Law on Securities (Vietnam) 2019 PDF

UNOFFICIAL TRANSLATION (For reference only) NATIONAL ASSEMBLY SOCIALIST REPUBLIC OF VIETNAM Independence – Freedom – Happiness No. 54-2019-QH14 LAW ON SECURITIES Pursuant to the Constituti...

UNOFFICIAL TRANSLATION (For reference only) NATIONAL ASSEMBLY SOCIALIST REPUBLIC OF VIETNAM Independence – Freedom – Happiness No. 54-2019-QH14 LAW ON SECURITIES Pursuant to the Constitution of the Socialist Republic of Vietnam The National Assembly promulgated the Law on Securities CHAPTER I GENERAL PROVISIONS Article 1. Scope of regulation This Law regulates activities regarding securities and securities markets; rights and duties of individuals and organisations participating in the field of securities; securities market operation; and state administration over securities and securities markets. Article 2. Applicable entities 1. Vietnamese organisations and individuals and foreign organisations and individuals participating in investment in securities and activities on the Vietnamese securities market. 2. State regulators on securities and securities markets. 3. Other organisations, individuals and authorities related to securities activities and securities market activities. Article 3. Application of Law on Securities, relevant laws Activities regarding securities and securities markets; rights and duties of individuals and organisations participating in the field of securities; securities market operation; and state administration over securities and securities markets shall comply with provisions of this Law and relevant laws. Article 4. Interpretation of terms In this Law, the following terms shall be construed as follows: 1. Securities means assets, including the following types: (a) Shares, bonds and investment fund certificates; (b) Rights, covered warrants, share purchase rights and depository receipts; 1 (c) Derivatives; (d) Other types of securities as stipulated by the Government. 2. Shares means a type of securities certifying the lawful rights and interests of an owner of a part of the shareholding in the issuing organisation. 3. Bond means a type of securities certifying the lawful rights and interests of an owner of a part of the debt of the issuing organisation. 4. Investment fund certificate means a type of securities certifying the lawful ownership of an investor of a capital contribution portion in a public fund. 5. Right means a type of 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. 6. Covered warrants means a type of securities with assets as collaterals, being issued by a securities firm, giving the owner a right to purchase (call warrants) or sell (put warrants) an underlying securities of the covered warrants issuers at a specific price, at or prior to a pre-determined date, or receiving the difference between the exercise price and the price of underlying securities at the exercise date. 7. Share purchase right means a type of securities issued by a joint stock companies, aimed at giving existing shareholders a right to purchase new shares in accordance with stipulated conditions. 8. Depository receipt means a type of securities with issuance based on securities of an organisation, which is established and operates legally in Vietnam. 9. Derivatives means a financial instrument under the form of a contract, including options, futures and forwards, in which it determines the rights and duties of contract parties with respect to the payment and delivery of specific amount of underlying assets at a pre-determined price during the specified period or at the pre-determined date in future. 10. Underlying assets of derivatives (hereafter referred to as underlying assets) means securities, securities index or other assets as specified by the Government, which are used as a basis to determine the values of derivatives. 11. Option contract means a type of derivatives, which specifies the right of purchaser and duty of seller to perform one of the following transactions: a) To purchase or sell certain amount of underlying assets at the pre-determined exercise price during the specified period or at the predetermined date in future. b) To pay for the differences between the values of underlying assets as determined at the point of entering the contract and the values of underlying assets during the specified period or at the predetermined date in future. 12. Futures contract means a type of listed derivatives, which specifies an undertaking among the contract parties to perform one the following transactions: 2 a) To purchase or sell certain amount of underlying assets at the specified price at the predetermined date in future. b) To pay for the differences between the values of underlying assets as determined at the point of entering the contract and the values of underlying assets at the predetermined date in future. 13. Forwards contract means a type of derivatives traded on the negotiable basis, which specifies an undertaking among the contract parties with respect to purchase or sell certain amount of underlying assets at the specified price at the predetermined date in future. 14. Activity of securities and securities markets shall comprise of 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. 15. Securities investment means to purchase, sell or hold securities of investors on the securities markets. 16. Investor means an organisation or individual who participates in investment in the securities market. 17. Strategic investor means an investor chosen by the General Shareholder Meeting in accordance with the criteria regarding financial capacity, technology qualifications and a cooperation commitment with the company within at least 3 years. 18. Major shareholder means a shareholder who owns directly or indirectly five per cent or more of the voting shares of an issuer. 19. Public offering of securities means an offer for sale of securities via one of the following methods: (a) Via the mass media; (b) An offer for sale of securities to one hundred (100) or more investors, not including securities professional investors; (c) An offer for sale to a number of undefined investors. 20. Private placement of securities means an offer for sale of securities, which does not fall in the cases as stipulated in the Point a, Clause 19 of this Article and is one of the following methods: a) An offer to less than one hundred (100) investors, not including professional investors; b) An offer only to securities professional investors. 21. An issuer means any organisation conducting an offer, issuance of securities. 3 22. Approved auditing organisation means an independent auditing organisation in the list of auditing organisations approved by the State Securities Commission to provide audits in accordance with provisions of this Law and relevant laws on independent audits. 23. Prospectus means a document or electronic data publicising accurate, truthful and objective information about an offer or listing of securities by an issuer. 24. Listing means to make eligible securities to the listing requirements to be traded on trading system for listed securities. 25. Trading registration means to make available securities to be traded on trading system for unlisted securities. 26. Securities trading systems shall comprise of trading systems for listed securities and for unlisted securities, which are organised and operated by Vietnam Stock Exchange and subsidiaries of Vietnam Stock Exchange (hereafter referred to as Vietnam Stock Exchange and subsidiaries). 27. Securities trading market means a venue or form for information exchange in order to collate buying and selling orders and to trade securities. 28. Securities business means the conduct of professional activities of securities brokerage, securities proprietary, underwriting, securities investment consultancy, securities investment fund management and securities investment portfolio management and securities related services provision as pursuant to the Article 86 of this Law. 29. Securities brokerage means acting as an intermediary in the purchase or sale of securities for a client. 30. Securities proprietary means a securities company which purchases and sells securities for itself. 31. Underwriting means 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. 32. Securities investment consultancy means the provision of analysis results, analysis reports and making recommendations with respect to buying, selling or holding of securities to investors. 33. Securities registration means recording information on issuers, securities of issuers and owners of securities. 34. Securities depository means 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. 4 35. Securities Portfolio management means the conduct of management, pursuant to authorization [or entrustment] from each investor, of the purchase, sale and holding of securities and other assets. 36. Securities investment fund management means the conduct of management of the purchase, sale and holding of securities and other assets of securities investment fund. 37. Securities investment fund means a fund established from capital contributions of investors in order to make a profit from investment in securities or other property including real estate, whereby the investors do not have daily control over the investment decision- making of the fund. 38. Public fund means a securities investment fund which makes a public offering of fund certificates. 39. Open-ended fund means a public fund whose fund certificates as offered to the public shall be redeemed at the request of investors. 40. Close-ended fund means a public fund whose fund certificates as offered to the public shall not be redeemed at the request of investors. 41. Members fund means a securities investment fund with from two (02) to ninety nine (99) capital contributing members and all of which shall be professional investors. 42. Exchange traded fund means 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. 43. Real estate investment fund means 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. 44. Inside information means 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 organisations. 45. Insider means a person holding an important position in the administration and management apparatus of an enterprise, public fund, public securities investment company, which includes: (a) 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 5 equivalent management titles elected by the general shareholders meeting or appointed by the board of directors, board of members or chairman of the enterprise. (b) 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. 46. Affiliated person means an individual or organisation with interactive relations in the following circumstances: (a) An enterprise or insiders of the enterprise; public fund, public securities investment company and their insiders; (b) An enterprise; and the organisations and individuals who own more than ten (10) per cent of the voting shares or capital contribution of the enterprise; (c) An organisation or individual within a relationship with another organisation or individual directly or indirectly controls or is controlled by such another organisation or individual; or jointly with such another organisation or individual is subject to the same control; (d) 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; (dd) Securities investment fund management company and securities investment fund, securities investment company managed by such securities investment fund management company. (e) A contractual relationship in which an organisation or individual is the representative of the other. g) Other organisation or individual who is affiliated in accordance with the Enterprise Law. 47. Securities practitioner means 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. 48. Listed company, trading registration company means a company which has issued securities listed or registered for trading on the securities trading system. Article 5. Principles on securities and securities market activities 6  1. Respect for rights of ownership, and other rights related to assets in activities of securities and securities markets; rights to freely trade, invest, conduct businesses and provide securities related services of organisations and individuals. 2. Fairness, publicity and transparency. 3. Protection of the lawful rights and interests of investors. 4. Self-responsibility for risks. Article 6. Policy on securities market development 1. It is a policy of the State to encourage and facilitate local and foreign organisations and individuals participating in investment and securities market activities, aimed at raising medium term and long term capital for investment in development. 2. It is a policy of the State to conduct administration and supervision to ensure that the securities market operates fairly, publicly, transparently, safely and effectively. 3. It is a policy of the State to invest in modernisation of infrastructure for the operation of the securities market, to develop manpower resources for the securities sector, and to provide and disseminate information about securities and securities markets. Article 7. Measures to ensure security and safety of securities markets 1. Measures to ensure security and safety of securities markets shall include: a) To supervise security, safety of securities markets; b) To cope, overcome incidents, events and fluctuation affecting to safety, stability and integrity of securities markets; c) To halt, suspend transactions of one or some listed or trading registered securities on the securities trading system; d) To halt, suspend partly or all activities or resume trading activities of Vietnam stock exchange and its subsidiaries. dd) To halt, suspend partly or all or resume activities of registration, depository, clearing and settlement of Vietnam securities depository and clearing corporation. e) To prohibit permanently or non-permanently holding positions at securities companies, securities investment fund management company, branch of foreign securities company and fund management company in Vietnam, securities investment company; to prohibit permanently or non-permanently conducting activities of securities and securities markets because of committing prohibited acts in activities of securities and securities markets. g) To seize securities accounts, require the competent persons to freeze monetary accounts in relation to violations of securities and securities markets. 2. The Government shall provide details for applying measures to ensure security, safety of securities markets as stipulated in the Clause 1 of this Article. Article 8. State administration of securities and the securities market 7  1. The Government shall exercise State administration of securities and the securities market. 2. The Ministry of Finance shall be responsible before the Government to exercise State administration of securities and the securities market, and shall have the following duties and powers: (a) To submit to the Government and to the Prime Minister of the Government for promulgation, strategies, a master plan, and policies for the development of the securities market; (b) To submit to the competent body for promulgation or to promulgate in accordance with its own authority, legal documents on securities and the securities market; (c) To direct the State Securities Commission in implementation of the strategies, plans, master plans and policies for development of the securities market and legal documents regulating securities and securities markets. 3. 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. 4. People's committees at all levels shall, within the scope of their respective duties and powers, exercise State administration of securities and the securities market within their localities. Article 9. State Securities Commission 1. The State Securities Commission is a body under the Ministry of Finance to perform 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: (a) To submit 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. (b) To organise and develop securities markets; to manage and supervise directly the operation relating to securities and securities markets; to manage the services relating to securities and securities markets in accordance with laws; (c) To issue, reissue, extend, adjust, withdraw licenses and securities practitioner certificates and certificates related to securities activities and the securities market; to approve changes, suspension and cancellation relating to securities activities and the securities market; 8 (d) To administer, conduct inspection, examination and supervision over the professional securities activities of Vietnam Stock Exchange and its subsidiaries, Vietnam Securities Depository and Clearing Corporation; to approve rules and regulations of Vietnam Stock Exchange and its subsidiaries, Vietnam Securities Depository and Clearing Corporation; to request Vietnam Stock Exchange and its subsidiaries, Vietnam Securities Depository and Clearing Corporation to amend rules and regulations relating to professional activities; to suspend and cancel the decisions relating to professional activities of Vietnam Stock Exchange and its subsidiaries, Vietnam Securities Depository and Clearing Corporation; to instruct Vietnam Stock Exchange and its subsidiaries, Vietnam Securities Depository and Clearing Corporation to perform the duties relating to their professional activities in the necessary circumstances for protection of lawful rights and benefits of investors. dd) To approve the admission of trading of new securities, change and application of new trading method; to approve a securities trading system and operation of new securities trading system; e) To manage and supervise activities relating to securities and securities markets of individuals and institutions; g) To conduct inspections, examination; to resolve complaints and denunciations and to deal with administrative breaches in the field of securities and securities markets; h) To report to the Ministry of Finance for reporting to the Prime Minister and the Government regarding the operation of securities markets. In the case of significant fluctuation affecting to security and safety of securities markets, the State Securities Commission shall be responsible to report promptly the Ministry of Finance, and report contemporaneously to the Government and Prime Minister with respect to the securities market status and measures to stabilise markets and to ensure financial safety and security. i) To perform within the scope of competent authority and submit to the competent bodies to conduct measures to ensure the safety and security of securities markets. k) To keep statistics on, and to make forecasts regarding securities activities and securities market activities; to modernize information technology in the securities and securities market sector; l) To organize, and to co-ordinate with the relevant bodies and organizations to provide professional training for senior officials, officials and staff in the securities sector and securities practitioners; to disseminate to the knowledge regarding securities and the securities market to the public; m) To provide guidelines on professional procedures for securities and the securities market and other documents within scope of regulation of the State Securities Commission. 9 n) To supervise professional social organisations regarding securities with respect to meet the objective, credo and charter of operation. o) To conduct the reporting mechanism regarding securities and securities markets in accordance with laws. p) To conduct international co-operation and act as a focal point for implementation of international commitments regarding securities and securities markets, in which Vietnam participates as a member. q) Other tasks and rights shall be in compliance with this Law and other relevant laws. 2. Detailed functions, duties, power, structure and apparatus of the State Securities Commission shall be prescribed by the Government. 3. The senior officials, officials and staff of the State Securities Commission shall be resposible for ensuring the truthfulness, confidentiality of information and compliance with laws on securities and securities markets and other provisions of relevant laws. Article 10. Professional social organisation relating to securities 1. A professional social organisation relating to securities shall be established and under operation in accordance with laws on associations, responsible for compliance with laws regarding securities and securities markets, and under supervision of State Securities Commission. 2. A professional social organisation relating to securities shall promulgate a code of conduct after obtaining approval from the State Securities Commission; cooperate with regulators relating to securities and securities markets with respect to dissemination and propaganda of laws on securities and securities markets to its members. Article 11. Securities Professional Investors 1. A securities professional investor shall be a person who has financial capacity or qualifications regarding securities, including: a) A commercial bank, branch of foreign bank, financial company, insurance business company, securities company, securities investment fund management company, securities investment company, securities investment fund, international financial organisation, off budget state financial fund, state financial organisation which is eligible to purchase securities in accordance with relevant laws. b) A company which has charter capital contributed of more than 100 billion dong or listed company, registered for trading company. c) A person who holds a securities practitioner certificate. d) An individual who holds a portfolio of listed, registered for trading securities with values of at least two (02) billion dong pursuant to the confirmation of a securities company at the time that the person is certified as a securities professional investor. 10  dd) An individual who has in the latest year taxable income of at least one (01) billion dong up to the time that the person is certified as a securities professional investor in accordance with the tax declaration submission to the tax authority or supporting documents for tax deduction provided by an organization or individual who makes payment. 2. The Government shall provide details for this Article. Article 12. Prohibited acts in activities of securities and securities markets 1. To directly or indirectly commit fraudulence, cheat, counterfeit of false documents, creation of untrue information or disclosure of misleading information or concealment of information or omission of necessary information which causes a serious misunderstanding and adversely affects activities relating to public offering, listing and trading securities, conducting business and investing in securities, providing securities services. 2. To use inside information to purchase or sell securities for oneself or for another person; to disclose or provide inside information or advise another person to purchase or sell securities based on the inside information. 3. To use one or several trading accounts of oneself or of others or to collude in the purchase and sale of securities aimed at creating a false supply and demand; to trade securities in the form of colluding with or persuading others to continuously purchase and sell in order to manipulate the price of securities; to combine the aforementioned methods or use other trading methods or to combine with spreading false rumors or to provide misleading information to public in order to manipulate the price of securities. 4. To conduct securities businesses, securities related services provision prior the granting or approval by the State Securities Commission for a license or certificate. 5. To use accounts, assets of a client without his or her authorization or against provisions of laws or to abuse trust to appropriate the client’ assets. 6. To allow others to borrow his or her own account for trading securities, to be in the name as a securities owner for another person, which results to an act of securities price manipulation. 7. To organise securities trading markets against provisions of laws. CHAPTER 12 SECURITIES OFFERING SECTION 1 PUBLIC OFFERING OF SECURITIES Article 13. Par value of securities 11 1. Securities offered to the public in the territory of the Socialist Republic of Vietnam shall be denominated in Vietnamese dong. 2. Par value of a share or investment fund certificate offered to public shall be ten thousand (10,000) Vietnamese dong. The par value of a bond offered to public shall be one hundred thousand (100,000) Vietnamese dong and multiples of one hundred thousand (100,000) Vietnamese dong. 3. In the case that price of securities of an issuer on the securities trading system falls below the par value, the issuer is eligible to offer securities with a price below the par value. Article 14. Form of offering securities to public 1. The forms of securities public offering shall comprise of initial public offering of securities, additional public offering of shares or share purchase rights, and other forms. 2. The Government shall provide specific regulations on the forms of public offering of securities. Article 15. Conditions for a public offer of securities 1. The conditions for an initial public offer of shares by a joint stock company shall be as follows: (a) A minimum amount of paid-up charter capital of thirty (30) billion Vietnamese dong at the point of securities offering registration, as calculated at the value recorded in the accounting books; (b) Business operations in the two (02) years immediately preceding the year of registration for the offer shall have been profitable, and there shall not be accumulated losses calculated up to the year of registration of the offer; (c) There shall be an issuance plan and a plan for usage of the proceeds earned from the offer, passed by the general meeting of shareholders; (d) At least 15% of voting shares of an issuer shall be sold to at least to 100 investors, who are not major shareholders; in the case of an issuer with the charter capital of 1000 billion dong or more, the minimum number of 10% of voting shares of an issuer shall be reached. dd) Major shareholders prior the time of initial public offering of shares of an issuer shall commit to hold jointly at least 20% of charter capital of the issuer for at least one (01) year since the date of offering completion. e) An issuer shall not fall into the cases of being under criminal prosecution or had been convicted for one of violations infringing upon the economic management order, but the criminal record has not been cleared. 12 g) To have a securities firm providing consultancy for registration application for public offering of shares, except the case that the issuer is a securities firm. h) To have a commitment and shall undertake listing or registration for share trading on the securities trading system after completing the offer. i) An issuer shall open an escrow account to receive money to purchase shares of the offer. 2. Conditions to offer additional shares to public of an issuer shall include: a) To meet the requirements as stated at the point a, c, e, g, h and i, Clause1 of this Article. b) Business operations in the year immediately preceding the year of registration for the offer shall have been profitable, and there shall not be accumulated losses calculated up to the year of registration of the offer. c) The value of additionally issued shares based on the face value shall not be more than the value of existing shares in circulation in accordance with face value, except the cases of underwriting with the commitment of purchase of all shares of the issuer for resale or purchase the remaining shares which have not been distributed by the issuer; issuance for capital increase from the owner’s equity; issuance for exchange, consolidation and merger of the enterprise. d) For the offer to public with the purpose of raising capital for project implementation of an issuer, shares sold to investors shall reach at least 70% of shares which are planned to issue. The issuer shall have a plan to make up the shortage of funds which are planned to raise from the offer for project implementation. 3. The conditions for a public offer of bonds shall be: a) The enterprise shall have, at the time of registration of the offer, a minimum amount of paid-up charter capital of thirty (30) billion Vietnamese dong calculated at the value recorded in the accounting books; b) Business operations in the year immediately preceding the year of registration of the offer shall have been profitable, and there shall not be accumulated losses calculated up to the year of registration of the offer; there must be no overdue debts payable of more than one year; c) There shall be an issue plan and a plan for usage and repayment of the proceeds earned from the offer passed by the General Shareholder Meeting or Board of Directors or Board of Members or company owner. d) There must be an undertaking from the issuer to carry out obligations to investors regarding conditions of the issue and conditions for payment, ensuring the lawful rights and interests of investors and other conditions. 13 dd) To have securities company to provide consultancy for registration application for bond offering to public, except in the case of an issuer who is a securities company. e) To meet the requirements as stipulated at the Point a, Clause 1 of this Article. g) To have a result of credit rating with respect to bond issuer in compliance with regulations of the Government regarding the cases which require credit rating and time of application. h) An issuer shall open a escrow account to receive the money for bond purchase from the offer. i) The issuer shall have an undertaking and shall carry out bond listing on the securities trading system after the offer completion. 4. The conditions for public offering of convertible bonds shall be in compliance with the provisions as stipulated at the Clause 2 and Point d Clause 3 of this Article. 5. Conditions for initial public offering of fund certificates shall include: a) The total value of fund certificates in offer registration shall be at least 50 billion dong; b) To have a plan of issuance and a plan of investment for the proceeds received from the offering of fund certificates in compliance with the provision of this Law. c) To be supervised by the custodian banks in compliance with this Law. d) Fund certificates offered to public shall be listed on the securities trading system after the offer completion, except the case of open ended fund certificates offering. 6. The Government shall provide regulations on the conditions and applications for a public offering of securities for transforming a state owned enterprise, a member limited liability company with 100% charter capital hold by the state owned enterprises, a public administrative body to a joint stock company; share offering with a lower price than face value; public offering of securities by shareholders of public companies; public offering of securities of a credit institution under special supervision; securities offering to overseas and other cases of offer and issuance. Article 16. Registration of a public offering of securities 1. An issuer, a shareholder of a public company shall register with the State Securities Commission prior to offering securities to public, except the provision as stipulated at the Clause 2 of this Article. 2. The following public offers of securities shall not be required to be registered: a) An offer of debt instruments of the Government, bonds which are issued by the policy banks and guaranteed by the Government, municipal bonds. b) An offer of an international financial institution's bonds approved by the Government of Vietnam; 14 c) A public offer of bonds by a State owned enterprise in order to transforming a state owned enterprise, a member limited liability company with 100% charter capital hold by the state owned enterprises, a public administrative body to a joint stock company. d) The sale of securities pursuant to a verdict or decision of a court as coming effective, decision of an arbitrator or the sale of securities by the manager or receiver of assets in a case of bankruptcy or insolvency. Article 17. Conditions for implementation of underwriting for public offering of securities 1. An issuer who undertakes underwriting for public offering of securities shall be a securities company and an organisation which meet the following conditions: a) To be licensed by the State Securities Commission to conduct securities underwriting pursuant to this Law; b) To meet the financial adequacy ratios pursuant to laws; c) Not to be an affiliated person with the issuer. 2. An organisation which conducts underwriting for public offering of securities under the method of agreement to purchase a part or all securities of the issuer shall be only permitted to underwrite with the total value of securities that is not more than its owners’ equity and not more than 15 times of the result of the short-term assets minus short term liabilities in accordance with the latest financial statements. Article 18. Application for registration of a public offering of securities 1. An application for registration of an initial public offering of shares of a joint stock company shall comprise: a) Request for registration of the initial public offering of shares; b) Prospectus; c) Charter of the issuer; d) Resolution of the General Meeting of Shareholders approving the issuance plan and the plan for usage of the proceeds from the offer and undertaking to place the securities for listing or registration for securities trading on a securities trading system; dd) Undertaking to meet the regulation as stipulated at the Point d, e, Clause 1, Article 15 of this Law; e) Undertaking of major shareholders prior to the time of initial public offering of shares of the issuer with respect to holding jointly at least 20% of charter capital of the issuer for at least 1 year since the date of offering completion. g) A contract of consultancy for application for public offering of shares with a securities company. h) Certification of a bank, branch of a foreign bank with respect to open an escrow account to receive money for share purchase from the offering. 15 i) Undertaking of underwriting for the issuance (if any). 2. Application for registration of public offering of additional shares of a public company shall comprise of: a) Request for registration of the public offering of additional shares; b) Documents as stipulated at the point b, c, d, g, h and i Clause 1 of this Article and undertaking which meets the provisions as stipulated at the point e Clause 1 Article 15 of this Law. c) Decision of a competent authority to approve a project, a plan to make up the shortage of funds which are planned to raise from the offering in order to implement the project with respect to the case as stipulated at the point d Clause 2 Article 15 of this Law. d) A report for usage of proceeds received from the latest offering, which is audited within 2 years since the date of filing the application, except the case of audited financial statements with detailed notes regarding the usage of proceeds received from the latest offering. 3. An application for registration of a public offering of bonds shall comprise of: a) Request for registration of the public offering of bonds; b) Documents as stipulated at the point b and c Clause 1 of this Article and undertaking which meets the provisions as stipulated at the point e Clause 1 Article 15 of this Law. c) Resolution of the General Meeting of Shareholders, Board of Directors or Board of Members or company owner approving the issuance plan and the plan for usage and repayment of the proceeds from the offer of bonds to public and undertaking to place the bonds for listing on a securities trading system; d) An undertaking from the issuer to carry out obligations to investors regarding conditions of the issue and conditions for payment, ensuring the lawful rights and interests of investors and other conditions. dd) A report of a credit rating result pursuant to the Point g Clause 3 Article 15 of this Law. e) A contract of consultancy for application for public offering of bonds with a securities company. h) Certification of a bank, branch of a foreign bank with respect to open an escrow account to receive money for bond purchase from the offering. i) Undertaking of underwriting for the issuance (if any). 4. An application for public offering of convertible bonds shall comprise of: a) Request for registration of the public offering of convertible bonds; b) Documents as stipulated at the point b, c, g and h Clause 1, point d Clause 2 of this Article and undertaking which meets the provisions as stipulated at the point e Clause 1 Article 15 of this Law. 16 c) Resolution of the General Meeting of Shareholders, approving the issuance plan and the plan for usage of the proceeds from the offer and undertaking for listing or trading registration on a securities trading system; d) An undertaking from the issuer to carry out obligations to investors regarding conditions of the issue and conditions for payment, ensuring the lawful rights and interests of investors and other conditions. dd) Other documents regarding to the conversion into shares; e) Undertaking of underwriting for the issuance (if any). 5. Application for registration of a public offering of investment fund certificates shall comprise of: a) Request for registration of the public offering of investment fund certificates; b) Prospectus; c) Proposed charter of the securities investment fund; d) Contract in principle for supervision between a custodian bank and the securities investment fund management company; contract in principle to sign with relevant service providers (if any); dd) Undertaking to underwrite the issuance (if any). 6. An application for registration of a public offering of shares or bonds shall include a Decision of the board of directors, board of members or the company owner for approving the application file. In the case of a public offering of shares by a credit institution, the application shall include a written letter of approval from the State Bank of Vietnam for charter capital modification. In the case of a public offering of securities by an insurance business organisation to modify its charter capital, the application shall include a written letter of approval from the Ministry of Finance for charter capital modification. 7. If a part of or an entire application for registration of a public offering of securities has been certified by an affiliated organization or individual, then the issuer shall provide such written certification to the State Securities Commission. 8. The information in an application for registration of a public offering of securities shall be accurate and truthful, not to cause any misunderstanding, and shall include all important items which will influence a decision by investors. 9. An issuer when submitting an application for registration of public offering of securities to the State Securities Commission shall submit at the same time application for registration of listing or trading pursuant to the provision at the Clause 4 Article 48 of this Law, except the case of offering of open ended certificates. Article 19. Prospectus 17 1. For a public offering of shares or bonds, a prospectus shall include the following contents: a) Summarized information about the issuer, which includes the model of its managerial organisation, its business operations, assets and financial status, the board of directors or board of members or the company owner, the general director (or director), deputy general director (or deputy director), chief accountant and shareholder structure (if any); b) Information relating to the offering and the securities offered shall include the conditions of offering, risk elements, proposed plan on profit and dividends for the next year after the issue of the securities, the issuance plan and the plan for usage of the proceeds received from the offering; c) Financial statements of the issuer for two latest years pursuant to the provision at the Article 20 of this Law; d) Other information as stipulated in the sample form for a prospectus. 2. The prospectus for a public offer of investment fund certificates shall include the following contents: a) Type and size of the securities investment fund; b) Investment objectives, investment strategy, methods and procedure for investment, restrictions on investment, and risk elements of the securities investment fund; c) Summary of main contents of the draft charter of the securities investment fund; d) Plan for issuance of the fund certificates and guidelines for participating in investment in the securities investment fund; dd) Summarized information regarding the securities investment fund management company and custodian bank, and procedure on trading with affiliated persons of the securities investment fund management company and custodian bank; (e) Other information as stipulated in the sample form for a prospectus. 3. Signatures in a prospectus shall be in compliance with the followings: a) For a public offering of shares or bonds, a prospectus shall have signatures of the following persons: Chairman of the board of directors or of the board of members or Chairman of the company, general director (or director), the chief financial officer or chief accountant of the issuer and the legal representative of the organisation which provides consultancy for application for registration of public offering of securities, underwriter or leading underwriter [if any]. There must be a power of attorney if the prospectus is signed on behalf of another person; b) For a public offering of fund certificates, a prospectus shall have signatures of the following persons: Chairman of the board of directors or of the board of members or 18 chairman of the company, general director (or director) of the securities investment fund management company and the legal representative of the underwriter (if any). There must be a power of attorney if the prospectus is signed on behalf of another person. 4. The Ministry of Finance shall promulgate the sample form for a prospectus. Article 20. Financial statements 1. Financial statements shall be prepared in accordance with the laws on accounting. 2. In the case that an issuer which is a parent company shall lodge consolidated financial statements in accordance with the laws on accounting. 3. Annual financial statements shall be audited by an approved auditing organisation which conducts audits for public related interest organisations in the field of securities. The auditor’s opinion for financial statements shall be unqualified opinion audit; in the case that the auditor’s opinion is one with exceptions, then the exceptions shall not have any impact on the offering conditions; the issuer shall have documents stating reasonable explanations and obtain certification from the auditing organisation with respect to the impact of the exceptions. 4. In a case where an application is lodged within 60 days from the date of ending annual accounting period, the annual financial statements of the previous year in an initial application file may be unaudited, but there shall also be audited financial statements for the previous two consecutive years. 5. Where a valid application file for registration of a public offer of securities is lodged with the State Securities Commission in excess of ninety (90) days after the last date of the accounting period of the most recent financial statements submitted with the application file, the issuing organization shall prepare additional financial statements up until the most recent month or quarter. Article 21. Approved auditing organisation and auditor 1. The State Securities Commission shall review, approve and disclose the list of auditing organisations and the list of auditors who conduct practices of auditing in order to audit for public related interest organisations in the field of securities. 2. Public related interest organisations in the field of securities shall include public companies, listed companies, trading registration organisations, organisations conducting public offering, securities firms, securities investment fund management companies, securities investment companies, and securities investment funds. 3. Approved auditing organisations which audit for public related interest organisations in the field of securities shall comply with laws on independent auditing and have the following responsibilities: 19 a) To report to the State Securities Commission within 10 days since the date when there is any change regarding name, address of headquarter, business sector, list of auditors or a change leading to fail to meet the conditions of being eligible to conduct audits. b) To explain, provide information and figures relating to auditing for public related interest organisations in the field of securities upon request of the State Securities Commission. c) After issuing an auditing report for a public related interest organisation in the field of securities, in the case of detecting that the organisation being under auditing have significant violations due to incompliance with laws and provisions relating to audited financial statements, the approved auditing organisation shall report in writing to the State Securities Commission. d) Confidential information protection shall be in compliance with relevant laws. 4. The Government shall provide further details for this Article. Article 22. Amendment, supplementation to an application for registration of a public offering of securities 1. During the time when an application for registration of a public offering of securities is being reviewed, the issuer shall be obliged to amend or supplement to the application if it discovers any inaccurate information or that there has been an omission of important information required by the regulations, or if it considers necessary to explain any matter which may cause misunderstanding. 2. The State Securities Commission, during the time it reviews an application, shall have the right to require an issuer to amend or supplement to the application for registration of the public offering of securities in order to ensure that disclosed information is accurate, truthful and complete and protects the lawful rights and interests of investors. 3. If after the State Securities Commission has issued a certificate of acceptance [of registration] of the public offering of securities, important information arises relating to the application for registration of the public offering, then within a time-limit of seven (7) working days, the issuer shall disclose the information which has arisen by the methods stipulated in clause 3 of article 25 of this Law and the issuer shall also amend and supplement the application. 4. Amended or supplemented documents sent to the State Securities Commission shall be signed by the persons who had signed the application for the public offering or by people who hold the same position as such original signatories. 5. The time-limit for an application review in the cases as stipulated in Clauses 1 and 2 of this Article shall be calculated from the date on which the State Securities Commission receives the amended and supplemented documents in a complete and eligible manner. 20 Article 23. Responsibilities of organisations and individuals related to an application for registration of a public offer of securities 1. The issuer shall be liable for the accuracy, truthfulness and completeness of the application for registration of a public offering of securities. 2. The organisation providing consultancy on the issuance, underwriter, approved auditing organisation, the signatory to the audit report and any other organisation or individual certifying the application shall be liable within the scope related to the application for registration of the public offering of securities. Article 24. Information prior to making a public offering of securities During the time for reviewing an application for registration of a public offering of securities, the issuer, underwriters and other affiliated organisations and individuals shall only use truthfully and accurately the information given in the prospectus which has been submitted to the State Securities Commission for the purpose of market research, and shall specify that information regarding an issue date and sale prices of securities is forecast information only. Article 25. Issuing a certificate for registration of a public offering of securities 1. Within a time-limit of thirty (30) days from the date of receipt of a complete and valid application, the State Securities Commission shall issue a certificate of acceptance [of registration] of the public offering of securities. In a case of refusal, the State Securities Commission shall provide a written notice specifying its reasons for the refusal. 2. A certificate of acceptance [of registration] of a public offering of securities from the State Securities Commission shall be deemed to be written confirmation that the application file for registration of the offer satisfies all the conditions and procedures stipulated by law. 3. Within a time-limit of seven (7) days from the date of effectiveness of a certificate of acceptance [of registration] of a public offer of securities, the issuing organization shall be obliged to make an issue announcement in three consecutive editions of a written or electronic newspaper. 4. Securities may only be offered to the public after the announcement stipulated in Clause 3 of this Article has been made. Article 26. Securities distribution 1. Securities shall only be distributed after the issuer has ensured that securities purchasers have accessed the prospectus in the application file for registration of the public offering of securities announced at locations set out in the announcement of issuance. 21 2. The issuers, underwriters or agency organisations shall distribute securities in a fair and public manner and ensure that the time-limit within which investors may register to purchase securities shall be a minimum of twenty (20) days; except the case where securities offered are covered warrants and this time-limit shall be set out in the announcement of issuance. In a case where the volume of securities registered to be purchased exceeds the permitted volume for the issue, the issuer or underwriter shall distribute all of the number of securities permitted for the issue to the investors in the proportion in which each investor registered to purchase. 3. Purchase monies for securities shall be paid into an escrow bank account at a bank or a branch of foreign bank and retained until completion of the offering and until a report has been made to the State Securities Commission. 4. The issuer shall complete distribution of the securities within a time-limit of ninety (90) days from the date of effectiveness of the certificate of acceptance [of registration] of the public offering of securities. If the issuer is unable to complete the public distribution of securities within this time-limit, then the State Securities Commission may consider an extension of the time limit for the securities distribution but shall not grant an extension beyond thirty (30) days. In a case where a number of tranches of public offers of securities are registered, the maximum time between any two tranches shall not exceed twelve (12) months. 5. The issuer or underwriter shall, within a time-limit of ten (10) days from the end of an offer tranche, report the results of the offer tranche to the State Securities Commission enclosing a letter of confirmation from the bank where the escrow account was opened of the amount of the proceeds received from the offer tranche. 6. The issuer, underwriters or agency organisations shall deliver the securities or certificates of ownership of the securities to purchasers within a time-limit of thirty (30) days from the date of the end of an offer tranche. Article 27. Suspension of public offering of securities 1. The State Securities Commission shall have the right to suspend a public offering of securities for a maximum of sixty (60) days in the following circumstances: a) Detecting that the application file for registration of the public offering of securities contains false information or omits important items which may affect an investment decision and cause loss to investors; b) The distribution of the securities was not conducted correctly as required by the Article 26 of this Law. 2. Within a time-limit of seven (7) days from the date on which an offer tranche is suspended, the issuer shall announce the suspension of the public offering of securities 22 by the method stipulated in Clause 3 of Article 25 of this Law and shall recall issued securities upon the investors’ request, and at the same time shall refund investors their money within a time-limit of fifteen (15) days from the date of receipt of a request. 3. If the deficiencies which led to the suspension are remedied, the State Securities Commission may issue written notice of rescission of the suspension and the securities offer shall be permitted to be continued. 4. The issuer shall announce the rescission of suspension by the method stipulated in Clause 3 of Article 25 of this Law within a time-limit of seven (7) days from the date it receives notice of rescission of suspension from the State Securities Commission. Article 28. Cancellation of public offering of securities 1. The State Securities Commission shall decide to cancel a public offer of securities in the following cases: a) At the expiry of the suspension period stipulated in Clause 1 of Article 27 of this Law, the deficiencies which resulted in the suspension of the offer tranche have not been remedied; b) The initial public offering of shares fails to meet the condition on minimum threshold of voting shares sold to at least 100 investors who are not major investors of the issuer as stipulated at the point d, clause 1 Article 15 of this Law; c) Offering of additional shares to public fails to meet the condition on raising sufficient capital for project implementation of issuer as stipulated at the point d, Clause 2 Article 15 of this Law. 2. A part from the provisions as stipulated in the Clause 1 of this Article, cancelation of the public offering in compliance with a verdict or decision of a court as coming effective, decision of an arbitrator or competent authorities as stipulated by laws. 3. Within a time-limit of seven (7) days from the date an offer tranche is cancelled, the issuer shall announce the cancellation of the public offering of securities by the method as stipulated in Clause 3 of Article 25 of this Law, and shall recall all issued securities, and refund investors within a time-limit of fifteen (15) days from the date of cancellation of the offer tranche. Upon expiry of this latter time-limit, the issuer shall compensate investors for their losses in accordance with the undertakings which the issuer made to investors. Article 29. Obligations of an issuer 1. When an issuer has completed a public offering of shares, becoming a public company as stipulated at the Point b Clause 1 Article 32 of this Law, it shall discharge the obligations of submitting the registration application for being a public company as stipulated in Clause 1 of Article 33 of this Law to the State Securities Commission. 23 2. The issuer conducted public offering of securities to public shall complete an application for registration of listing or trading of securities within the time limit of 30 days since the date of offering completion. 3. An issuer which completes a public offering of bonds shall comply with the obligation to disclose information as stipulated in this Law. SECTION 2 PRIVATE PLACEMENT OF SECURITIES Article 30. Private placement of securities of issuer which is not a public company Private placements of securities by an issuer which is not a public company shall be conducted in accordance with the Law on Enterprises and other relevant laws. Article 31. Private placement of securities of a public company, securities firms, securities investment fund management company 1. A private placement of shares, convertible bonds, bonds attached with warrants by a public company shall satisfy the following conditions: a) There is a decision from the General Meeting of shareholders passing a plan on the offering and usage of proceeds from the offering, and plan shall specify the criteria and number of eligible investors; b) Persons to participate in the offering shall include strategic investors and professional investors; c) The lock-up period [or restriction] on transfer of the shares or convertible bonds or bonds attached with warrants, which are privately placed, is a minimum of 3 years for strategic investor; a minimum of 1 year for professional investors from the date of completion of the offer tranche, except in cases of transfer among professional investors or [a transfer] pursuant to a verdict, decision of a court as becoming effective, decision of an arbitrator or pursuant to an inheritance in accordance with law; d) There must be a minimum interval of six (6) months between tranches of private placements of shares or convertible bonds or bonds attached with warrants; dd) Private placement of shares, conversion of bonds to shares, exercising warrants shall comply with the provisions on foreign ownership limit as stipulated by laws. 2. Conditions for private placement of bonds by public company which is not under the cases as stipulated at the clause 1 of this Article shall include: a) There is 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, and plan shall specify the criteria and number of eligible investors; 24 b) Persons to participate in the offering shall include professional investors; c) The transfer of privately placed bonds shall be only conducted by the professional investors, except [a transfer] pursuant to a verdict, decision of a court as becoming effective, decision of an arbitrator or pursuant to an inheritance in accordance with law; d) Repayment in full of both principles and interests of bonds offered or repayment in full due debts within three (03) consecutive years preceding to the offering of bonds (if any), except the case where offering of bonds to creditors who are chosen financial institutions. dd) There is an annual financial statement of the year preceding the year of issuance, which has been audited by the approved auditing organisation. e) To meet the financial adequacy ratios, safety ratios for operation as stipulated by laws (if any). 3. Securities company, securities investment fund management company which is not be a public company conducts private placement of shares, convertible bonds, bonds attached with warrants in compliance with the provisions at the Clause 1 of this Article. 4. Conditions for private placement of bonds by securities company, securities investment fund management company which is not a public company and not under the cases as stipulated in the clause 3 of this Article shall include: a) To have a decision of general meeting of shareholders or board of directors or board of members or owner of the company passing the plan of issuance and usage of proceeds from the offering, and plan shall specify the criteria and number of eligible investors; b) To meet the provisions as stipulated at the Point b, c, dd and e, Clause 2 of this Article. 5. Securities company, securities investment fund management company which is not be a public company conducts offering of shares to existing shareholders in accordance with the current percentage of ownership in compliance with conditions as stipulated at the Points a and d Clause 1 of this Article. 6. The Government shall provide detailed regulations on private placement by public company, securities company, securities investment fund management company as stipulated in this Article and other cases of private placement by public company. CHAPTER III Public Companies SECTION 1 GENERAL PROVISION ON PUBLIC COMPANY Article 32. Public companies 1. A public company means a joint stock company which belongs to one of the following two categories: 25 (a) A company which has a charter capital of at least 30 billion dong and at least 10% of voting shares owned by at least 100 shareholders who are not major shareholders; (b) A company has conducted successfully initial public offering of shares via registration with the State Securities Commission as stipulated in the Clause 1, Article 16 of this Law; 2. The joint stock companies as defined at the Point a, Clause 1 of this Article shall lodge registration applications for public company as stipulated in Clause 1 of Article 33 of this Law with the State Securities Commission within a time-limit of ninety (90) days from the date such companies complete their capital contribution and shall shareholder structure in compliance with the provisions of Point a, Clause 1 of this Article. 3. Within the time limit of 15 days since the date of receiving complete and valid public company registration application by a joint stock company as stipulated at the Point a Clause 1 of this Article or receiving the results of completion of offering by joint stock company as stipulated at the Point b, Clause 1 of this Article, the State Securities Commission shall be responsible for confirmation of completion of public company registration, and announce name, business category and other information related to public company on the means of information disclosure of the State Securities Commission. Article 33. Public company registration application 1. A public company registration application shall contain the following documents: a) Request for public company registration; b) Charter of the company; c) Business registration certificate of the company; d) Information disclosure statement on the company, which includes a summarized information about organizational structure, business activities, managerial organization, shareholding structure, assets, financial status and other information; dd) The most recent year financial statements audited by independent auditing company. In the case which the company increases its charter capital after the time of ending the latest financial year, the company shall provide additionally audited financial statements of the latest term; e) List of shareholders; 2. The Minister of Finance shall provide the form of information disclosure on public company and regulations on public company registration application formed after split, separation, merger and acquisition of companies. Article 34. Rights and obligations of public companies 26 1. After the State Securities Commission confirms the completion of public company registration, a public company shall have the following obligations: a) To disclose information as stipulated in this Law; b) To comply with the regulations on corporate governance as stipulated in this Law; c) To conduct registration of shares at the Vietnam Securities Depository and Clearing Corporation as stipulated in the Article 61 of this Law; d) Public company as stipulated at the Point a Clause 1 of Article 32 of this Law shall register securities trading on the trading system for unlisted securities within 30 days since the date when the State Securities Commission confirms the completion of public company registration. After 2 years since the first trading day on the trading system for unlisted companies, the public company shall have a right to submit its listing registration application after meeting the conditions on listing of securities. dd) Public company as stipulated at the Point b, Clause 1 Article 32 of this Law shall make the shares listed or registered for trading on the securities trading system within the time limit of 30 days since the date of ending the public offering. 2. Apart from rights and obligations as stipulated at the Clause 1 of this Article, a public company shall have rights and obligations as stipulated in the Law on Enterprises and in other provisions of relevant laws. Article 35. Tender offer 1. The following circumstances shall be made tender offer and registered with the State Securities Commission: (a) Any organisation, individual and affiliated person as stipulated at the Point a, b, c, d, e and g Clause 46 Article 4 of this Law intents to purchase the voting shares, close- ended investment fund certificates leading to reach a direct or indirect ownership of twenty five (25) per cent or more of the number of currently circulating shares or closed investment fund certificates in any one public company or close ended fund respectively; (b) Any organization, individual and affiliated person, as stipulated at the Point a, b, c, d, e and g Clause 46 Article 4 of this Law, holding twenty five (25) per cent or more of the voting shares or fund certificates in any one public company or close ended fund respectively intents to purchase additional shares, leading to reach a direct or indirect ownership of 35%, 45%, 65%, 75% or more of the currently circulating voting shares in the public company or currently circulating fund certificates in the close ended fund respectively; (c) Except the case that the tender offer has been conducted for entire amount of currently circulating voting shares of a public company, investment fund certificates of a close ended fund, after such tender offer, any organisation, individual and affiliated person, as 27 stipulated at the Point a, b, c, d, e and g Clause 46 Article 4 of this Law, holding eighty (80) per cent or more of the voting shares or fund certificates in any one public company or close ended fund respectively intends to purchase additional shares and investment fund certificates held by the remaining shareholders or investors within 30 days pursuant to the conditions on the tender offer prices and method of payment, which are similar to the tender offer. 2. The entities as stipulated in the Clause 1 of this Article shall not to conduct tender offer if falling into one of the following circumstances: (a) Purchase of newly issued shares or fund certificates leading to reach such ownership as stipulated at the Point 1 of this Law in accordance with the issuance plan passed by the General Shareholder Meeting of a public company or Board of representatives of the closed fund; (b) Receipt of currently circulating voting shares or fund certificates leading to reach such ownership as stipulated at the Clause 1 of this Article and passed by the General Shareholder Meeting or Board of Representatives of the closed fund. In such circumstance, the General Shareholder Meeting or Board of Representatives shall certify the entities, which make the transfer or receive the transfer. (c) Transfer of shares as between companies, which operate as a group of companies, and that includes economic groups, corporation, parent - subsidiary company and not leading to a cross ownership as stipulated in the Law on Enterprise. (d) Any organisation, individual who owns shares as a result of splitting, separation, merger and acquisition of an enterprise; (d) Donation or inheritance of shares or investment fund certificates; (dd) Transfer of shares or investment fund certificates pursuant to a verdict or decision of a court as coming effective; decision of an arbitrator; 3. The Government shall provide specific regulations on tender offers for shares of public company or investment fund certificates of close ended fund. Article 36. Redemption by public company of its own shares 1. When a public company redeems its own shares, it shall comply with the following conditions: a) To have decision of General shareholder meeting to pass the redemption of shares for decrease of charter capital, plan of redemption, in which it states clearly the amount, time of implementation and principle to determine the redemption price. b) To have sufficient resource for redemption of shares from the following resources: capital surplus, development investment fund, undistributed after-tax profits, other funds 28 belonging to owner’s capital, which is eligible to use for addition of charter capital in accordance with laws; c) To have a securities firm, which is delegated to conduct trading, except the case which the securities firm is a member of Vietnam Stock Exchange, which conducts redemption for its own shares; d) To meet the conditions as stipulated in laws in the cases where a public company is in conditional businesses. dd) Not to fall in any cases as stipulated in the Clause 3 of this Article. 2. The redemption of shares is exempt from the conditions as stipulated in the Point a, b, c and d Clause 1 of this Article in the following cases: a) To redeem shares upon request from the shareholders as stipulated in the Enterprise Law; b) To redeem shares of the employees in accordance with the rule on issuance of shares to employees of the company, redeem odd shares in accordance with the plan of issuance of shares for dividend payment, issuance of shares from the owners’ capital; c) A securities firm which purchase its own shares to correct trading errors or redeem odd shares; 3. A public company shall not redeem its own shares in the following cases: a) To have overdue payable debts in accordance with the latest audited annual financial statements; in the case which the time of intention for share redemption exceeds 6 months since the date of ending the financial year, determination of overdue payable debts is based on the latest semi-annual audited or reviewed financial statements; except the case as stipulated in the point c Clause 2 of this Article; b) Under the process of offering or issuance of shares to raise additional capital, except the cases as stipulated in the point c Clause 2 of this Article; c) Shares of company which are target of tender offer, except the cases as stipulated in the clause 2 of this Article; d) To have conducted redemption of its own shares within 6 months since the date of reporting the redemption results or just completing the offer, issuance of shares to raise additional capital within 6 months since the date of ending the offer, issuance, except the cases as stipulated in the Clause 2 of this Article; 4. A public company shall not redeem shares owned by the following entities, except for the case where the share redemption is conducted in accordance with the ownership percentage in the company, or in compliance with the court verdicts, decisions coming effective legally, decision of arbitrators, or share redemption via transactions conducted pursuant to order matching method: 29 a) Inside persons or affiliated persons of inside persons as stipulated in this Law; b) Share owners who are under transfer restrictions as stipulated in laws and Company Charter; c) Major shareholders as stipulated in this Law; 5. A public company which conducts redemption of its own shares as stipulated in the Clause 1 and Point a Clause 2 of this Article shall carry out the procedure of charter capital decrease corresponding to the total value as calculated in accordance with the face value of shares bought back within 10 days since the date of completing the payment for share redemption; 6. In the case which the company redeems shares of employees in accordance with the rule on issuance of shares to employees of the company, the following provisions shall be complied: a) The total amount of shares owned by employees bought back by the company for capital decrease shall be reported at the annual general shareholder meeting; b) The company shall carry out the procedure of charter capital decrease corresponding to the total value as calculated in accordance with the face value of shares bought back within 10 days since the date of reporting at the annual general shareholder meeting as stipulated in the Point a of this Clause; 7. Any securities firm, public company which redeems its own shares is permitted to sell these shares right after the redemption in the following cases: a) Securities firm redeems its own shares to correct the trading errors or redeem the odd shares; b) Public company redeems the odd shares in accordance with the share issuance plan for dividend payment, share issuance plan from the owner’ capital; c) Public company redeems the odd shares upon request of shareholders. 8. The Minister of Finance shall provide further details of share redemption of public company; Article 37. Reports of share redemption, information disclosure and implementation of share redemption 1. A public company in compliance with the Clause 1 Article 36 of this Law, prior to conducting its own share redemption shall submit its reports to the State Securities Commission, including: a) A report of share redemption; b) Decision of general shareholder meeting to approve the share redemption and plan of redemption; 30 c) Documents which certify the delegation of transaction implementation by a securities firm, except the case where the securities firm is a member of Vietnam Stock Exchange, who buys back its own shares; d) Decision of Board of Directors to approve the plan for share redemption; dd) The latest audited annual financial statements; e) Documents to prove that the company has sufficient resources redeem its own shares; g) Documents to prove its meeting the conditions to redeem its own shares pursuant to laws in the case where the public company conducts conditional businesses; 2. Reports relating to the share redemption shall include: a) Objective of redemption; b) Total amount of shares registered for redemption; c) Resources to conduct redemption; d) Trading method; dd) Tentative time for conducting redemption; e) Principle to determine prices (range of prices). 3. Within 7 working days since the date of receiving complete and valid reports of share redemption as stipulated in the Clause 1 of this Article, the State Securities Commission shall send a notification in written to the public company in regards to receiving complete reports of share redemption; in the case of receiving incomplete and invalid documents, the State Securities Commission shall send a notification in written to the public company to state clearly the contents, any request for correction and supplementation. The timeline for correction and supplementation for reports shall not be included in the deadline as stipulated in this Clause. In the case of refusal, the State Securities Commission shall respond in written and state clearly the reasons. 4. Within 7 working days since the date of notifying in written by the State Securities Commission, the public company shall disclose on its website; means of information disclosure by the State Securities Commission, Vietnam Stock Exchange in regards to contents as stipulated in the Clause 2 of this Article. The public company shall conduct share redemption after 7 working days since the date of information disclosure. 5. Within 10 working days since the date of completing transactions of share redemption, the public company shall submit reports of trading results to the State Securities Commission and disclose information to public. In the case where the public company fail to redeem all of shares as planned to trade, the public company shall report to the State Securities Commission and disclose the reasons of incompletion. 31 6. Public company shall complete the share redemption in accordance with the timeline as stipulated in the information disclosure, but no exceeding 30 days since the date of starting transactions. 7. Within 6 months since the date of completing the share redemption, the public company shall not be permitted to offer shares to raise additional capital, except the case of conversion of bonds to shares in accordance with the commitment engaged when conducting offer of convertible bonds. Article 38. Cancellation of public company status 1. A public company shall have responsibility to send to the State Securities Commission a written notification enclosed with list of shareholders provided by the Vietnam Securities Depository and Clearing Corporation within 15 days, since the date when contributed charter capital falls below 30 billion dong in accordance with the latest audited financial statements or shareholder structure fails to meet the conditions as stipulated at the Point a Clause 1 of Article 32 of this Law pursuant to the determination of Vietnam Securities Depository and Clearing Corporation. 2. After 1 year since date of failing to meet the requirements as stipulated in the Point a Clause 1 of Article 32 of this Law, the company still fails to meet the conditions for being a public company, the State Securities Commission shall consider to cancel the public company status. 3. The public company shall conduct fully the relevant provisions on public company until the point of time when the State Securities Commission informs the cancellation of public company status. 4. Within 7 working days since the date of receiving notification by the State Securities Commission with respect to the cancellation of public company status, the company shall have responsibility to announce the cancellation of public company status on its own website, means of information disclosure by the State Securities Commission, Securities Depository and Clearing Corporation, Vietnam Stock Exchange and conduct the procedure of cancelation of listing, register for trading pursuant to laws. 5. The Minister of Finance shall provide details for cancellation of public company status in the case of failing to meet the conditions of being a public company due to restructure, liquidation and bankruptcy of company. Article 39. Application for cancellation of public company status Any public company falling in the cases as stipulated at the Clause 2 Article 38 of this Law shall submit the application for cancellation of public company status to the State Securities Commission. The application for cancellation of public company status shall include: 1. Certificate for Enterprise registration; 32 2. Written notification that the company no longer meets the provisions as stipulated at the Point a, Clause 1 Article 32 of this Law; 3. The list of shareholders provided by the Vietnam Securities Depository and Clearing Corporation; 4. The latest annual financial statements audited by the approved auditing organisation. In the case where the company increases charter capital after ending the latest accounting year, the company shall supplement the latest audited financial statements. ITEM 2 CORPORATE GOVERNANCE APPLIED TO PUBLIC COMPANY Article 40. Principles of corporate governance applied to public company Corporate governance applied to public company shall comply with the provisions of this Law, of the Law on Enterprises, other relevant laws and the following principles: 1. To ensure an effective and reasonable corporate governance framework; 2. To ensure effectiveness of the operation of board of directors, board of supervisors; enhancing responsibilities of Board of Directors to the company and its shareholders; 3. To ensure rights of shareholders, equal treatment among shareholders; 4. To ensure the role of investors, securities markets and intermediaries in supporting corporate governance related activities. 5. To respect and ensure legitimate rights and interests of stakeholders in corporate governance; 6. To disclose promptly, fully, exactly and transparently information of company activities; to ensure shareholder access information equally. Article 41. Substances of corporate governance applied to public company 33  1. Shareholders of public company shall have the following rights and obligations: a) The right to be equally treated. b) The right to fullly access periodical and extraordinary information published by the company in accordance with law. c)Shareholders have the right to protect their legitimate rights and interests; right to request for suspension, cancellation of resolution, decisions made by general shareholder meeting, board of directors as stipulated in the Enterprise Law; d)Major shareholders shall not take their advantages to make any influence to the rights and interest of the company, of other shareholders pursuant to laws and company charter; to have information disclosure obligations pursuant to laws; dd) Other rights and obligations pursuant to laws and company charter; 2. Convening and holding a meetings of the General Meeting of Shareholders shall be conducted in compliance with the following provisions: a) The Board of directors, Board of supervisors and the convenor of the General Meeting of Shareholders shall fully comply with the orders and procedures for convening the meeting of the General Meeting of Shareholders as stipulated in the Law on Enterprise, the company’s charter and internal rules on corporate governance; arrangement for meeting venue, appropriate time for shareholders to attend the meeting of General Meeting of Shareholders; b) Public company shall provide in its internal rule on corporate governance in regards to the application of modern IT so that shareholders can attend and give their opinions at the General Meeting of Shareholders via online meetings, e-voting or other electronic forms as stipulated in the Law on Enterprise and their charters; c) If the audit report on the annual financial statements of the public company contains material qualified opinions, disclaimer opinions, or adverse opinions, the public company shall invite the representative of the approved auditing organisation who audited its financial statements to attend the Annual General Meeting of Shareholders; d) Complying with other provisions of the law and the company's charter. 3. Composition, structure, responsibilities and duties of the Board of directors shall comply with the following provisions: a) The structure of Board of directors of a public company shall be balanced in terms of the number of executive and non-executive members, the number of independent members to ensure the independence of the Board of directors; b) Board of directors shall be responsible before the shareholders with respect to the company operation; to ensure the company operation in compliance with laws, company 34 charter and its internal rules; to develop the internal rule on corporate governance to submit to the General Meeting of shareholders for approval; to appoint a person in charge of corporate governance; and to have other responsibilities and duties as stipulated in laws, and compay charter. c) Board of directors shall hold a meeting at least once per quarter in accordance with the order, procedure as stipulated in the company charter and internal rule on corporate governance. Holding a meeting of Board of directors, meeting agenda and relevant materials shall be informed in advance to Board of Directors members pursuant to timelines as stipulated in laws and company charter. 4. Candidature and nomination of members to the Board of Directors shall comply with the provisions of Law on Enterprise, relevant laws and the following provisions: a) In case a candidate for the Board of directors has been identified, a public company shall disclose information related to the candidate at least ten (10) days prior to the opening of the Shareholders’ General Meeting on the company’s website where shareholders could find out about the candidate’s information before voting. b) Where the number of candidates for the Board of directors through nominations and candidature fails to meet the required number as prescribed in the Enterprise Law, the incumbent Board of Directors could introduce or nominate more candidates or organisations according to the provisions of the company's Charter and Internal regulations on corporate governance. 5. Members of the Board of directors shall have the following rights and responsibilities: a) To be provided with information, materials on financial status, business operation of the company and units in the company. b) To perform their duties honestly and carefully in the best interests of shareholders and the company; c) To attend all meetings of the Board of directors and provide opinions on the issues to be discussed; d) To report promptly and adequately to the Board of directors on the remuneration they receive from subsidiaries, affiliated companies and other organisations; dd) To report and disclose information once conducting transactions of shares of the company pursuant to laws; e) Other rights and responsibilities in accordance with the law and the company’s Charter. 6. Any public company shall comply with the provisions on avoidance of conflicts of interests and information disclosure transparency as follows: a) Members of a Board of Directors, of Supervisors (supervisor), General Director (Director) and other enterprise managers of a public company shall be responsible for 35 disclosing relevant interest and not use the information obtained by their positions for personal purposes or the interests of other individuals or organizations. b) Public company shall be responsible for applying any necessary measures to prevent members of a Board of Directors, of Supervisors (supervisor), General Director (Director) and other enterprise managers of the company, shareholders and related persons from interference to company opreration, causing any damage to the company interest; to comply with provisions on transactions of shareholders, enterprise managers and related persons of these mentioned-above persons; to ensure legitimate rights and interest of persons who have relevant interests to the company. c) Public company shall have obligations of reporting, disclosing fully, exactly and promtly periodic and irregular information on operation status, production, businesses, finance and corporate governance performance of the company to the shareholders, public and other information if it possibly impacts on the securities prices and decisions of shareholders and investors. d) Information to be disclosed and method of information disclosure shall be conducted in compliance with this Law, company charter and rules on information disclosure of the company. 7. The Government shall provide details of this Article. CHAPTER IV Securities Trading Market Article 42. Organisation of securities trading markets 1. Vietnam Stock Exchange and its subsidiaries are permitted to organise securities trading markets for those securities which satisfy the conditions for listing; for securities of state owned enterprises; for securities of one-member limited liability with charter capital held 100% by state owned enterprises to transform into joint stock companies; for securities of other enterprises which do not satisfy the conditions for listing; for securities of innovative start-up companies; derivatives and other securities pursuant to the provisions of the Government. 2. Apart from Vietnam Stock Exchange and its subsidiaries, no organisation or individual shall be permitted to organise and operate a securities trading market. Article 43. Establishment and operation of Vietnam Stock Exchange and its subsidiaries 1. Vietnam Stock Exchange shall be legal entity established and operating pursuant to this Law and Enterprise Law, held more than 50% of charter capital or total voting shares by the State. 36 2. The Prime Minister of the Government shall, upon the proposal of the Minister of Finance, issue a decision on the establishment, dissolution, organizational structure and ownership form, functions, rights and responsibilities of Vietnam Stock Exchange and establishment of its subsidiaries. 3. Vietnam Stock Exchange and its subsidiaries shall be subject to administration and supervision by the State Securities Commission. Article 44. Managerial and executive apparatus of Vietnam Stock Exchange 1. The Prime Minister of the Government shall decide the managerial and executive apparatus of Vietnam Stock Exchange pursuant to this Law, Enterprise Law and other relevant laws. 2. The Chairman of the board of members or directors, General Director (Director) of Vietnam Stock Exchange shall be approved or appointed or dismissed by the Minister of Finance on the proposal of the board of members or directors after obtaining the opinion of the chairman of the State Securities Commission. 3. The rights and duties of the board of members, of the director, General directors (directors) and board of supervisors (supervisors) shall be stipulated in the respective charter of Vietnam Stock Exchange or provisions of laws. Article 45. Charter of Vietnam Stock Exchange 1. The charter of Vietnam Stock Exchange shall be approved, promulgated, amended or supplemented by the Ministry of Finance on the proposal of the board of members or directors of the Vietnam Stock Exchange after obtaining the opinion of the chairman of the State Securities Commission. 2. The charter of Vietnam Stock Exchange shall contain the following main particulars: a) Name and address of headquarter, subsidiaries and branches; b) Objectives, scope of operation and services provision; c) Charter capital, method for increasing and reducing charter capital or for transferring charter capital; d) Names and addresses and basic information about the capital contributing members, founding shareholders or owner; dd) Capital contribution portions or amount of equities and value of contributed capital of founding shareholders or capital contributing members or owners; e) Legal representative; g) Structure of managerial organisation; h) Rights and obligations of Vietnam Stock Exchange; 37 i) Rights and obligations of capital contributing members, owners or shareholders; k) Rights and duties of the board of members or director, General Director (director) and board of supervisors (supervisors); l) Method for passing decisions of Vietnam Stock Exchange; m) Method for amending or supplementing the charter; n) Applicable accounting and auditing regimes; o) Establishment of funds and rules on usage of funds; principles on use of profits, on dealing with losses and other financial regimes; p) Principles for resolution of internal disputes. Article 46. Rights and duties of Vietnam Stock Exchange 1. Vietnam Stock Exchange shall have the following rights: a) To promulgate rules on securities listing, securities trading, information disclosure, members of Vietnam Stock Exchange and other business procedures relating to organisation and operation of securities trading markets after obtaining approval from the State Securities Commission; b) To organise and operate securities trading markets; c) To provide warning, control and restriction on securities trading pursuant to laws and rules of Vietnam Stock Exchange; d) To temporarily suspend or rescind trading for one or some of securities in the case where prices and volume of securities trading have irregular fluctuation, the listed company, registered trading company fails to have any measures to fix the causes, leading to the securities to be brought under warning, control or restriction on trading or in necessary cases in order to protect investors’ legitimate rights and interests and ensure the stability, safety of the securities markets. dd) To approve, amend, cancel listing or registration for trading of securities; and to supervise maintenance of conditions for securities listing by listed companies. e) To approve or to rescind the membership as a member of Vietnam Stock Exchange; g) To provide auction and bidding services; services relating to market information and relevant information on securities listing, trading registration; services for development of technology related infrastructure for securities markets and other relevant services as stipulated in the charter of Vietnam Stock Exchange; h) To act as a conciliator on the request of members of Vietnam Stock Exchange when a dispute arises relating to securities trading activities.