1. Initial Public Offering of Securities and Fund Certificates
Based on Clause 1, Article 10 of Decree No. 155/2020/ND-CP, the forms of public offering of securities are clearly defined as follows:
- IPO for Raising Capital: This involves the issuance of shares to the public for raising additional capital for the issuing organization, enabling it to expand its scope of operations and strengthen its financial capacity.
- IPO for Becoming a Public Company: This type of offering aims to transform the issuing entity into a public company by altering its ownership structure without increasing its charter capital. Here, the company can enter the stock market and attract new investors without issuing additional shares.
- Combination of Both Forms:This hybrid form combines raising new capital and expanding public ownership, thereby optimizing the advantages for the issuing organization.
- IPO of Fund Certificates for Establishing a Securities Investment Fund: This form is aimed at founding a securities investment fund, which provides a sustainable financial foundation for the fund and attracts investors from the outset.
From the above, it is evident that the IPO of fund certificates to establish a securities investment fund is among the key methods of public securities offering, alongside share issuance. Each method plays a distinct role in shaping and developing the financial market, contributing to its diversity and attractiveness, particularly in Vietnam’s stock market.
2. Conditions for Initial Public Offering of Fund Certificates to Establish a Securities Investment Fund
According to Clause 5, Article 15 of the Securities Law 2019, specific conditions for the public offering of fund certificates to establish a securities investment fund are as follows:
- Minimum Value of Fund Certificates: The total value of fund certificates registered for public offering must be at least VND 50 billion. This threshold ensures sufficient liquidity and scale for the fund while enhancing its attractiveness to investors in the market.
- Issuance and Capital Utilization Plan: The fund must have a clear and detailed issuance plan along with a strategy for utilizing the capital raised from the fund certificate offering. This plan must comply with the Securities Law to ensure transparency and build investor confidence in the fund’s objectives and investment strategies.
- Oversight by a Supervisory Bank: The offering process and subsequent fund management activities must be monitored by a supervisory bank. This oversight ensures compliance with legal regulations, protection of investor rights, and mitigation of potential risks.
- Listing Requirements for Fund Certificates: After the offering is completed, the fund certificates must be listed on a securities trading system to facilitate their trading and transferability, except in the case of open-ended fund certificates. Listing enhances liquidity and transparency for investors during the investment process.
- Special Cases for Public Offering: Clause 6, Article 15 further stipulates that the Government will provide conditions and documentation for special cases of public offering, such as:
- Conversion of state-owned enterprises into joint-stock companies.
- Public offering of shares below par value.
- Public offering by shareholders of a public company.
- Public offering of securities abroad.
- Other forms of offering as prescribed by law.
3. Regulations on the Initial Public Offering of Fund Certificates
According to Article 13 of Circular No. 98/2020/TT-BTC, the process and legal requirements for the IPO of fund certificates are specified to ensure transparency and protect investors’ rights. Key points include:
- Registration Certificate Requirements
- The public offering of fund certificates can only proceed after obtaining a Certificate of Securities Offering Registration from the State Securities Commission (SSC).
- This ensures that the investment fund meets the necessary conditions before mobilizing capital from the public, providing investors with confidence in the fund’s legality and reliability.
- Information Disclosure After Registration
- Within 5 working days of the registration certificate’s issuance, the fund management company must disclose the offering announcement.
- The announcement must comply with disclosure regulations in the securities market, ensuring that all critical information about the offering is fully and transparently communicated to the public.
- Additionally, the fund management company must submit the announcement to the SSC using the template provided in Appendix XI of the Circular for monitoring purposes.
- Capital and Securities Lock-Up
- All investor contributions must be locked in a separate account of the open-ended fund at the supervisory bank until the fund establishment registration certificate becomes effective.
- Similarly, the structured securities portfolio of founding members and investors must also be locked at the Vietnam Securities Depository and Clearing Corporation (VSDC).
- This ensures that investor capital is only utilized after the fund is legally operational, safeguarding investor interests and enhancing transparency in fund management.
- Interest Payments by Supervisory Banks
- During the lock-up period, the supervisory bank is responsible for paying interest to the fund at a rate not lower than the prevailing demand deposit rate.
- This helps maintain the value of the fund’s capital during the waiting period, ensuring that investor interests are not adversely affected.
In conclusion, the regulations on the public offering of fund certificates, as outlined in Circular No. 98/2020/TT-BTC, play an essential role in ensuring the legality, transparency, and protection of investors in Vietnam’s securities market.
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Dinh Phuong Thao