Currently, Vietnam’s stock market is facing many fluctuations, a series of individuals and organizations are accused of manipulating the stock market, leading to investors’ skepticism about the listing of companies and market transparency. In this article, we will provide legal information about the conditions and process for a company to list securities on the stock exchange in Vietnam.
First of all, it is important to understand whether listing a company on the stock exchange and an initial public offering of shares or commonly known as an IPO are the same or not?
Listing securities means putting securities that are eligible for listing on the trading system for listed securities in Vietnam.
Initial public offering of shares is usually done for the purpose of raising more capital for the issuer or becoming a public company through a change of ownership structure without increasing the charter capital of the issuer. Notarized initial public offering of shares is also a mandatory procedure before listing the company on the stock exchange.
Currently, Vietnam has two main listed stock exchanges, namely Ho Chi Minh City Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) to list companies on stock exchanges. This contract is normally made as follows:
Step 1: Register a public company
Step 2: Register for a public offering of securities with the State Securities Commission
Step 3: Register to list shares at the Stock Exchange
* Note: For steps 1 and 2, businesses can still register for notarized security offering first and register a public company afterward according to regulations.
To list on the stock exchange, enterprises must satisfy all the different conditions at the mentioned 3 steps, specifically:
1. Register a public company
Public company is a joint-stock company which meets in one of the following two cases:
(i) The company has contributed charter capital of VND 30 billion or more and has at least 10% of the voting shares held by at least 100 investors who are not major shareholders; or
(ii) The Company has successfully conducted the initial public offering of shares through registration with the State Securities Commission in accordance with regulations.
When one of these two conditions is satisfied, the company needs to submit a public company registration file to the State Securities Commission within 90 days as prescribed.
The State Securities Commission is responsible for certifying the completion of the registration of a public company, and at the same time announcing the name and business contents and other information related to the public company on the information disclosure media of the State Securities Commission after the enterprise meets the statutory requirements.
2. Public offering of securities
A joint-stock company that plans to issue securities for the first time to the public must meet all of the following conditions:
Before offering securities to the public, a joint-stock company must register with the State Securities Commission and receive approval.
*Note: When submitting the application for registration of the public offering of securities to the State Securities Commission, the enterprise must also submit the application for registration for listing or registration for securities trading as prescribed.
3. Listing of securities
In order to list corporate securities, the following conditions must be met:
The classification and arrangement of listed shares are based on the criteria specified in the listing regulations of the Vietnam Stock Exchange, including: charter capital, capitalization value, operating time, status financial model, structure of non-major shareholders, corporate governance.
After receiving a complete and valid application for listing registration, the Stock Exchange will issue a decision to approve the listing and within 90 days from the date of approval for listing, the listing registration organization must put securities into trading according to regulations.
It can be seen that in order for a company to be listed on the stock exchange, businesses have to go through complicated procedures along with strict conditions and high transparency requirements about the company’s operations.
We hope that this article has helped you to have an overview of the necessary legal conditions and procedures to list your company on the stock exchange in Vietnam.
The article is based on applicable law at the time noted as above and may no longer be appropriate at the time the reader approaches this article as the applicable law has changed and the specific case that the reader wishes to apply. Therefore, the article is only for reference.