In order to establish a transparent legal framework and simultaneously attract foreign investment capital through the securities market, Vietnamese law has specifically stipulated the conditions under which foreign enterprises are permitted to publicly offer shares in Vietnam. Full compliance with these requirements not only ensures the legality of the offering activities but also contributes to strengthening investor confidence and promoting the sustainable development of the capital market.
1. Legal Definitions
According to Clause 19, Article 4 of the Consolidated Law on Securities, a public offering of securities shall be understood as the offering of securities by any of the following methods:
a) Offering through mass media;
b) Offering to 100 or more investors, excluding professional securities investors;
c) Offering to unspecified investors.
With respect to the scope of application of the Law on Securities, Article 2 expressly provides that:
- Vietnamese organizations and individuals as well as foreign organizations and individuals participating in securities investment and activities in the securities market of Vietnam.
→ Accordingly, foreign enterprises are permitted to conduct public offerings of shares in Vietnam, thereby reflecting the Government’s policy of openness and deep international integration.
This mechanism not only facilitates the attraction of international investment flows but also contributes to establishing a transparent and equitable competitive environment between domestic and foreign enterprises.
2. Conditions for Public Offering of Shares
Pursuant to Article 36 of Decree No. 155/2020/ND-CP, enterprises incorporated and operating under foreign law must satisfy the following requirements in order to be permitted to publicly offer securities in the Vietnamese market:
– The offering enterprise must have recorded profits for two consecutive years preceding the year of registration and must have no accumulated losses; no overdue debts for more than one year.
– A resolution or decision of a competent authority approving the issuance plan and the plan for utilization of the proceeds (or for debt repayment in the case of bond issuance).
– An investment project in Vietnam approved by a competent authority, with the total proceeds raised not exceeding 30% of the total investment capital of the project.
– The foreign enterprise must commit to retaining the proceeds raised in Vietnam and not withdrawing the counterpart capital within the duration of the project.
– A commitment to an underwriting arrangement either by purchasing the entire offering for resale or by purchasing the unsubscribed portion.
– The issuing organization must open an escrow account to receive payments for the securities subscribed in the offering.
– A bank must be appointed to supervise the use of proceeds obtained from the offering.
– A securities company must be engaged to advise on the application dossier for the public offering of securities.
– A commitment to list or register the securities for trading (in the case of shares) or to list bonds after the completion of the offering.
– A commitment to perform all obligations of the issuing organization towards investors regarding issuance conditions, payment, protection of the lawful rights and interests of investors, and other relevant conditions in the case of bond offerings.
3. Procedures for Registration of Public Offering of Shares
Step 1: Preparation of Application Dossier
– Legal basis: Article 37 of Decree No. 155/2020/ND-CP.
– The application dossier includes:
- Application for public offering, using Form No. 05;
- Prospectus in accordance with Article 19 of the Consolidated Law on Securities;
- Charter of the issuing organization;
- Resolution of the General Meeting of Shareholders approving the issuance plan, the plan for utilization of proceeds from the offering, or the plan for listing;
- Most recent annual financial statements audited by a competent State authority;
- Decision approving the investment project;
- Underwriting commitment including minimum contents as prescribed in Form No. 04;
- Written confirmation from a bank or foreign bank branch on the opening of an escrow account for receiving subscription proceeds;
- Written confirmation from the supervising bank on the monitoring of the use of proceeds obtained from the offering;
- Advisory contract with a securities company for preparation of the public offering registration dossier;
- Resolution of the Board of Directors approving the application dossier for registration of public offering of shares.
Step 2: The dossier shall be submitted to the State Securities Commission of Vietnam.
Step 3: Receipt and Processing of Application Dossier
– Legal basis: Article 25 of the Consolidated Law on Securities and Article 41 of Decree No. 155/2020/ND-CP.
– Time limit: within 30 days from the date of receipt of the public offering registration dossier:
- If the dossier is complete and valid: a Certificate of Public Offering Registration shall be issued.
- If the dossier is incomplete or invalid: a written reply shall be issued, clearly stating the reasons. In cases where inaccurate or missing information is identified, the applicant shall be requested to amend or supplement documents in accordance with Article 22 of the Consolidated Law.
Step 4: Announcement of Offering Registration Information
– Time limit: within 07 working days from the effective date of the Certificate of Public Offering Registration.
– Publication: in one electronic or printed newspaper for three consecutive issues, and disclosure on the enterprise’s website.
– The distribution of securities shall be carried out in accordance with the provisions of the securities law.
– The enterprise shall proceed with the public offering of shares in compliance with applicable regulations.
The public offering of shares in Vietnam provides foreign enterprises with the opportunity to access a rapidly developing capital market. However, in order to carry out such activities lawfully and effectively, enterprises must fully comply with statutory conditions. This is not only a legal requirement but also a demonstration of credibility and a commitment to long-term cooperation with domestic investors.
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