Is M&A Approval Required For A Foreign Investor Buying Secondary Shares In A Vietnamese Securities Company?

The Securities Law 2019 removes the requirement for an approval by the State Securities Commission (SSC) for transactions involving 10% or more of the Charter Capital of a securities company. Instead, only a private placement of shares by a securities company is subject to SSC’s approval. Accordingly, it is not clear if an M&A Approval is required if a foreign investor acquires secondary shares from existing shareholders in a Vietnamese securities company.

A foreign investor purchasing shares in a company doing businesses sectors which are subject to market access conditions applicable to foreign investors will have to obtain an M&A Approval under the Investment Law 2020 from the relevant Department of Planning and Investment (DPI). Businesses carried on by a securities company are conditional businesses. However, Article 4.3(e) of the Investment Law 2020 provides that if the provisions of the Investment Law 2020 and other laws promulgated before the 1 January 2021 differ on (i) investment processes or procedures, or (ii) investment guarantee, except that the authority, processes, procedures, investment conditions, securities and securities market activities will follow the Securities Law 2019.

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Written by Nguyen Quang Vu On In ,

Could contractual options be considered as derivative securities under new Securities Law 2020?

Contractual option agreed privately between two parties is unlikely to be considered as a type of derivative securities under the new Securities Law 2020 and Decree 158/2020. This is because Decree 158/2020 has substantially reduced the scope of underlying assets (tài sản cơ sở) of derivative securities subject to securities regulations. Under the old Securities Law 2006 and Decree 42/2015, a private contractual option could still be considered as a derivative securities under the securities regulations.

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Written by Lawyers VNLaw On In ,

Will the number of preference shareholders be taken into account in determining public company status in Vietnam?

The Securities Law 2019 is not clear whether the number of preference shareholders will be taken into account when determining whether a company is a public company. Under the Securities Law 2019 a joint stock company (Company) would be considered a public company if:

  • Its paid-up charter capital is at least VND 30 billion; and

  • At least 10% voting shares (cổ phiếu có quyền biểu quyết) if the Company is held by at least 100 investors who are not major shareholders.

The first requirement is clear and intelligible. However, the second requirement is not clear whether:

(1) each and every of the 100 investors who are not major shareholders must hold ordinary shares; or

(2) only some (but not all) of the 100 investors who are not major shareholders could hold ordinary shares and the rest of these 100 investors could hold preference shares.

A literal reading of the law tends to support the first interpretation (i.e., all investors must hold ordinary shares). However, a closer look suggests that the second interpretation is more reasonable. This is because:

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Written by Nguyen Quang Vu On In

New regulations on public offering of shares under in Vietnam

The new rules on public offering of securities in Vietnam under the Securities Law 2019 and Decree 155/2020 contain several changes to the previous rules under the Securities Law 2006 and Decree 58/2012. Here are some notable new changes.

This post is written by Nguyen Khanh Linh and Nguyen Quang Vu.

1. Forms of public offering of securities

According to Decree 155/2020, “the initial public offering of shares to establish an enterprise in an infrastructure or high-tech sector, or establish a shareholding credit institution, and “public offer of capital contribution contracts for investment”, are no longer considered as a separate form of public offerings. The forms of public offering under Securities Law 2019 now only consist of:

(a) public offering for raising additional capital to the issuing organization;

(b) public offering to become a public company by changing ownership structure without increasing the charter capital of the issuing organization; and

(c) A combination of the forms described at (a) and (b).

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Written by Nguyen Quang Vu On In ,