The company charter stipulates). For example, with a public company, there is a principle of public offering. In which, there are two activities understood as private offering of shares, which are the purchase of shares from founding shareholders and the offering to existing shareholders. The offering method is almost understood as direct offering.
Thus, it can be understood according to current law that private offering of shares can be offered in all methods such as: direct offering, offering through auction, offering through bidding, offering through underwriting, offering through issuing agents. This provision is not unreasonable in terms of the nature and requirements of private offering activities. However, in any case, issuing specific instructions instead of "implicit understanding" is still considered better. In Vietnam, private offering of shares is often carried out by direct offering. Or it can be said that depending on the nature of the enterprise, the appropriate offering method is applied.
2.3.2. Method of private bond offering
According to Decree No. 52/2006/ND-CP, enterprises issue bonds in one of three ways: Bidding, Underwriting and Issuing Agent. To date, Decree 90/2011/ND-CP has added a method of issuing bonds by credit institutions. Specifically, each method is stipulated in Article 5 of Circular 211/2012/TT-BTC Guiding the implementation of a number of articles of Decree 90/2011/ND-CP dated October 14, 2011 of the Government on issuing corporate bonds, which stipulates the method of issuing bonds in the domestic market.
Vietnamese law does not recognize the bond auction method like some countries in the world. This regulation is relatively reasonable and so far in practice, there have been no difficulties for enterprises in offering individual bonds using the four methods mentioned above.
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2.4. Procedures for private securities offering
The order and procedures for private securities offering include the following basic contents: (i) Registration procedures with competent state agencies; (ii) Information disclosure; (iii) Securities distribution (The use of methods used to carry out private securities offering activities is collectively referred to as securities distribution).
2.4.1. For private offering of shares
Accordingly, the procedures are stipulated in Article 5 of Decree 60/2015/ND-CP amending and supplementing Decree 58/2012/ND-CP, which are:
(i) The issuing organization submits a registration dossier for private share offering to the State Securities Commission. The dossier for private share offering of a public company is specified in detail in Decree 60/2015/ND-CP. For each different purpose of offering, there will be different dossiers: dossier for private share offering of a public company; dossier for private share offering to exchange for debt; dossier for private share offering to exchange for shares of a joint stock company or capital contribution in a limited liability company; dossier for private share offering of a securities business organization which is a joint stock company. It can be seen that the system of legal documents on procedural dossiers is gradually being detailed.
(ii) In case the registration dossier for private offering is not complete and valid, within 5 days (previously 10 days) from the date of receipt of the registration dossier for private offering of shares, the State Securities Commission must have written opinions requesting the issuing organization to supplement or amend the dossier. The time for receiving complete and valid dossiers is calculated from the time the issuing organization completes the supplementation or amendment of the dossier.
(iii) Within 15 days from the date of receipt of a complete and valid registration dossier, the State Securities Commission shall notify the issuer and publish on its website confirmation of receipt of the complete registration dossier for the private offering of shares of the issuer.
(iv) The issuing organization must open a blocked account and receive mobilized capital according to the provisions of Clause 3, Article 21 of the LCK (Money for purchasing securities must be transferred to a blocked account opened at a bank until the offering is completed and reported to the State Securities Commission), except in the case of offering to exchange debts, or to exchange for shares or capital contributions at another company.
The regulation on blocked accounts has eliminated many loopholes, so the supervision of the actual contributed capital has made the State supervision difficult in the past because without regulations on blocked accounts for private placement of shares, the supervision of the use of capital from large capital mobilizations is not clear. However, the regulation on opening blocked accounts should still be applied to the case of offering to exchange debts, so that management will be easier.
(v) Within 10 days from the date of completion of the offering, the issuing organization shall send a report on the results of the offering according to Form No. 02 of the Appendix issued with Decree 58/2012/ND-CP to the State Securities Commission, together with confirmation from the commercial bank where the blocked account is opened regarding the amount of money collected from the offering. In cases of private offering of shares to swap debts of a public company; offering shares to swap for shares of a non-public joint stock company or offering to one or several specified shareholders to swap shares of another public company or offering shares to swap for capital contributions in a limited liability company, the report on the results of the offering must be sent together with written confirmation from the parties receiving the swapped shares.
This regulation is considered reasonable because the steps and required documents are all available. These documents ensure the management and supervision of the state in the private securities offering activities of enterprises. The procedural time is minimized for enterprises.
Article 123 of the 2014 Enterprise Law on Private Offering of Shares stipulates the private offering of shares of a joint stock company that is not a public joint stock company, including:
(i) Within 05 working days from the date of the decision to offer private shares, the company must notify the Business Registration Authority of the private share offering. The notice of private share offering must be accompanied by the following documents: (a) Resolution of the General Meeting of Shareholders on private share offering; (b) Plan for private share offering approved by the General Meeting of Shareholders (if any).
Compared with Decree 58/2012/ND-CP amended and supplemented by Decree 60/2015/ND-CP, it can be seen that the 2014 Enterprise Law has officially loosened the "Private Share Offering Plan" for JSCs that are not public JSCs by providing a "Private Share Offering Plan" - not mandatory and furthermore, it does not stipulate additional documents on the capital use plan. However, this "looseness" is unnecessary and can be a source of direct influence on the rights of investors and on state management. The capital offering and use plan has never been considered redundant for the purchasers and the supervision of other competent entities. Documents need to be regulated as mandatory for all types of companies, all forms of companies, regardless of their size or unprofessionalism. Only then will enterprises not "use" these regulations to avoid "circumventing" the law.
Previously, Decree 01/2010/ND-CP only regulated the order and procedures for receiving and processing dossiers for private securities offerings that must be listed at competent authorities without specific instructions, leading to thousands of enterprises being "stuck" in the process of issuing private securities, especially companies that are not yet public companies. The agencies that apply still have to reject the dossiers of enterprises and listen to complaints from enterprises. Many agencies send petitions to higher-level agencies for guidance, such as the case of the Department of Planning and Investment of Ho Chi Minh City, which sent an official dispatch to the Ministry of Planning and Investment. However, the answer is still waiting for guidance from the Government, some agencies are
tried to apply similar legal provisions to solve it. But all are only temporary solutions.
Therefore, Decree 58/2012/ND-CP has amended and supplemented the authority to receive registration dossiers for private share offerings, accordingly: State agencies with authority to manage private share offerings (hereinafter referred to as competent state agencies) include: (i) State Bank of Vietnam: in case the organization offering private shares is a credit institution (i.e. credit institutions that are not public companies); (ii) Ministry of Finance: in case the offering organization is a joint stock insurance company (i.e. for insurance companies that are not public companies); (iii) State Securities Commission: in case the offering organization is a securities joint stock company, fund management joint stock company, public company (except for public companies that are enterprises operating in the fields of credit and insurance); (iv) Department of Planning and Investment, Management Board of industrial parks, export processing zones, high-tech zones, economic zones: in case the offering organization is a joint stock company that is not subject to the above. Therefore, it should create convenience for enterprises when submitting documents, no longer receiving the answer "waiting for instructions from the Government" as before with Decree 01/2010/ND-CP. Decree 58/2012/ND-CP was issued with specific regulations on procedures and documents applicable to two types of public joint stock companies and non-public joint stock companies, which has resolved the difficulties in this implementation step more clearly and specifically; in addition, it also added the procedures and procedures for registering for private offering, contributing to speeding up the process of private offering of shares by joint stock companies. However, Decree 58/2012/ND-CP only stops at regulating the receiving authority, basic procedures, and basic documents, but specific instructions on how to receive and process documents are still unclear; the same is true for Decree 60/2015/ND-CP amending and supplementing Decree 58/2012/ND-CP.
For LLCs that conduct private offering of securities to become JSCs, although Article 196 of the 2014 Enterprise Law (Conversion into a joint stock company by selling all or part of the capital contribution to one or several other organizations or individuals) has been created as the basis for conversion, the 2014 Enterprise Law does not stipulate the conditions, methods and procedures for offering, the basis for conversion.
specific receiving agencies to convert these enterprises. Therefore, it is necessary to issue specific regulations on the offering procedures to convert LLCs into JSCs through private offering of shares. The State Securities Commission has only guided the steps as follows: (Step 1): The issuing organization sends the offering registration dossier to the competent state agency (Department of Planning and Investment; Management Board of industrial parks, export processing zones, high-tech zones, economic zones). (Step 2): The competent state agency receives the dossier during office hours on working days, checks and appraises the dossier. In case the dossier is not complete and valid, within 10 days, the competent state agency will have written comments requesting the issuing organization to supplement or amend the dossier. (Step 3): Within 15 days from the date of receipt of a complete and valid registration dossier, the competent state agency shall notify the issuing organization and publish on the electronic information page the private offering of shares of the registering organization. (Step 4): Within 10 days from the completion of the offering, the issuing organization must report the results of the private offering of shares according to Form No. 02 issued together with Decree No. 58/2012/ND-CP to the competent state agency. This is also the same for the procedures prescribed in Clauses 3, 4, 5, Article 196 of the 2014 Enterprise Law.
Regarding information disclosure, Article 101 of the 2010 Law on Securities only regulates information disclosure of public companies and does not regulate information disclosure of non-public joint stock companies. This is clearly a shortcoming in the legal system, and of course, non-public joint stock companies cannot disclose information like public companies.
2.4.2. For private bond offerings
Regarding registration procedures with competent state agencies: (i) The issuing enterprise must develop a bond issuance plan and submit it to the competent authority for approval and acceptance as a basis for bond issuance and announce it to bond buyers; (ii) Send a written notice of bond issuance to the Ministry of Finance; (iii) For issuing enterprises that are companies
Public companies must submit bond issuance registration documents to the State Securities Commission and may only issue bonds with written approval from the State Securities Commission.
The bond offering dossier is stipulated in Articles 14, 15, 16 of Decree 90/2011/ND-CP, in which it is worth noting that Point c Clause 1 Article 16 stipulates that the dossier must include: "The rating result of the credit rating organization for the bond issuer and the type of bond issued (if any)". This result should have been a mandatory regulation because the credit rating is one of the important factors that helps investors consider whether to invest or not.
Regulations on information disclosure for private bond offerings of enterprises are fully and reasonably stipulated in Article 31, Chapter IV of Decree 90/2011/ND-CP.
Seeing that, both are private securities offerings, the procedures for state agencies of private stock offerings and private bond offerings are regulated quite detailed and clear. The registration procedures for state agencies of private stock offerings and private bond offerings are both subject to management by the State Securities Commission. However, private bond offerings also clearly stipulate supervision by the Ministry of Finance and in the dossier of private bond offerings, it is necessary to provide additional information on underwriting contracts, payment guarantees, agency contracts, etc. And, a similar thing happens that the regulations on how to receive dossiers and how to process dossiers are still left open?.
CHAPTER 3
SOME PROPOSALS TO CONTRIBUTE TO IMPROVING THE LAW ON PRIVATE SECURITIES OFFERING IN VIETNAM
3.1. Completing and amending a number of legal provisions
3.1.1. Issue separate documents on private offering activities
Issue a specific document on private offering of shares. Decree 58/2012/ND-CP or the amended Decree 60/2015/ND-CP are, after all, Decrees guiding the implementation of the 2010 Law on Securities, so the regulations are not enough. The legal contents related to private offering of shares are still scattered in a number of legal documents. Therefore, integrating and changing the restrictions will be both convenient for the State to manage and convenient for enterprises to apply, including the contents on: subjects of offering, conditions of offering, procedures - documents of offering, methods of offering, authority, etc.
3.1.2. Regarding the conditions for offering securities:
(i) The requirement that private equity offerings must be at least six months apart and that the transfer period be one year should be removed.
If we approach the problem from the continuous capital needs of enterprises, we can see that each investment project and business expansion requires a certain amount of capital. Enterprises in the market economy must continuously expand their business activities and continuously face investment and business opportunities. Continuously, we can understand that today the enterprise has an investment opportunity, they offer it separately and arrange the capital to seize that investment opportunity. Tomorrow they have another investment opportunity that continues to need capital to implement, they will have to wait six months to offer shares to raise capital. Obviously, this limitation eliminates that investment opportunity.
From the above limitations and restrictions, it is clear that capital mobilization and taking advantage of investment opportunities will be difficult. Investment plans will have to change, the problem of capital mobilization