its shareholder structure no longer meets the requirements outlined in the law, it must send a written notification to the SSC within 15 days.
    • The notification must include a list of shareholders provided by the Vietnam Securities Depository and Clearing Corporation (VSDCC).
    • If the company fails to meet the requirements for being a public company for one year, the SSC may consider cancelling its public company status.
    • Until the SSC officially announces the cancellation of public company status, the company must continue to follow the regulations pertaining to public companies.
    • The company is required to announce the cancellation of public company status on its website, through the SSC, the VSDCC, and the VSE within 7 working days of receiving notification from the SSC.
    • It must also initiate the necessary procedures for delisting and deregistering for trading, as outlined in the relevant legislation.

    Application for Cancellation of Public Company Status

    • A public company facing a potential cancellation (as stated in Clause 2 of Article 38) must submit an application for cancellation to the SSC.
    • The application should include:
      • A certificate for enterprise registration.
      • A written statement confirming that the company no longer meets the required conditions.
      • A list of shareholders provided by the VSDCC.
      • The most recent annual financial statements audited by a certified auditing organization.
      • If the company has increased its charter capital after the end of the most recent accounting year, it must submit the latest audited financial statements.

    Principles of Corporate Governance

    • Corporate governance in public companies must adhere to the provisions of the law, the Law on Enterprises, other related legislation, and the following principles:
      • Establishing an effective and reasonable corporate governance framework.
      • Ensuring effective operation of the board of directors and the board of supervisors.
      • Strengthening the responsibilities of the board of directors towards the company and its shareholders.
      • Guaranteeing the rights of shareholders and ensuring equal treatment for all.
      • Recognising the role of investors, securities markets, and intermediaries in supporting corporate governance activities.
      • Respecting and safeguarding the legitimate rights and interests of all stakeholders.
      • Ensuring prompt, complete, accurate, and transparent disclosure of company activities.
      • Ensuring equal access to information for all shareholders.

    Substances of Corporate Governance

    • Shareholder Rights and Obligations:

      • Right to equal treatment.
      • Right to full access to periodic and extraordinary information published by the company in accordance with the law.
      • Right to protect their legitimate rights and interests.
      • Right to request the suspension or cancellation of resolutions and decisions made by the general shareholder meeting or the board of directors, as stipulated in the Enterprise Law.
      • Major shareholders must not use their advantages to influence the rights and interests of the company or other shareholders, according to laws and the company charter.
      • Major shareholders have information disclosure obligations as stipulated in the law.
      • Other rights and obligations as defined by laws and the company charter.

    • General Meeting of Shareholders:

      • The board of directors, board of supervisors, and convener of the general meeting of shareholders must fully comply with the orders and procedures for convening the meeting, as stipulated in the Law on Enterprises, the company's charter, and internal rules of corporate governance.
      • The meeting arrangements should include an appropriate venue and time for shareholders to attend.
      • Public companies are required to incorporate the use of modern Information Technology (IT) in their internal rules of corporate governance to enable shareholders to attend and participate in the general shareholder meeting via online meetings, e-voting or other electronic forms, as stipulated in the Law on Enterprises and company charters.
      • If the annual financial statements of a public company contain material qualified opinions, disclaimer opinions, or adverse opinions from an approved auditing organization, that organization's representative must be invited to attend the Annual General Meeting of Shareholders.
      • Compliance with other provisions of the law and the company's charter is required.

    • Board of Directors:

      • The board of directors of a public company must have a balanced structure in terms of the number of executive and non-executive members, and the number of independent members to ensure its independence.
      • The board of directors is responsible to the shareholders for the company's operation. It must ensure the company operates in compliance with laws, company charter, and internal rules.
      • The board must develop and present the internal rule on corporate governance to the general meeting of shareholders for approval. It must appoint a person in charge of corporate governance and fulfill other responsibilities and duties stipulated in the law and company charter.
      • The board of directors must hold a meeting at least once per quarter, following the order and procedure outlined in the company charter and internal rule on corporate governance.
      • Board members must be informed of the meeting agenda and materials in advance, within the timelines stipulated in laws and the company charter.

    • Candidature and Nomination of Board Members:

      • When a candidate for the board of directors has been identified, the company must disclose information about the candidate on its website at least ten days before the opening of the Shareholders’ General Meeting, to allow shareholders access to information before voting.
      • If there are not enough candidates for the Board of directors through nominations and candidatures, the incumbent board of directors can introduce or nominate more candidates or organizations, according to the company charter and internal regulations on corporate governance.

    • Board Member Rights and Responsibilities:

      • To receive information and materials about the financial status, business operation of the company and its subsidiaries.
      • To perform their duties honestly and diligently in the best interests of shareholders and the company.
      • To attend all board of directors meetings and provide opinions on the issues discussed.
      • To report promptly and completely to the board of directors on remuneration received from subsidiaries, affiliated companies and other organizations.
      • To report and disclose information when conducting transactions of the company's shares, as per the law.
      • Other rights and responsibilities in accordance with the law and the company's charter.

    • Conflict of Interest and Transparency:

      • Board members, supervisors, the general director, and other enterprise managers of a public company are responsible for disclosing relevant interests and avoiding the use of information obtained through their positions for personal purposes or the interests of other individuals or organizations.
      • Public companies must implement measures to prevent board members, supervisors, the general director, other enterprise managers, shareholders, and related parties from interfering with company operations or causing damage to the company's interests.
      • They must comply with provisions on transactions of shareholders, enterprise managers, and related parties of these individuals.
      • They must ensure the legitimate rights and interests of individuals with relevant interests in the company.
      • Public companies have obligations to report and disclose periodic and irregular information about their operation status, production, businesses, finances, and corporate governance performance to shareholders, the public, and other relevant entities.
        • This disclosure must be full, accurate, and timely.
        • It should include information that could potentially impact securities prices and the decisions of shareholders and investors.
      • Information to be disclosed and the method of disclosure must comply with the law, the company charter, and rules on information disclosure.

    Securities Trading Market Organization

    • Vietnam Stock Exchange (VSE) and its subsidiaries can organize securities trading markets for securities that meet listing criteria. This also includes securities of state-owned enterprises, securities of one-member limited liability companies with charter capital held 100% by state-owned enterprises that are transforming into joint-stock companies, securities of other enterprises that do not meet listing requirements, securities of innovative start-up companies, derivatives, and other securities as stipulated by the Government.
    • No other organization or individual can organize and operate a securities trading market.

    Establishment and Operation of the VSE and Its Subsidiaries

    • The VSE is a legal entity established and operating according to the law and the Enterprise Law.
    • The State holds more than 50% of the charter capital or total voting shares in the VSE.
    • The Prime Minister of the Government, upon the proposal of the Minister of Finance, issues a decision on the establishment, dissolution, organizational structure, ownership form, functions, rights, and responsibilities of the VSE. This decision includes establishment of subsidiaries.
    • The VSE and its subsidiaries are under the administration and supervision of the State Securities Commission.

    Management and Executive Apparatus of the VSE

    • The Prime Minister decides the management and executive apparatus of the VSE, in accordance with the law, the Enterprise Law, and other relevant laws.
    • The Chairman of the board of members or directors, and the General Director of the VSE, are appointed or dismissed by the Minister of Finance, following a proposal from the board of members or directors and after obtaining the opinion of the chairman of the State Securities Commission.
    • The rights and duties of the board of members, directors, general directors, and board of supervisors are stipulated in the VSE's charter or the relevant provisions of the law.

    Charter of the VSE

    • The charter of the VSE is approved, promulgated, amended, or supplemented by the Ministry of Finance, following a proposal from the board of members or directors of the VSE and after obtaining the opinion of the chairman of the State Securities Commission.
    • The charter includes the following main particulars:
      • Name and address of headquarters, subsidiaries and branches.
      • Objectives, scope of operation, and services provision.
      • Charter capital, methods for increasing and reducing capital or transferring capital.
      • Names, addresses, and basic information about the capital contributing members, founding shareholders, or owners.
      • Capital contribution portions and the value of contributed capital from founding shareholders or capital contributing members or owners.
      • Legal representative.
      • Structure of the managerial organization.
      • Rights and obligations of the VSE.
      • Rights and obligations or shareholders or capital-contributing members.
      • Rights and duties of the board of members or directors, general director, and board of supervisors.
      • Methods for passing decisions of the VSE.
      • Methods for amending or supplementing the charter.
      • Applicable accounting and auditing rules.
      • Establishment of funds and rules on fund usage. Principles on the use of profits, dealing with losses, and other financial regimes.
      • Principles for resolving internal disputes.

    Rights and Duties of the VSE

    • The following are the rights of the VSE:
      • To promulgate rules on securities listing, securities trading, information disclosure, membership of the VSE, and other business procedures related to the organization and operation of securities trading markets after obtaining approval from the SSC.
      • To organize and operate securities trading markets.
      • To provide warning, control, and restriction on securities trading in accordance with laws and rules of the VSE.
      • Temporarily suspend or rescind trading in one or some of securities in the case where securities prices and trading volumes have irregular fluctuations, the listed or registered company has failed to take steps to address the cause of the fluctuations, or there is a need to protect investor rights and ensure the stability and safety of the markets.
      • To approve, amend, cancel listing or registration for trading of securities, and supervise the maintenance of listing conditions by listed companies.
      • To approve or rescind membership of a trading company as a member of the VSE.
      • To provide auction and bidding services; services related to market information, information on securities listing and trading registration; services for the development of technology-related infrastructure for securities markets; and other relevant services as stipulated in the VSE charter.
      • To act as a conciliator on the request of VSE members if a dispute arises relating to securities trading activities.

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    Law on Securities (Vietnam) 2019 PDF

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    Test your knowledge of the Law on Securities, including its regulations, applicable entities, and key terms. This quiz will cover definitions and roles related to securities, such as brokers and investment funds, focusing on the legal framework in Vietnam.

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