Major amendments to regulations on sale of State capital in State-affiliated enterprises

In March 2018, the Government issued Decree 32/2018 containing major amendments to the regulations on sale of State capital in State-affiliated enterprises. The amendments will take effect from 1 May 2018. State-affiliated enterprises are joint stock companies (State-owned JSC) or limited liability companies with two members or more (State-owned LLC) a part of which is owned by the State or by a wholly State-owned enterprises (Wholly SOE). New amendments under Decree 32/2018 include:

Stricter pricing control

·        Decree 32/2018 requires the State-seller to retain licensed valuer to value the State’s capital and to determine an asking price before commencement of the sale process even if the State-affiliated enterprises are listed companies. Under Decree 91/2015, it appears that if a State-affiliated enterprise is a listed company, then there is no need to retain a licensed valuer. Decree 32/2018 also provides that the asking price is only valid for a period of six months from the date of the valuation report. This suggests that a re-valuation is required if a sale is not completed within six months of the date of the valuation report.

·        For a listed State-affiliated company, if the asking price determined by the valuer is lower than the average share price of the company during the period of 30 consecutive trading days before public announcement of the sale, then such average share price will be used as the asking price. It is not clear if the average share price is a arithmetic average or weighed average (which takes into account the trading volume each trading day).

·        The licensed valuer when valuing the State’s capital must take into account the value of land leased by the State-affiliated enterprise and “history” of such State-affiliated enterprise. Decree 91/2015 only requires the value of land granted (not leased) to the State-affiliated enterprise to be taken into account. However, Decree 32/2018 does not specifically require the valuer to take into account whether the sale stake is a minority stake or a control stake.

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Written by Nguyen Quang Vu On In , ,

New Model Charter for a Public Joint Stock Company in Vietnam

On 22 September 2017, the Ministry of Finance issued a model charter of public companies under Circular 95/2017 following the new governance regulations of Decree 71/2017. This model charter (New Model Charter) is to replace the old one (Old Model Charter) provided under Circular 12/2012, which is based on the now-defunct Enterprise Law 2005. These charters are not legally compulsory, thus should be read with reference purpose only.

Most changes to the New Model Charter reflect changes in the Enterprise Law 2014 and Decree 71/2017 (find out more here). Besides, the New Model Charter introduces the following notable changes:

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Written by Nguyen Quang Vu On In ,

Purchasing shares from an individual in Vietnam

A purchaser of listed shares in a public joint stock company (Public JSC) from an individual selling such shares through his/her securities trading account does not need to verify the selling individual’s authority to sell the listed shares under the Law on Family and Marriage 2014 assuming that:

  • the listed shares are not the main sources of income of the selling individual and his/her spouse (if he/she is married); and
  • the purchaser is an innocent purchaser who does not know that the selling individual is married or that the selling individual does not have the authority to sell the listed shares under the Law on Family and Marriage 2014.
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Written by Lawyers VNLaw On In ,

Proxy contest in Vietnam

Vietnam securities regulations do not have specific regulations governing a proxy contest where a shareholder or group of shareholder actively seeks to obtain proxies from other shareholders in order to influence the decision of the Shareholder Meeting (e.g. electing new Board directors or approving certain important corporate matters). In particular, a shareholder, who seeks to obtain proxies from other shareholders in a Public Joint Stock Company (Public JSC), is not required to make any public disclosure or filing about its intention for the proxies obtained.

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Written by Nguyen Quang Vu On In ,