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question and answer
:: Question :: When shareholding companies proposes to issue more shares to increase their Charter Capital, pursuant to laws and regulations of Vietnam, which percentage between the capital proposed to be issued and the current Charter capital? Is there any limitation on the capital proposed to be increased within a year?
Answer:
In principle, in respect of both listed companies and un-listed companies, there are two major kinds of share offering namely public offering and private offering. There is no specific regulation on percentage between the capital proposed to be issued and the current Charter capital as well as the limitation on the capital proposed to be increased within a year.
In order to conduct public share offering, the company must satisfy conditions stipulated in Article 12.1 of the Law on Securities 2006.
Currently, there is no specific regulation on distance between the two tranches of public shares offering to increase Charter Capital.
In order to conduct private share offering, the company must satisfy conditions stipulated in Article 8 of Decree No. 1/2010 of the Government on Private Share Offering dated January 4, 2010. .
In respect of distance between the two tranches of private shares offering to increase Charter Capital, pursuant to Article 8.5 of Decree No. 1/2010, private shares offering tranches must be conducted at least six months part. If company breaches this regulation, the offering shall be deemed invalid and the increase of Charter Capital shall not be approved by the competent authority.
Especially, breach of regulation on dossier, conditions and conducting of the private shares offering shall be subjected to a fine from 30 million Vietnam dong to 100 million Vietnam dong.
However, Decree No. 1/2010 took effect from February 25, 2010. Therefore, before the effective date of this Decree, there was no specific regulation on private shares offering. The private shares offering must be conducted pursuant to the 2005 Law on Enterprises and the 2006 Law on Securities.
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