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GUIDING THE IMPLEMENTATION OF DECREE No. 48/1998/ND-CP OF JULY 11, 1998 ON ISSUANCE OF SHARES AND BONDS TO THE PUBLIC

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THE STATE SECURITIES COMMISSION
 
No: 02/2001/TT-UBCK
 
SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
----- o0o -----
Ha Noi , Day 28 month 09 year 2001

CIRCULAR No

CIRCULAR No. 02/2001/TT-UBCK OF SEPTEMBER 28, 2001 GUIDING THE IMPLEMENTATION OF DECREE No. 48/1998/ND-CP OF JULY 11, 1998 ON ISSUANCE OF SHARES AND BONDS TO THE PUBLIC

In furtherance of the Government’s Decree No. 48/1998/ND-CP of July 11, 1998 on securities and securities market, the State Securities Commission hereby guides matters regarding the issuance of shares and bonds to the public for listing up at the Securities Trading Centers as follows:

I. GENERAL PROVISIONS

1. In this Circular, the following terms shall be construed as follows:

1.1. Shares include common shares and preferred shares, which constitute a type of securities in form of certificate or book entry certifying the shareholders’ ownership and legitimate interests over the assets or capital of a joint-share company.

1.2. Bond is a type of securities issued in form of certificate or book entry certifying the obligation to repay debts (including principals and interests) of the bond-issuing organizations towards bond owners.

1.3. Registered shares, bonds are types of shares or bonds where the owners’ names are inscribed.

1.4. Bearer shares, bonds are types of shares or bonds where the owners’ names are not inscribed.

1.5. Stock option means the option reserved for current shareholders of a joint-stock company to buy a quantity of stocks in a new issuance of common shares corresponding to their respective stock proportions in the company.

1.6. Convertible bonds are those which can be converted into common shares of the same issuing organization under pre-determined conditions.

1.7. Issuance underwriting means that the issuance-underwriting organizations assist the issuing organizations in carrying out procedures for compilation and submission of dossiers of application for issuance before making securities sale offer and agreeing to buy securities of issuing organizations for resale or to buy the remaining quantity of securities not yet distributed out. The issuance-underwriting activities only mean that the issuance-underwriting organizations underwrite securities for the issuing organizations, excluding the performance of obligations toward investors, performed by the underwriting organizations on behalf of the issuing organization.

1.8. Distributing organizations are those which sell securities by mode of issuance underwriting or through issuing agents.

1.9. Issuing agents are securities companies, commercial banks, investment banks and financial companies, which undertake to sell securities for issuing organizations on the basis of agreement or through the principal issuance-underwriting organization.

1.10. Approved auditing organizations mean independent auditing organizations approved by the State Securities Commission to be the auditing organizations for securities issuing and trading organizations.

1.11. Equitized enterprises mean State enterprises or enterprises of other types, which conduct the equitization.

1.12. Rights mean a type of securities issued together with preferred bonds or shares, permitting the authorized securities holders to buy a certain amount of common shares at a pre-set price in a given period of time.

1.13. Listed companies mean joint-stock companies which have their common shares listed at the Securities Trading Centers or Stock Exchange.

2. Par values of shares and bonds are inscribed in Vietnam dong. Shares have the uniform par value of VND 10,000. Bonds have the minimum par value of VND 100,000 or the multiple of VND 100,000. In a bond-issuing drive of the issuing organizations, bonds of the same term must have the same par value.

3. Shares and bonds issued to the public for transaction at the Central Trading Market shall be registered in concentration at the Securities Trading Centers or Stock Exchanges.

4. Share certificates, bond certificates issued to the public must contain the following principal contents:

4.1. Name and head-office of the issuing organization;

4.2. Serial number and date of issuance of the establishment permit (or decision) and the business registration certificate;

4.3. Type, par value, serial number;

4.4. The amount of equities allowed to be issued (for shares);

4.5. Interest rate, interest payment schedule, bond term ( for bonds);

4.6. Owners’ names (for registered shares and bonds);

4.7. Date of issuance;

4.8. Seal and signature of the chairman of the Managing Board of the issuing organization.

5. Where shares and bonds are issued in form of book entry, the share or bond buyers shall be granted the ownership certificates.

6. Shares and bonds may be sold to the following subjects:

6.1. Economic organizations, social organizations, Vietnamese citizens and overseas Vietnamese;

6.2. Foreign organizations and individuals.

7. The percentages of shares or bonds held by foreign organizations and individuals in an issuing organization shall comply with the Prime Minister’s decisions.

II. CONDITIONS FOR SHARE ISSUANCE

1. The share-issuing conditions as prescribed in Article 6 of Decree No.48/1998/ND-CP of July 11, 1998 of the Government on securities and securities market for the issuing organizations to issue shares to the public for the first time shall include:

1.1. Being joint-stock companies, equitized enterprises;

1.2. Having the minimum charter capital actually obtained by the date of applying for issuance being VND 10 billion;

1.3. Having profitable production and business operation in the two latest consecutive years counting to the date of submitting the dossiers of application for issuance, the healthy financial situation and good development prospect. For equitized enterprises, the above-said two-year duration shall cover the pre-equitization time;

1.4. Having feasible plans on the use of capital gathered from the issuance, which have been approved by the shareholders’ congress;

1.5. The Managing Board members and the director (general director) have experiences in business management;

1.6. At least 20% of the stock capital of the issuing organization must be sold to more than 100 investors outside the issuing organization; where the stock capital of an issuing organization is VND 100 billion or more, this minimum percentage shall be 15% of the stock capital of the issuing organization;

1.7. The founding shareholders must hold at least 20% of the stock capital of the issuing organization by the time of ending the issuing drive and must maintain this percentage for at least 3 years as from the end of the issuing drive;

1.8. Where the issued shares have the total value according to their par values exceeding VND 10 billion, there must be the issuance-underwriting organization.

2. The listed companies, when additionally issuing shares to increase their capital, apart from satisfying the conditions prescribed at Points 1.1,1.2, 1.3,1.4,1.5,1.6 and 1.8 of Section II of this Circular, shall also have to meet the following conditions:

2.1. The interval between the additional issuance and the previous issuance must be at least one year counting from the time of being granted the issuing permit;

2.2. The value of the additionally issued shares is not larger than the total value of the being-circulated shares. The share value is calculated according to par value.

3. Where the capital-increasing shares are issued together with the stock option, the preferred shares are issued together with rights, the issuing organizations must clearly state the right-exercising modes in the prospectus with the following contents:

3.1. The right-exercising duration;

3.2. The conversion price, calculation method;

3.3. Other terms related to the interests of holders of stock option or rights (if any).

III. CONDITIONS FOR BOND ISSUANCE

1. The conditions for bond issuance as prescribed in Article 8 of the Government’s Decree No.48/1998/ND-CP of July 11, 1998 on securities and securities market for the issuing organizations to issue bonds to the public shall include:

1.1. Being State enterprises, joint-stock companies, equitized enterprises, limited liability companies;

1.2. The minimum charter capital level by the date of application for issuance is VND 10 billion;

1.3. Having profitable production and business activities for the two latest consecutive years counting to the date of submitting the dossiers of application for issuance, the healthy financial situation and good development prospect. For equitized enterprises, the above-said two-year time limit shall cover the pre-equitization period;

1.4. Having feasible plans on the use of capital gathered from the issuing drive approved by the Managing Board, for joint-stock companies; by the Members’ Council, for limited liability companies; or by the managing agencies, for State enterprises;

1.5. The Managing Board members and the director (general director) have experiences in business management;

1.6. At least 20% of the total value of the to be-issued bonds must be sold to more than 100 investors; where the total value of the to be- issued bonds reaches VND 100 billion or more, this minimum percentage shall be 15% of the total value of the to be- issued bonds;

1.7. There must be the issuance-underwriting organization, except for cases where the issuing organizations are credit institutions;

1.8. Having committed to fulfill the obligations towards investors;

1.9. Determining the representatives of bond owners.

2. Bonds issued under Point 1 above may be unsecured bonds, secured bonds, convertible bonds and bonds accompanied with rights.

3. Bonds may be secured partially or wholly by either of the following two modes:

3.1. Payment guarantee of the Finance Ministry or a financial institution, for State enterprises;

3.2. Security with the secured assets of the issuing organizations or a third organization.

4. Where the secured bonds are issued under the provisions at Point 3.2, Section III of this Circular, the issuing organizations must clearly state the security rates and list in detail the secured assets in the dossiers of application for issuance and have valid documents proving that such assets are under the ownership of their own (or the third organization) and have adequate value for bond repayment. The secured assets must satisfy the requirements prescribed at Points 6,7 and 8 of Section III of this Circular.

5. Assets which are allowed to be used as security for the issuance of secured bonds shall include:

5.1. The Government’s bonds of various kinds.

5.2. Bonds of other kinds, which are repaid with both principals and interests by underwriting organizations unconditionally;

5.3. The right to use land under the land legislation;

5.4. Dwelling houses and construction works affixed to land;

5.5. Such production and business establishments as factories, hotels, shops, warehouses; instruments, machinery and equipment closely associated with factories, sea-going ships, airplanes….

6. Assets used as security prescribed at Points 5.4 and 5.5, Section III of this Circular must be insured through contracts.

7. The assets securing for a bond issuance must satisfy the following requirements:

7.1. The value of the secured assets stated at Points 5.1 and 5.2, Section III of this Circular must be at least equal to the total bond value;

7.2. The value of the secured assets stated at Points 5.3,5.4 and 5.5, Section III of this Circular must be at least equal to 1.5 time of the total bond value.

8. The evaluation or calculation of the value of the secured assets must be effected as follows:

8.1. The secured assets defined at Points 5.1 and 5.2, Section III of this Circular shall be calculated at the lowest price of one of the following prices:

8.1.1. The market price;

8.1.2. The par value;

8.1.3. The purchasing prices of such secured assets, including the interests or discount amount received by the date of applying for issuance.

8.2. The secured assets defined at Points 5.3, 5.4 and 5.5, Section III of this Circular must be valued by a competent asset pricing agency. This valuation shall be valid for not more than 12 months as from the date of valuation.

9. Where the convertible bonds or bonds accompanied with rights are issued, the issuing organizations must clearly state the terms for purchase or conversion in the dossiers of application for issuance, which include the following principal contents:

9.1. Conditions and time for effecting the purchase and/or conversion;

9.2. Conversion rate and method of calculating the purchasing and/or converting price;

9.3. The method of calculating and compensating for damage in cases where the bond-issuing organizations fail to issue shares to satisfy the right to purchase and/or conversion;

9.4. Other terms (if any).

IV. DOSSIERS OF APPLICATION FOR ISSUANCE

1. The dossier of application for issuance of shares to the public as provided for in Article 9 of the Government’s Decree No.48/1998/ND-CP of July 11, 1998 on securities and securities market shall include:

1.1. The application for issuance;

1.2. The notarized copy of the establishment permit (or decision);

1.3. The notarized copy of the business registration certificate;

1.4. The company’s charter as provided for at Point 6, Section IV of this Circular;

1.5. The resolution of shareholders’ congress approving the issuance of new shares;

1.6. The prospectus as provided for at Point 4, Section IV of this Circular;

1.7. The lists and curricula vitae of the members of the Managing Board and the directorate;

1.8. The financial statements for the two latest consecutive years counting to the date of submitting the dossiers of application for issuance as provided for at Point 5, Section IV of this Circular;

1.9. The decision on valuation of the enterprise, issued by the competent body for the State enterprises conducting the equitization;

1.10. The commitment to underwrite the issuance as provided for at Point 7, Section IV of this Circular (if any);

2. The dossier of application for the issuance of bonds to the public shall include:

2.1. The documents prescribed at Points 1.1, 1.2, 1.3, 1.4, 1.6, 1.7, 1.8, 1.9 and 1.10 of Section IV, this Circular;

2.2. The Managing Board’s resolution on the application for bond issuance to the public; where the issuing organizations are State enterprises, there must be the approving opinions of the managing bodies of such enterprises;

2.3. The commitment to fulfil the issuing organization’s obligation towards the investors as provided for at Point 8 of Section IV, this Circular;

2.4. The contract between the bond- issuing organization and the bond owners’ representatives as provided for at Point 3, Section VIII of this Circular;

2.5. The record determining the value of the secured assets or the written approval of payment guarantee by the underwriting organization (for case of issuing secured bonds).

3. The dossiers of application for additional issuance of shares/bonds to the public shall be exempt from the documents prescribed at Point 1.2, 1.3 and 1.9 of Section IV, this Circular.

4. The prospectus must satisfy the following requirements:

4.1. Containing all necessary, truthful and clear information in order to help investors and securities companies accurately assess the financial situation, business activities and prospect of the issuing organization.

4.2. Containing the following major contents:

- The full name and transaction name of the issuing organization;

- The head-office’s address; the transaction telephone and fax numbers;

- The serial numbers, days, months and years of the establishment permit (or decision) and the business registration certificate;

- The brief operation charter;

- The commitment of persons who assume the prime responsibility for the contents of the prospectus;

- The outline of the formation and development process;

- The structure of the organization or the group, of which the issuing organization is a member (if any);

- The managerial apparatus organization;

- The analysis of financial activities;

- The capital ownership structure of the current shareholders, the names and addresses of current shareholders holding 5% or more of the stock capital of the company;

- The names and addressed of the Managing Board members, the executive director (or general director), the chief accountant, the percentages of share and bond ownership by each of the above-mentioned members in the issuing organization;

- The results of business and marketing activities in the two latest consecutive years, principal products or services;

- The situation of new product research and development;

- The policies towards laborers;

- Taxes and the performance of tax obligation towards the State;

- The current situation on debts;

- The issuance plan: The purpose of using money amount earned from the issuance drive, the total capital amount planned to be issued, the quantity of shares or bonds expected to be issued, the projected selling price, mode of distribution, principle of distribution, time limit for registration for purchase of shares or bonds, mode of payment and transfer of shares or bonds, interests of owners.

4.3. In cases of issuing shares accompanied with the stock option, preferred shares accompanied with rights or issuing convertible bonds, bonds accompanied with rights and secured bonds, the prospectus must clearly reflect the conditions and rights related to shares or bonds mentioned above.

4.4. The financial data in the prospectus must be compatible with the data of the already audited financial statement in the dossier of application for issuance.

4.5. There must be the signatures of the chairman and members of the Managing Board (at least 2/3 of the Managing Board members), the head of the Control Commission, the director (general director) and the chief accountant of the issuing organization and the executive directors (general directors) of all issuance- underwriting organizations (if any). In case of signing by their representatives, there must be letters of authorization.

4.6. The cover pages must contain:

- The full names enclosed with head-office addresses, transaction telephone and fax numbers of the auditing organization, the consulting organization and all issuance-underwriting organizations (if any);

- The capital letter line shall be as follows: "THAT THE STATE SECURITIES COMMISSION PERMITS THE SECURITIES ISSUANCE ONLY MEANS THAT THE SECURITIES ISSUANCE HAS MET THE LAW PROVISIONS BUT DOES NOT IMPLY THE GUARANTEE OF THE VALUE OF SECURITIES. ALL STATEMENTS CONTRARY TO THIS ARE ILLEGAL";

- The venue for supply of the prospectus;

- The information (names, telephone numbers) on individuals responsible for the announcement of information of the issuing organization.

- The cover page of the official prospectus approved by the State Securities Commission must be clearly inscribed with the serial number and date of issuance of the issuing permit.

4.7. The prospectus must be presented on white paper, A4 size, in vertical position, black letters.

5. The financial statement must satisfy the following requirements:

5.1. Complying with the current accounting regulations of the State;

5.2. The annual financial statements must be certified by an approved auditing organization. The auditing opinions on the financial statements must be the full agreement or the agreement with exceptions. The exceptions shall not greatly affect the financial situation of the issuing organization;

5.3. The duration between the signing date of the latest annual financial statement and the time of sending the dossiers of application for issuance to the State Securities Commission must not exceed 90 days. In cases where the above duration exceeds 90 days, the issuing organization must make additional financial statements at the request of the State Securities Commission;

5.4. Where the issuing organization owns 50% or more of the stock capital (or contributed capital) of another organization, or 50% or more of the stock capital of the issuing organization are held by another organization, the issuing organization must send also the financial statements of such organizations or the integrated financial statement;

5.5. If the financial statement is a copy, it must be stamped with "Sao y ban chinh" (certified true copy of the original) and signed by the lawful representative of that very organization.

6. The company’s charter must accord with the law provisions, without limiting the transfer of common shares of common shareholders, excluding shares of the Managing Board members.

7. The issuance-underwriting commitment must satisfy the following requirements:

7.1. Being made according to set form;

7.2. Being signed between the issuance- underwriting organization and the issuing organization. Where the issuance is underwritten according to conglomerate, the issuance-underwriting commitment must be signed between the principal issuance- underwriting organization and the issuing organization.

8. The written commitment to fulfil the bond-issuing organization’s obligations towards investors must contain the following major contents:

8.1. The name of the issuing organization;

8.2. The addresses of the head office, branches and representative offices of the issuing organization;

8.3. Types and characteristics of the issued bonds;

8.4. The commitment to pay the principals and interests for the issued bonds;

8.5. The commitment to the maximum borrowing percentage;

8.6. The terms of the unsecured bonds;

8.7. The commitment to maintain the total value of mature secured assets of bonds (if any);

8.8. Details on the third party’s security on the principals and interests (if any);

8.9. The name of the representative of bond owner under the contract between the issuing organization and the bond owner’s representative;

8.10. The terms on the bond owner’s representative.

9. The amendment and/or supplementation of the dossiers of application for issuance before being granted the issuing permits:

9.1. Cases of amendment, supplement:

9.1.1. The issuing organization deems it necessary to make amendments or supplements;

9.1.2. The State Securities Commission requests the issuing organization to make amendment or supplement.

9.2. In case of amendments and/or supplements under the provisions at Point 9.1, the written amendments or supplements must be signed by the persons who have signed the dossiers of application for issuance sent to the State Securities Commission or by persons with the same titles as the above-mentioned people;

9.3. In case of amendments, supplements under the provisions at Point 9.1.2, the issuing organization must make the amendments and/or supplements strictly according to the procedures and time prescribed by the State Securities Commission.

10. After being granted the permits and before completing the security distribution to the public, if the State Securities Commission detects that the dossiers of application for the granting of issuing permits are inaccurate or lack necessary information but without causing damage to investors, the issuing organizations must amend or supplement the dossiers of application for the issuing permits:

10.1. The amendment or supplement must comply with the provisions at Points 9.2 and 9.3 of Section IV of this Circular;

10.2. The issuing organizations must immediately announce the contents of amendment or supplement on three consecutive issues of a central newspaper and one local newspaper of the locality where the issuing organizations and headquartered and on the official bulletin of the securities market.

11. Where securities buyers suffer from damage due to inaccurate or untruthful information in the prospectus:

11.1. The following organizations and individuals must be jointly accountable to compensate for damage to the securities buyers:

11.1.1. The issuing organization, the chairman and members of the Managing Board, the head of the Control Commission, the director (general director), the chief accountant and the participants in the compilation of the dossiers of application for issuance;

11.1.2. The company which provides consultancy for the issuing organization. The organization which undertakes to underwrite and signs the commitment to underwrite the issuance with the issuing organization;

11.1.3. The auditing organization, the persons who have signed and certified the auditing;

11.2. The subjects mentioned at Points 11.1.2 and 11.1.3 above may be exempt from their joint liability only when they can prove that they have strictly complied with the law provisions and have tried their best.

11.3. The damage compensations to share or bond buyers as provided for at Point 11.1 above shall comply with the current legislation.

12. The compilation of dossiers of application for issuance must be counseled by at least one securities company which bears responsibility for the scope of counseling.

V. GRANTING, SUSPENSION AND WITHDRAWAL OF SHARE, BOND- ISSUING PERMITS

1. Organizations issuing shares or bonds to the public for listing or listed companies wishing to additionally issue shares must be granted the issuing permits by the State Securities Commission. The issuing permits shall be granted to issuing organizations only when:

- They meet all conditions prescribed at Points 1 and 2, Section II or Points 1 and 2, Section III, of this Circular;

- They have the dossiers of application for issuance as provided for at Point 1, Point 2 or Point 3, Section IV of this Circular;

- They have amended and/or supplemented the dossiers of application for issuance as provided for at Point 9, Section IV of this Circular (in case of amendment, supplement).

2. The dossiers of application for issuance of shares or bonds to the public shall be sent to the State Securities Commission. Within 45 working days after fully receiving the dossiers of application for issuance, the State Securities Commission shall examine, consider and grant or refuse to grant the permits. In case of refusal to grant a permit, the State Securities Commission shall have the written explanation of the reasons therefor.

In case of amendment and/or supplementation of the dossiers of application for issuance, the time limit for receipt of the dossiers shall be counted from the date the State Securities Commission receives the written amendments and/or supplements.

3. Before completing the distribution of shares or bonds to the public, the issuing organization may suspend the issuance in the following cases:

3.1. Failure to effect the supplementation or amendment of the dossier of application for issuance as provided for at Point 10, Section IV of this Circular;

3.2. When the State Securities Commission detects that information in the dossier of application for issuance is inaccurate or inadequate, which may affect the investment decision and cause damage to investors;

3.3. The issuing organization’s lost, blockaded or confiscated assets have the value being equal to 10% or higher, of the value of the issued shares or bonds.

Where the issuance is suspended, the investors may cancel the purchase registration or return the purchased shares or bonds. The issuing organization is obliged to refund the money to the purchasers according to the provisions at Point 12, Section VI of this Circular.

4. The issuing organization shall have its issuing permit withdrawn in the following cases:

4.1. It voluntarily asks for the withdrawal of the issuing permit;

4.2. The issuance’s results fail to satisfy the conditions prescribed at Points 1.6 and 1.7, Section II or Point 1.6, Section III, of this Circular;

4.3. It cannot overcome the cases mentioned at Points 3.1, 3.2 and 3.3 of Section V, this Circular strictly according to the procedures and time limit prescribed by the State Securities Commission;

4.4. It has violated the legislation and/or regulations on securities and securities market, causing serious damage to investors;

4.5. It or its representative has failed to make share or bond sale offer within 60 days as from the date the issuing permit takes effect;

4.6. At the end of the issuance drive, the actually issued quantity has failed to reach the minimum 80% of the quantity of securities allowed for issuance;

4.7. When the law body requests the withdrawal of the issuing permit.

Where the issuing permit is withdrawn, the investors may cancel the registration of the share or bond purchase or return the already purchased shares or bonds and the issuing organization as well as the distributing organization shall be obliged to refund the money to the purchasers according to the provisions at Point 12, Section VI of this Circular.

5. The issuing organizations shall have the obligation to pay a fee for the granting of issuing permits to the State Securities Commission, which is equal to 0.02% of the total value of the shares or bonds asked for issuance, but shall not exceed VND 50 million.

6. Shares and bonds issued to the public may be registered for listing and trading at the Securities Trading Centers or the Stock Exchange.

VI. DISTRIBUTION OF SHARES, BONDS

1. While the State Securities Commission considers the dossiers of application for issuance:

1.1. The issuing organizations must not directly or indirectly carry out activities of advertisement, inviting the public to invest in the purchase of shares or bonds and distributing shares or bonds to the public in any form;

1.2. The issuing organizations can only use the information in the prospectus already sent to the State Securities Commission to probe the market, except for the information on the issuing date and the prices of shares or bonds to be sold to the public. The market probing must not be carried out on the mass media.

2. Announcing the issuance: Within 5 working days after receiving the issuing permit granted by the State Securities Commission, the issuing organization must announce the issuance on five (5) consecutive issues of a central newspaper, one local newspaper of the locality where it is headquartered and on the official bulletin of the securities market. The issuance announcement must contain the following principal contents:

- The name of the issuing organization;

- The address of its head-office, its telephone and fax numbers;

- Its charter capital;

- Objectives and business lines;

- Selling prices offered to the public;

- Types of shares or bonds;

- The total volume of shares or bonds allowed to be issued to the public;

- The issuance date and duration;

- The venue for supply of the prospectus;

- The place and time of distribution of shares, bonds.

3. After receiving the issuing permit and before distributing securities, the issuing organization shall have to send to the State Securities Commission the following documents in service of the distribution of shares or bonds:

- The summarized prospectus as provided for at Point 5, Section VI of this Circular;

- The notice on the issuance of shares (bonds) made with contents according to the set form;

- Other documents (if any).

5 working days after receiving the above-mentioned documents, if the State Securities Commission has no other opinions, the issuing organization may use these documents to offer the sale of shares or bonds to the public.

4. Supply of the prospectus: After being allowed to use documents to offer the sale of shares or bonds to the public, the issuing organization shall have to supply the official prospectus or the summarized prospectus (if any) at the requests of the investors and securities companies at the places stated in the issuance announcement.

5. The requirements on the summarized prospectus:

5.1. The summarized prospectus must honestly reflect the contents of the official prospectus already approved by the State Securities Commission;

5.2. The principal contents of the summarized prospectus must comply with the provisions at Point 4.2, Section IV of this Circular;

5.3. The headings of the summarized prospectus must be the same as the headings of the official prospectus already approved by the State Securities Commission;

5.4. The cover pages of the summarized prospectus must contain the contents prescribed at Point 4.6, Section IV of this Circular;

5.5. The summarized prospectus must be made public at all its branches, distributing agents or at places easily accessible to the investing public.

6. When selecting distributing agents, the issuing organization shall have to select organizations which satisfy the following conditions:

6.1. Having adequate material foundations and personnel in service of the distribution;

6.2. Being efficient business units;

6.3. Having agency contracts signed with the issuing organization.

7. When distributing shares, bonds to the public, the issuing organization shall have to comply with the following requirements:

7.1. Being allowed to use only information in the official prospectus and other relevant documents in the dossiers of application for issuance already approved by the State Securities Commission;

7.2. Being not allowed to distribute shares, bonds when the announcement to the public has not yet been made as provided for at Point 2, Section VI of this Circular;

7.3. Distributing shares, bonds in a fair manner at the selling prices set in the official prospectus already approved by the State Securities Commission;

7.4. Creating favorable conditions for individual investors to buy shares, bonds;

7.5. Ensuring the minimum purchase registration time limit of 30 days for investors;

7.6. Using cards of registration for the purchase of shares or bonds;

7.7. Only being allowed to request share, bond buyers to deposit a maximum sum being equal to 10% of the value of shares or bonds registered for purchase.

8. Where the volume of shares or bonds registered for purchase exceeds the volume of shares or bonds allowed to be issued to the public:

8.1. The distributing organization may apply one or several priority modes to the distribution, including the time priority; the quantity priority; or other priority modes as agreed upon;

8.2. The distributing organization must prioritize the distribution to individual investors according to the volume of shares or bonds they have registered to purchase. Where the volume of shares or bonds registered for purchase by individual investors exceeds 20% of the volume of shares or bonds allowed to be issued, the distributing organization shall have to reserve at least 20% of the volume of shares or bonds issued to the public for distribution to the individual investors;

8.3. The issuance-underwriting organization or concerned people must sell out the entire volume of underwritten shares or bonds to the public and must not retain shares or bonds for themselves;

8.4. The manager and major shareholders of the issuance-underwriting organization must not buy shares or bonds issued to the public;

8.5. At the end of the purchase registration time limit, the issuing organization must inform the investors of the volume of shares or bonds they are entitled to buy;

8.6. If investors are not allowed to buy the full volume of shares or bonds they have registered to purchase, they may cancel the purchase registration and have to notify such cancellation within 5 days after receiving the notification on the volume of shares or bonds they can buy. The issuing organization and the distributing organization are obliged to refund the deposits to the purchasers no later than before the date when the share or bond-buying money is paid. If past the above time limit the issuing organization and the distributing organization still fail to refund the money to the investors, they shall, besides having to fully return the deposits to the investors, have to pay the interests thereon at the highest demand deposit interest rate applied by a State-run commercial bank at the time of payment.

9. The issuing organization or the distributing organization must distribute shares or bonds within 90 days as from the date the issuing permit takes effect. Upon the expiration of the above time limit, if the shares or bonds are not sold out, the issuing organization, if wishing to continue the distribution thereof, must send the application to the State Securities Commission, clearly stating the reasons and plan for the distribution of the remaining shares or bonds.

10. The issuing organization and the issuance-underwriting organization must transfer shares or bonds to the buyers within 30 days as from the end of the issuance drive.

11. Within 10 days after the end of the issuance drive, the issuing organization shall have to send a report on the share or bond distribution results to the State Securities Commission.

12. Where the issuing organization is suspended or has its issuing permit withdrawn according to the provisions at Point 3 or Point 4, Section V of this Circular, the issuing organization shall have to:

12.1. Announce on three (3) consecutive issues of a central daily and a local daily of the locality where the issuing organization is headquartered and on the official bulletin of the securities market the suspension or permit withdrawal. The announcement contains the following contents:

- The serial number and date of the decision on the issuance suspension or the decision on withdrawal of the issuing permit;

- The time to reimburse the purchase money or deposit money to investors;

- The venue for reimbursement of the purchase money or deposit money to investors;

- Mode of payment.

12.2. Refund the purchase money or the deposit money to investors within 30 days as from the date of issue of the issuance suspension decision or the issuing permit- withdrawing decision.

If past the above time limit the issuing organization and the distributing organization still fail to refund money to the investors, they shall, besides having to fully return the purchase money or deposits to the investors, have to pay the interests thereon at the highest demand deposit interest rate applied by a State-run commercial bank at the time of payment.

VII. ISSUANCE UNDERWRITING

1. Organizations participating in the issuance underwriting must satisfy the following conditions:

1.1. Having the issuance-underwriting operation permit granted by the State Securities Commission;

1.2. Not being subjects prescribed at Point 3, Section VII of this Circular.

2. The issuance-underwriting organizations must not underwrite the issuance of a volume of shares or bonds with value exceeding four times the difference between the value of their current assets and current liabilities. The current assets and the current liabilities are determined as follows:

2.1. The current assets include: cash, amounts to be collected in the fiscal year, financial investments of a term of under one year;

2.2. The current liabilities include: short-term borrowings, amounts to be paid in the fiscal year, including due long-term debts.

3. An issuance-underwriting organization must not participate in the issuance underwriting in the following cases:

3.1. It holds 5% or more of the stock capital of the issuing organization or vice versa the issuing organization holds 5% or more of the stock capital of the issuance-underwriting organization;

3.2. The issuance-underwriting organization and the issuing organization both have the same shareholder owning 5% or more of the stock capital;

3.3. The issuance- underwriting organization and the issuing organization are both governed by another organization.

4. Organizations participating in the issuance underwriting must send the State Securities Commission the issuance-applying dossiers prescribed at Point 1, Point 2 or Point 3, Section IV of this Circular, together with the following documents:

4.1. The copy of the issuance-underwriting permit granted by the State Securities Commission;

4.2. The application for issuance underwriting;

4.3. The contract among the issuance underwriters (in case a conglomerate underwrites the issuance);

4.4. The documents proving that the issuance-underwriting organization fully satisfies the conditions prescribed at Point 2, Section VII of this Circular.

Where the issuance is underwritten by a conglomerate, the principal underwriting organization shall send the documents mentioned at Points 4.1, 4.2, 4.3 and 4.4 while other members of the conglomerate shall only send the documents prescribed at Points 4.1 and 4.4 of Section VII of this Circular.

5. The issuance underwriting shall be effected by either of the two following modes:

5.1. Purchasing the entire volume of to be- issued shares or bonds for resale to the public;

5.2. Purchasing the remaining volume of shares or bonds of an issuance drive, which have not yet been distributed out.

6. Where the issuance underwriting involves two or more underwriting organizations, the issuance-underwriting conglomerate must be set up:

6.1. The issuance-underwriting conglomerate must operate on the basis of a contract between the underwriting organizations; in the issuance-underwriting conglomerate, there may be one or several principal issuance-underwriting organizations;

6.2. The principal issuance-underwriting organization signs on behalf of the conglomerate the issuance-underwriting contract with the issuing organization and takes responsibility before the issuing organization for the commitments of the issuance-underwriting organizations in the conglomerate when performing the distribution of shares or bonds.

7. In the course of performing the issuance-underwriting commitments, the issuance-underwriting organization must abide by the following regulations:

7.1. Not disclosing information on the issuing organization to the third party outside the information in the prospectus;

7.2. Bearing responsibility for the truthfulness and adequacy of the information in the prospectus;

7.3. Distributing shares, bonds to the public according to the provisions in Section VI of this Circular.

VIII. BOND OWNERS’ REPRESENTATIVES

1. The bond owners’ representatives may be commercial banks or financial institutions, which satisfy the following conditions:

1.1. Having the custody operation permit granted by the State Securities Commission;

1.2. Conducting business activities efficiently and having a healthy financial situation;

1.3. Having the structure to administer and manage the representation- related activities separately from other activities in order to avoid causing damage to the interests in the course of acting as representatives of bond owners.

2. The following organizations must not act as bond owners’ representatives:

2.1. The organization which guarantees the payment of debts of the issuing organization;

2.2. The organization which holds more than 5% of the total voting shares of the issuing organization, or vice versa the issuing organization which holds more than 5% of the total voting shares of the organization asking to act as representative;

2.3. The organization which has the same manager with the bond-issuing organization;

2.4. The bond-issuing organization and the bond owners’ representative have the same shareholders owning more than 5% of the total number of the voting shares;

3. The bond owner- representing contract shall be signed between the issuing organization and the representative of bond owners, which include the following major contents:

3.1. Names and addresses of the contracting parties;

3.2. Rights and obligations of the contracting parties;

3.3. The stipulations on amendment or supplementation of the regulation on the rights and obligations of the bond owners’ representative;

3.4. Charges paid to the representative of the bond owners;

3.5. Terms on liquidation of the contract;

3.6. The effective duration of the contract.

4. The written regulation on the rights and obligations of the bond owners’ representative, which includes the following major contents:

- Monitoring the observance of terms prescribed in the written commitment to fulfil the obligations of the bond-issuing organization according to the provisions at Point 8, Section IV of this Circular;

- Handing over the assets, documents or vouchers related to the work of representing the bond owners to the new representative of the bond owners upon the change of the bond owners’ representative as provided for at Point 8, Section VIII of this Circular;

- Helping and creating conditions for bond owners to check the list of bond owners, the financial statements and annual reports of the issuing organization;

- Supervising, liquidating and dividing the secured assets to the bond owners in case the issuer is incapable of repaying bonds;

- Requesting the issuing organization to send the reports prescribed at Point 2, Section IX of this Circular;

- The provisions on restrictions on the bond owners’ representative.

5. The amendment and supplementation of the Regulation on the rights and obligations of the bond owners’ representative shall be effected according to the following principles and procedures:

5.1. The supplemented or amended provisions must not contravene the provisions in this Circular and be accepted by the bond owners or the representative of the owners holding more than 30% of the total bond value;

5.2. The bond-issuing organization must elaborate the written supplements and/or amendments to the regulation on the rights and obligations of the bond owners’ representative and send them to the latter as well as the State Securities Commission within 7 days as from the date of making the written amendments and/or supplements, and at the same time the issuing organization must send them to the bond owners when so requested.

6. The bond owners’ representative is obliged to notify the persons on the list of bond owners at least once a year, of the status and characteristics of the secured assets (if any) and the owners’ representative must notify any changes within 30 days as from the date such changes arise.

7. The change of the bond owners’ representative shall be made in the following cases:

7.1. Where the bond owner- representing contract is no longer effective;

7.2. Where the bond owners’ representative has its custody operation permit withdrawn;

7.3. Where the bond owners’ representative voluntarily refuses to act as representative any longer;

7.4. Where more than 30% of the total bond owners request the issuing organization to change the bond owners’ representative.

8. The change of the bond owners’ representative and determination of the new bond owners’ representative shall be effective only when:

- There is the approving opinion of the bond owners or the representative of the persons owning more than 30% of the total bond value;

- There is the approving opinion of the State Securities Commission.

The bond-issuing organization must notify the change of the bond owners’ representative to all bond owners within 30 days as from the date of determining the new representative of the bond owners.

IX. REPORTING REGIME

1. The issuing organization shall have the duty to observe the reporting regime and announce information according to the current regulations of the State Securities Commission.

2. In case of bond issuance, annually the issuing organization has the duty to prepare and send the following reports to the State Securities Commission and the representative of bond owners:

2.1. The report on the borrowing percentage, the bond-issuing organization’s guarantee which may make its total debit balance exceed the committed borrowing percentage;

2.2. The report on events which may deprive the issuing organization of the capability and conditions to maintain the assets which ensure its payment capability (if any);

2.3. The list of bond owners at the request of the representative of the bond owners.

X. INSPECTION, SUPERVISION AND HANDLING OF VIOLATIONS

1. Organizations issuing shares and/or bonds to the public shall be subject to the inspection and supervision by the State Securities Commission and other competent agencies as provided for by law.

2. The issuing organization, the issuance-underwriting organization and the concerned organizations as well as individuals, that violate the provisions of this Circular, shall be handled according to the provisions in the Government’s decree on sanctioning administrative violations in the field of securities and securities market and according to the current law provisions.

XI. SECURITIES RE-REGISTRATION

Shares and bonds allowed to be issued not according to the provisions of the Government’s Decree No.48/1998/ND-CP on securities and securities market, if being transacted at the Securities Trading Centers and/or Stock Exchange, must be re-registered according to the following regulations:

1. The issuing organizations must satisfy all conditions prescribed at Point 1, Section II of this Circular, excluding Points 1.4 and 1.8 for share-issuing organizations, and Section III of this Circular, excluding Points 1.4 and 1.7 for bond-issuing organizations;

2. The issuing organizations must send to the State Securities Commission the dossiers of re-registration as provided for in Section IV of this Circular, excluding Point 1.5 and 1.10, which are replaced with the following documents:

- The documents proving the share or bond issuance already permitted by competent bodies;

- The resolution of shareholders’ congress approving the re-registration for share listing or the resolution of the Managing Board (the Members’ Council) approving the re-registration for bond listing.

3. The State Securities Commission shall reply in writing either to approve or not to approve the re-registration by the issuing organizations as provided for at Point 2, Section V of this Circular.

4. The issuing organizations must abide by the regulations on the granting of issuing permits, issuance announcement, bond owners’ representative, reporting regime, inspection, supervision and handling of violations according to the provisions at Point 5, Section V; Points 2, 3, 4 and 5, Section VI, Section VIII, Section IX and Section X of this Circular.

XII. IMPLEMENTATION ORGANIZATION

1. This Circular takes effect 15 days after its signing and replaces Circular No.01/1998/TT-UBCK of October 13,1998 of the State Securities Commission, Decision No.80/2000/QD-UBCK of December 29, 2000 of the State Securities Commission amending and supplementing Circular No.01/1998/TT-UBCK and relevant guiding documents.

2. The director of the Office of the State Securities Commission, the director of the Securities Issuance Management Department, heads of units under the State Securities Commission, the issuing organizations and the securities firms shall, within the scope of their respective functions and tasks, have to guide and organize the implementation of this Circular

Chairman of the State Securities Commission
NGUYEN DUC QUANG

 


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