The information disclosure of the public company plays an important role for investors who are shareholders because the information disclosure helps investors to grasp information about the operation and internal management of the company after the Company has raised capital from the public. Pursuant to Vietnamese law, the information disclosure of a public company is a mandatory obligation. In case a public company fails to ensure compliance with the obligation to disclose information, it will be subject to legal consequences such as administrative sanctions in accordance with the securities law. Therefore, this article will provide an overview of obligations in term of information disclosure of a public company.
Public companies are understood as a joint-stock company that has widely mobilized capital through a successful initial public offering of shares through registration with the State Securities Commission in accordance with the Law on Securities 2019; or being a joint-stock company with a contributed charter capital of VND 30 billion or more and having at least 10% of the voting shares held by at least 100 investors who are not major shareholders.
Therefore, in order to ensure a safe and transparent securities market as well as protect the legitimate rights and interests of investors in the stock market, especially non-professional investors and foreign investors, the securities law has stipulated that disclosure of information is a mandatory obligation for public companies in Clause 1, Article 34 of the Law on Securities No. 54/2019/QH14. At the same time, in Clause 6, Article 40, this Law stipulates that disclosure of information is one of important governance principles applicable to public companies:
“Punctually, adequately, accurately and transparently disclose information about the company’s operation; ensure equal accessibility of information to all shareholders.” In fact, it can be seen that in some cases, the implementation of disclosure of information by public companies has not been focused and complied by laws since this can directly affect the actual value of public companies in the market, especially in cases where information disclosure is not positive about the management activities and business results of the enterprise. However, it should also be noted that if the public company does not comply with the provisions on the meaning of information disclosure, it may be subject to measures to handle administrative violations such as fines and/or corresponding additional sanctions in Decree No. 156/2020/ND-CP.
When publishing information, public companies need to comply with the following basic principles as guided in Circular No. 96/2020/TT-BTC:
In accordance with the securities law, the obligation to disclose information of a public company will include to publish public company’s registration information, annual audited financial statements, information related to the shareholders’ council, management and production and business activities of the enterprise, transactions of shares or assets of the company; to publish unusual information at the time of events as prescribed by law and/or to publish information at the request of competent state agencies, specifically as follows:
3.1 Publicizing information after registration of a public company
One of the important obligations of a public company is to publish information after 07 days from the date the State Securities Commission confirms the completion.
This obligation to disclose information will have to be fulfilled through the public company’s website and the information disclosure system of the State Securities Commission (http://www.ssc.gov.vn)
3.2 Periodic disclosures
3.2.1 Audited annual financial statements
Annually, the public company must publish the audited annual financial statements approved by the auditing organization within 10 days from the date the auditing organization signs the audit report, and no later than 90 days from the end of the fiscal year.
3.2.2 Annual report:
The annual report must be prepared according to the prescribed form and published within 20 days from the date of publication of the audited annual financial statements and not exceed 110 days from the end of the fiscal year.
3.2.3 Information about the annual council meeting
Within a minimum of 21 days before the opening date of meeting of the General Meeting of Shareholders or depending on the time limit specified in the Company’s Charter, the public company must publish the information on the company’s website and the information page of the State Securities Commission and the Stock Exchange.
3.2.4 Publicize the information about corporate management of public company
The public company must publish information about the status of a corporate governance by a prescribed form within 30 days from the end of the first 6 months of the year and the end of the calendar year.
3.2.5 Unusual statements
The obligation to disclose unusual information should be fulfilled within 24 hours from the time when one of events happens:
Or in some cases the company must make the disclosure of information about the extraordinary meeting of General Meeting of Shareholders or adopting the Resolution of the General Meeting of Shareholders in the form of obtaining shareholders’ opinions in writing; relating to the date of final registration of exercise of rights to existing shareholders and disclosure of information in other special cases as prescribed.
Disclosure of information upon request is understood as a disclosure at the request of the State Securities Commission and the Stock Exchange within 24 hours when one of the following events occurs:
The disclosure of information relating to other activities of the public company shall be carried out in the following cases:
In short, the disclosure of information is a mandatory obligation and demonstrates the responsibility of the public company for the published information as well as the timely updating and notifying when there is a change in the information published to investors. Therefore, public companies playing a role as organizations raising capital from the public need to pay attention and ensure compliance with information disclosure to avoid the risk of being imposed on measures of administrative violations from the State Securities Commission if they do not comply with this obligation by laws.
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.