Disclosure of information of public companies on the stock market according to Vietnamese law

Guidelines. The topic outlines general issues on information disclosure on the Vietnamese stock market, presents the current situation and some solutions for improvement.

The above topics have contributed important scientific conclusions in the process of researching the law regulating information disclosure activities on the stock market. However, the topics were all done before Circular No. 52/2012/TT-BTC was issued by the Ministry of Finance on April 5, 2012, so up to now, there has been no thesis topic exploiting the new points in Circular 52/2012/TT-BTC on the obligation to disclose information of public companies (including listed public companies and unlisted public companies) . Therefore, the difficulties when public companies implement legal regulations and information disclosure mechanisms according to the new regulations have not been mentioned. In addition, the study of legal experience regulating information disclosure activities of public companies in some countries with developed stock markets such as the US, Australia, Korea... aims to assess the compatibility of Vietnamese law with international law; At the same time, providing some directions and solutions to improve the current reality of Vietnam is an issue that needs to be considered comprehensively and is important not only for public companies but also for investors and management agencies. It can be said that this is a new issue, highly applicable and requires comprehensive research.

3. Research purpose and tasks

Research purpose:

Based on clarifying the legal regulations governing information disclosure activities of public companies on the stock market and assessing the current status of information disclosure of public companies, the thesis proposes directions and solutions to improve the law and other solutions to enhance the openness and transparency in information disclosure activities of public companies.

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Research mission:

- Research general issues on information disclosure of public companies on the stock market and experiences of some countries to draw lessons for Vietnam;

- Analyze current legal regulations governing information disclosure activities of public companies on the stock market;

- Assess the current status of information disclosure of public companies in Vietnam, thereby finding out the difficulties and shortcomings in both legal aspects and implementation of information disclosure obligations of public companies;

- Propose some directions and solutions to perfect the law regulating information disclosure activities of public companies on the stock market.

4. Novelty and contributions of the topic

- Basic issues on information disclosure of public companies on the stock market;

- Current legal regulations governing information disclosure activities of public companies on the stock market;

- Difficulties and inadequacies of the law and the current status of law application regulating information disclosure activities of public companies on the stock market;

- Research international experience on information disclosure of public companies in some countries with developed stock markets such as the US, Australia, Korea and assess the compatibility of Vietnamese law with international law;

- Propose some directions and solutions to perfect the law regulating information disclosure activities of public companies in accordance with the current reality of the Vietnamese stock market.

5. Research object and scope

Research subjects:

The topic studies aspects of information disclosure for public companies under Vietnamese law. Other information disclosure obligations are not

regulated by securities law and the securities market is not within the scope of this research topic.

Research scope:

The main topic of the study is to clarify the legal regulations and the practical compliance with the information disclosure obligations of public companies on the stock market from 2010 to present through a comparison of the new points and impacts after the issuance of Circular No. 52/2012/TT-BTC compared to the previous Circular 09/2010/TT-BTC. The study of the practical compliance with the information disclosure obligations of public companies is currently mainly for companies listed on the two stock exchanges (Hanoi Stock Exchange and Ho Chi Minh City Stock Exchange).

6. Research methods

- Investigate and collect documents to synthesize and analyze according to logical methodology;

- Comparison method;

- Conduct field surveys to provide appropriate assessments and recommendations;

- Consulting experts in the field of information disclosure for public companies.

7. Structure of the thesis

The thesis is structured into 3 chapters:

Chapter 1: General issues on information disclosure of public companies and laws regulating information disclosure activities of public companies on the Vietnamese stock market

Chapter 2: Current status of laws regulating information disclosure activities of public companies on the Vietnamese stock market

Chapter 3: Directions, solutions, and recommendations for improving the law regulating information disclosure activities of public companies on the Vietnamese stock market.

Chapter 1

GENERAL ISSUES ON INFORMATION DISCLOSURE OF PUBLIC COMPANIES AND LAWS REGULATING INFORMATION DISCLOSURE ACTIVITIES OF PUBLIC COMPANIES IN THE MARKET

VIETNAM SECURITIES

1.1. Public companies and information disclosure of public companies on the stock market

1.1.1. General overview of public companies

1.1.1.1. Concept of public company

The term “public company” (CTDC) originates from Western legal philosophy, they take individuals (people) as legal subjects in transactions to include all business organizations under the criterion of “legal entity”. Depending on the laws of each country, business organizations are formed into three main types: (i) companies, (ii) partnerships, (iii) business individuals. Next, Western scholars continue to divide companies into two forms: internal companies ( private companies or privately held corporations) and public companies (public limited companies) [25] . Internal companies are often small-scale companies, with a narrow area and scope of operations, owned by a small number of people (usually less than 50 people), not widely mobilized capital, subject to supervision and have low transparency requirements ( on books and reports) , are less likely to be acquired and have some other characteristics depending on the laws of each country. The form of an internal company is also considered as an accumulation stage to prepare to become a public company (through the initial public offering or IPO) when the enterprise needs to expand to develop strongly. In contrast to the form of an internal company, a public company often has a wide area, scope of operation, a large number of shareholders and capital scale. The term "public company" can be

regulated in the Law on Companies (such as UK, USA, Australia...) or in the Law on Securities (such as Poland, Hungary...) on the basis of distinction from the type of internal company.

In the UK and many countries under the English law system, private companies are distinguished from public companies in terms of capital. The Companies Act 2006 of the UK stipulates that private companies , or private companies limited by shares, are organized in the form of shares, with a small capital (only one pound of initial capital is enough). Meanwhile, public companies ( abbreviated as Plc and required to be written after the company name ) require a minimum capital of 50,000 pounds, can raise capital and trade shares without restrictions, have an unlimited number of shareholders and have a minimum of two permanent directors.

According to American or Australian law, public companies and private companies are distinguished mainly by the number of shareholders. According to the Corporations Act 2001 of Australia , a private company ( proprietary limited company , abbreviated after the company name as Pty ltd and distinguished from the Ltd suffix (without Pty) of a public company) is a company with a maximum of 50 shareholders and the shareholders must be outsiders who do not work for the company. In addition, Article 112 of the Australian Corporations Act stipulates that public companies must have at least three directors and at least one company secretary, and only public companies have the right to raise capital by issuing shares to the public. In the US, a public company is called a C. Corporation (a joint stock company with more than 100 shareholders) to distinguish it from an S. Corporation - a company that can only issue one type of stock, has no more than 100 shareholders and must be an individual with US nationality.

In addition to the distinction based on capital or shareholder size, many countries define a public company according to the issuance of securities to the public, as in Clause 9, Article 4 of the Polish Securities Law, "A public company is a company whose shares of at least one issuance are approved for public trading" or as stipulated in Article 110 of the Bulgarian Securities Law:

“A public company is a company that has issued shares to the public for the first time or registered with the Securities and Exchange Commission for issuance with the purpose of participating in transactions on a regulated securities market”.

From the above definitions of public companies, it can be seen that a “public company” is an enterprise that has reached a certain capital scale and management method. The company can be organized in the form of a public company right from its establishment or through a “transition” in the stock market activities - the procedure for issuing securities to the public for the first time (IPO). To determine a company as a public company, countries often base on certain criteria as follows:

(1) Is an organization that conducts public offering of securities;

(2) Is an organization with large capital scale;

(3) Is an organization with a large number of securities owners;

(4) Is an organization with securities traded on a regulated market (or companies with securities listed on the Stock Exchange).

1.1.2.2. Classification of public companies (from the perspective of information disclosure)

From the perspective of information disclosure, each country will classify public companies according to listing criteria or scale criteria. Specifically as follows:

If considered by company size, public companies are classified as:

(i) A public company is a company that meets the requirements of publicness such as having a higher number of stockholders or a larger capital scale or total debt value than other ordinary enterprises.

(ii) Large-scale public companies are companies that meet the criteria of capital size, debt value or shareholder size higher than normal public companies. Therefore, large-scale public companies have a higher responsibility for information transparency than other public companies.

If classified according to securities listing criteria, public companies include:

(i) Listed public companies are companies whose securities (stocks or bonds) are listed on the stock exchange.

(ii) An unlisted public company is a company that meets the criteria for publicness but does not have securities listed on a stock exchange.

Under this classification, listed companies are subject to more stringent disclosure obligations than unlisted public companies.

International experience in classifying public companies:

Depending on the country, public companies are classified according to company size criteria or listing criteria, thereby setting out appropriate information disclosure requirements for each type of company.

In the US - the stock market is considered the most developed today, public companies are classified by size, including: smaller reporting companies and larger public companies . Accordingly, a small public company is a company with a public equity float of less than 75 million USD or an annual revenue of less than 50 million USD in the most recent fiscal year . A large public company is a company with a public equity float exceeding 75 million USD or an annual revenue exceeding 50 million USD in any fiscal year. This 75-50 million USD level is re-evaluated every 5 years depending on inflation conditions. Large public companies must fulfill their reporting obligations more strictly than small companies. Small companies can choose to comply with the disclosure obligations for small or large companies.

In Japan, the Company Act 2005 , which partially replaced the Commercial Code , regulates the types of enterprises, of which joint-stock companies are the main subjects subject to regulations related to information disclosure. Joint-stock companies include large companies and ordinary companies. Large companies are defined in Article 2, Clause vi of the Company Act as companies that satisfy one of the following two conditions: (i) a company capitalized at ¥500 million or more

or more) or (ii) has liabilities of ¥20 billion or more at the end of the fiscal year (liabilities are at ¥20,000 million or more). The difference is that Japanese lawmakers consider the total value of debts as the basis for determining the size of the company, in order to ensure the rights of creditors and related individuals and organizations.

In Korea - one of the ten most developed stock markets in the world, public companies are classified based on the listing factor, including listed public companies and unlisted public companies. Companies listed on the Korea Stock Exchange (KSE) are responsible for stricter information disclosure than other unlisted public companies. However, the information disclosure obligations of companies listed on the KSE are differentiated based on the size of the company itself. As the only organized exchange in Korea, the KSE is organized into three (03) areas: the area for trading stocks, bonds and derivatives. The area for stocks is divided into two areas: the first area (KOSPI) is for large-sized companies, the second area (KOSDAQ) is for newly listed stocks or for small and medium-sized companies to trade. The regulations on information disclosure are also based on the Listing Board, in which companies listed on the KOSPI Main Board (comprising companies with capital of 10 billion won or more) have higher information disclosure obligations than companies listed on the KOSDAQ Board (comprising companies with capital of 3 billion won or more) . In addition, the regulations on information disclosure specifically emphasize the difference for large -sized corporations (companies with total assets of over 2 trillion won) , according to which these companies are subject to more stringent information disclosure obligations than other companies.

Thus, countries can classify public companies according to scale criteria (such as the US, Japan, etc.) or listing criteria (such as Korea). However, today, the method of classifying public companies according to listing criteria is not applied by many markets because this method creates a large gap in information disclosure responsibility between listed companies and non-listed companies.

Disclosure of information of public companies on the stock market according to Vietnamese law - 2

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