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Question :: I am a member of the Supervisory Commission (the Commission) of a public company which is unlisted and termed from 2007 to 2010. Until now, my term is still valid. In 2009, I was [not] invited to attend any meeting of the company’s Commission. Recently, I also did not attend the Commission’s meeting to produce the Commission’s Report for submission to the General Shareholder’s Meeting (the Meeting) year 2010 on April 9. I was informed that this Commission’s Report was built by the Commissions’ Director (the another member of the Commission also did not attend). I would like to ask you whether the operation of the Commission like that is legal or not? Is the Report mentioned above legal? What should I do to comply with the rights, duties and obligations of a Commission’s member?
Question :: I am a president of the Management Board (“the Board”) of a public company. As per regulations, the term of the Board, Supervisory Commission (“the Commission”) is five (5) years. Therefore, the first term of the Board, Commission is due on November 2010. However, in order to facilitate the voting of the Board, the Commission in the second term, the Board would like to submit the General Shareholder’s Meeting (“the Meeting”) with the latest on April 19, 2010 for renewal of the first term of the Board, the Commission until April 2011. So, the question is that is the renewal true or not? If the shareholders are not taken opinions directly at the Meeting, can the Board collect opinions indirectly from shareholders in writing? If the Meeting does not pass the renewal, how can the voting of the Board, the Commission be taken in compliance with laws?
Question :: Our company registers shares at the Securities Depository Central (SDC), but cannot deposit, of which my 10.000 shares. So, can I transfer directly 2.000 shares to my brother and compliment 2.000 shares to my wife?

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LEGAL NEWS

Offering separate shares for sale

Offering separate shares for sale to professional securities investors or to less than 100 unprofessional securities investors, called a separate share sale for short, has been an effective raising fund instrument over the past time. Although the Finance Ministry issued the Official Document no. 14285/BTC-UBCK dated 26 Nov 2008 (“Official Document 14285”) for guiding the implementation of a number of items stated in the Directive 20/2008/CT-TTg dated 23 Jun 2008 by the Government’s Prime Minister (“Directive 20”) on strengthening management of the securities market, in which it provides guidance for enterprises to conduct the separate share sale processes, enterprises cannot avoid errors as applying such unspecified regulations and when no financial sanction has been applied to the acts of violation. Accordingly, the fact that the Government’s Decree 01/2010/NĐ-CP was issued on 4 Jan 2010 on offering separate shares for sale (“Decree 01”) is deemed extremely necessary for the time being. Joint-stock companies and enterprises to be converted into joint-stock companies, except the state-owned enterprises converted into joint-stock companies, shall comply with the provisions of Decree 01 upon issuance of the separate shares.

Management bodies

The management of the units offering separate shares for sale is devolved as follows:

- Credit institutions managed by the State Bank of Vietnam;

- Joint-stock insurance companies managed by the Finance Ministry;

- Securities joint-stock companies, fund management joint-stock companies, public companies (except public companies operating in the credit & insurance areas) managed by the State Securities Commission;

- Joint-stock companies not falling under the above entities managed by the Department of Planning & Investment, the management board of industrial parks, export processing parks, hi-tech zones, economic zones.

Conditions for a separate share sale

In order to offer separate shares for sale, the enterprise shall approve the plan for separate share sale and the plan for utilization of the proceeds earned from the offer tranche, in particular the resolution of either the shareholders’ General Meeting or the Management Board of a joint-stock company (pursuant to the company’s Charter or the delegation of power by the shareholders’ General Meeting to the Management Board); or that of the Members’ Council or the entity’s owner (with respect to the companies converted into joint-stock companies); or that of the owner of a wholly foreign-invested company or the management board of a joint-venture company (with respect to foreign invested companies converted into joint-stock companies). It is required that the plan for separate share sale shall determine applicable entities and that the number of investors entitled to this sale offer shall be less than 100 investors, at the same time the enterprise is limited to the share assignment within at least one year upon completion of the offer tranche.

Then the company shall submit a valid and full application file for registration of a separate share sale in accordance with Decree 01. For the companies operating in conditional business sectors, they are also required to comply with legal regulations of the relevant specialized sectors. In addition, separate share sales shall be conducted apart from each other at least every 6 months.

The obligations of enterprises offering a separate share sale

In addition to the obligations mentioned in the official document 14285 and Directive 20, Decree 01 also emphasizes that the companies are not entitled to advertise their offer on public media, except in cases where the information is made public pursuant to the securities law and other relevant legal documents within 90 days prior to and during the time of offering separate shares for sale. And the amount paid for purchase of securities shall be transferred to the escrow account opened at a commercial bank until completion of the offer tranche. In the event that the company is converted into a public company after such separate share sale, it is required to proceed with the public company registration procedures in compliance with the securities law.

The enterprise should take notice that its assignment of shares shall not be certified during the time when the share assignment is limited based on the plan for separate share sale registered with the competent state body, and while it is registering as a public company (in case where it is converted into a public company after such offer tranche).

Handling of violations

Warning and fines (at least 10 million VNĐ) shall be imposed on the acts of violating Decree 01. In addition, the violator may be suspended from a separate share sale in a specific time and/or illegal proceeds earned from conducting violations confiscated, and one or more remedial measures taken based on the nature and seriousness of such violations.

Decree 01 shall take effect as from 25 Feb 2010.