Private placement of shares and pre-emption rights of existing shareholders under Enterprise Law 2020

Under Article 125.2(b) of the Enterprise Law 2020, except for the cases of merger and consolidation of companies, when a non-public joint stock company (a target company) plans to conduct a private placement of shares, the existing shareholders must be offered to purchase such shares first. Only after the existing shareholders do not subscribe for new shares, the target company could conduct a private placement of shares. While the new regulations clarify an unclear point before the Enterprise Law 2020, they could increase the risks that a target company may not be able to successfully issue shares to a desirable investor via a private placement. Below are some potential mechanism to mitigate such risks.

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Written by Nguyen Quang Vu On In ,

Communication with a prospective arbitrator by a party in a VIAC arbitration proceeding

Rule 16.4 of VIAC arbitration rules does not allow an arbitrator to privately meet or contact any party relating to the dispute “during arbitration proceeding”. VIAC rules do not regulate the communication between a party with a prospective arbitrator before such party appoints its own candidate. As such, a party in a VIAC arbitration proceedings could arguably have private meeting and discussion with a prospective arbitrator to discuss the dispute. In particular,

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Written by Nguyen Quang Vu On In ,

Decree 155/2020 Implementing Vietnam Securities Law 2019 – Public Companies

In December 2020, the Government issued one of its most comprehensive Decrees, Decree 155/2020 implementing the Securities Law 2019. Decree 155/2020 has 311 articles and is 140 page long. We will cover parts of Decree 155/2020 in a series of blog posts. In this post, we cover new issues concerning public companies in Vietnam.

  • Meetings of the General Meeting of Shareholders (GMS) - Decree 155/2020 now requires members of the Board of Directors (Board) and the Inspection Committee to attend the annual GMS meetings to answer shareholders’ questions (if any). If there is an emergency event that a member of the Board and the Inspection Committee cannot attend, such member will have to report in writing to the Board and the Inspection Committee.

  • The representative of the auditor of a public company also has the responsibility to attend the annual GMS meeting of the company, if there are material qualifications regarding the annual audited financial statement of the company.

  • Information of candidates for the Board - Other than the information about name, date of birth, and qualifications, Decree 155/2020 also requires the public company and the candidates of the Board to publicize information about other managerial titles (including the title of Board member at other companies), and interests relating to the company and the company’s related parties of the candidates.

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Written by Nguyen Quang Vu On

New Decree 153/2020 on Corporate Bond Issuance in Vietnam

In December 2020, the Government issued Decree 153/2020 regulating, among others, the private placement of corporate bonds by Vietnamese issuers. Decree 153/2020 does not regulate public offering of corporate bonds. Decree 153/2020 has the following notable points regarding corporate bond issuance in Vietnam:

  • Corporate guarantee for bond issuance - Decree 153/2020 allows a private issuance of corporate bond to be guaranteed by a corporate guarantee as opposed to a bank guarantee under Decree 163/2018.

  • Less conditions for private placement of corporate bonds – Decree 153/2020 no longer requires a company to have at least one year of operation. The requirement of no overdue payment under previous bonds is removed if the issuer plans to issue bond to a selected finance organization.

  • Bond purchasers – Purchasers of corporate bonds in a private place are limited to “professional investors” and, in case of convertible bonds, professional investors and strategic investors. Decree 153/2020 also impose express obligations on bond purchasers to study the bond terms, the bond issuers, and be responsible for its investment decision. Trading of bond is also limited to professional investors. It is not clear if this means strategic investors are not permitted to sell its convertible bonds.

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Written by Nguyen Quang Vu On