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 securities law. Therefore, this article will provide an overview of obligations in terms of information disclosure of a public company.
1. Why do a public company have to publish information?
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, 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 the important governance principles applicable to public companies:
“Punctually, adequately, accurately and transparently disclose information about the company’s operation; ensure equal access 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 with 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.
2. Principles of disclosure
When publishing information, public companies need to comply with the following basic principles as guided in Circular No. 96/2020/TT-BTC:
- To publish information fully, accurately and timely in accordance with the law;
- To simultaneously publish information and notify and report to the State Securities Commission of Vietnam and the Stock Exchange where securities are listed and registered for trading;
- The language of disclosure of information will be Vietnamese, except for cases applicable to Vietnam Securities Depository (“VSD”), which will be both Vietnamese and English;
- The means of information disclosure can include:
- The website of the organization;
- The Information disclosure system of State Securities Commission of Vietnam;
- The Website of the Stock Exchange, other means of disclosure of information in accordance with the Regulation of the Stock Exchange;
- The VSD’s website; other mass media (printed newspapers, electronic newspapers…).
3. What information should a public company disclose?
In accordance with the securities law, the obligation to disclose information of a public company will include to publish the 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 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.
3.3 Unusual statements
The obligation to disclose unusual information should be fulfilled within 24 hours from the time when one of the events happens:
- Bank accounts in a commercial bank or foreign bank branches of the company are cleared at the request of competent state agencies for reasons showing signs of fraud or violations of law.
- Upon receiving a written request from competent authorities or issuing a decision of the public company on the suspension of part or all of its business activities; changes in the contents of the enterprise registration; the revocation of the enterprise registration certificate; the amendment, supplementation or suspension, the withdrawal of the establishment and operation license or the operating license;
- Decision of the extraordinary General Meeting of Shareholders is adopted such as;
- Decision to buy back shares of the company or sell treasury stocks;
- Decision on dividend policies, reorganization of enterprises, changes in accounting periods, applicable accounting policies; signing contracts for auditing annual financial statements or related changes; establishing, increasing or reducing ownership ratios in subsidiaries or affiliated companies.
- Decision of the General Meeting of Shareholders or the Board of Directors approving contracts and transactions between the company and internal persons, related persons of internal persons or related persons of public companies;
- Policies related to the company’s shares;
- Decision-related to the business manager;
- Decision to buy, sell assets or make transactions worth more than 15% of the company’s total assets based on the most recent year’s financial statements audited or financial statements of the last 06 months reviewed. In case the public company is the parent company, it shall be based on the consolidated financial statements;
- Upon receiving the decision on the prosecution against the company, the company’s internal members; temporary detention and criminal liability prosecution for the company’s internal members;
- To publish information about extraordinary meetings of General Meeting of Shareholders or the adoption of the Resolution of the General Meeting of Shareholders in the form of obtaining shareholders’ opinions in writing
- Upon receiving the decision on the prosecution against the company, the company’s internal members; temporary detention and criminal liability prosecution for the company’s internal members;
- Upon receipt of the judgment, the decision with legal validity of the Court in relation to the operation of the company; Decisions on sanctioning violations of tax law;
- The company receives a notice from the Court of acceptance of the application for the opening of the enterprise bankruptcy procedure;
- In case the company is aware of events and information affecting the company’s own securities price, the company must confirm or correct the event or information;
- When other events have a great impact on the production, business or management situation of the company;
- Approved or delisted on the Foreign Stock Exchange.
Or in some cases, the company must make disclosure of information about the extraordinary meeting of General Meeting of Shareholders or adopt 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.
3.4 Communication of information as required
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:
- Events that seriously affect the legitimate interests of investors;
- There is information related to the company that greatly affects the stock price and it is necessary to confirm that information.
3.5 Disclosure of information relating to other activities of a public company
The disclosure of information relating to other activities of the public company shall be carried out in the following cases:
- Publishing information on the activities of offering, issuing, listing, registration of transactions and reports on capital use;
- Disclosure of information on foreign ownership ratio;
- Publishing information about the own stock repurchase transaction of the public company, sale of treasury stocks.
In short, the disclosure of the 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.
