| THE MINISTRY OF FINANCE -------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ---------- |
| No. 18/2007/TT-BTC | Hanoi, March 13, 2007 |
CIRCULAR
PROVIDING GUIDELINES ON PURCHASE OR RE-SALE OF SHARES AND A NUMBER OF CASES OF ISSUE OF ADDITIONAL SHARES BY PUBLIC COMPANIES
To implement the Law on Securities, the Ministry of Finance hereby provides the following guidelines on purchase or re-sale of shares and a number of cases of issue of additional shares by public companies:
I. GENERAL PROVISIONS
1. This Circular makes detailed provisions on public companies redeeming their own shares, re-selling redeemed shares, offering publicly to purchase shares; issuing shares for payment of dividends, issuing bonus shares originated from sources of capital of the owner, and issuing shares in accordance with an option program to their employees.
2. Interpretation of terms: in this Circular, the following terms shall be construed as follows:
2.1 Treasury share means a share which was issued by a public company and redeemed by such company by a lawful source of capital.
2.2 Outstanding share means a fully-paid share about which information on the purchaser is recorded correctly and fully in the register of shareholders; from this point of time, the share purchaser becomes a shareholder of the company.
II. REDEMPTION OF SHARES AND SALE OF TREASURY SHARES
1. Conditions for redemption of shares
Any public company redeeming its own shares to use as treasury shares must satisfy the following conditions:
1.1 A resolution passed by the General Meeting of Shareholders shall be required in the case of redemption of more than 10% but not more than 30% of the total number of outstanding shares, or a resolution passed by the General Meeting of Shareholders shall be required in the case of redemption of 10% or less of the total number of outstanding shares in each period of 12 months.
Where a public company redeems its own shares resulting in the number of treasury shares being equal to 25% or more of the total number of its outstanding shares, the company must offer publicly the redemption in accordance with the Law on Securities and the guidelines provided in Section III of this Circular.
1.2. Sufficient capital from the following sources is available for redemption [of shares] for treasury shares:
(a) Surplus capital;
(b) Retained profit;
(c) Other sources in accordance with the law.
1.3. A plan for redemption specifying a period of implementation and principles for determination of a price is available.
2. Cases in which [a company] is not permitted to redeem its own shares
2.1 A company shall not be permitted to redeem its own shares in the following cases:
(a) It suffers losses in its business or currently has any overdue debt;
(b) It is under the process of offering shares for sale to raise additional capital;
(c) It is currently carrying out a split or consolidation of shares;
(d) Its shares are the subject of a public offer for purchase.
2.2. A company shall not be allowed to redeem shares from the following shareholders to use as its treasury shares:
(a) Managers of the company, their spouses, parents, adoptive parents, children, adopted children, brothers and sisters;
(b) Shareholders subject to a limit of transfer in accordance with law and the charter of the company;
(c) Shareholders holding a controlling shareholding, unless the State sells certain shares to reduce its proportion of ownership.
3. Conditions for sale of treasury shares
3.1. A public company shall only be allowed to sell its treasury shares after 6 months from the last day of the most recent redemption, unless [such treasury shares] are distributed to its employees or used as bonus shares. Where they are used as bonus shares for employees, [the company] must ensure a sufficient sum for payment from its welfare or reward funds.
3.2. A specific plan for sale specifying the period of implementation and principles of determination of a price must be available.
4. Report and announcement of information
4.1. Any public company redeeming shares or selling treasury shares must submit a report in writing to the State Securities Commission at the same time as announcing information on the mass media no later than 7 days before the date of implementation of the redemption or sale. The report and the announcement of information shall include the following main items:
(a) Objectives of the redemption of shares or the sale of treasury shares;
(b) Proposed maximum number of shares to be redeemed or sold;
(c) Capital sources for redemption;
(d) Principles of determination of prices;
(dd) Period of implementation of the transaction;
(e) Name of the securities company appointed to conduct the transaction;
(g) Price stated in the announcement of information (if any).
4.2. Where a company announces the price for redemption [of shares], it must specify that such price is the proposed price. The price for redemption [of shares] shall be determined and announced before the day of implementation of the redemption.
4.3. Any public company whose shares are listed on the Stock Exchange or Securities Trading Centre, upon redemption of its own shares or sale of treasury shares, must concurrently submit a report to the Stock Exchange or Securities Trading Centre and announce information on the announcement of information media of the Stock Exchange or Securities Trading Centre. The timing of reporting and announcement of information shall be subject to paragraph 4.1.
5. Implementation of transactions
5.1. Any public company whose shares are listed on a Stock Exchange or Securities Trading Centre, upon redemption of its own shares or sale of treasury shares, must comply with regulations of the Stock Exchange or Securities Trading Centre in relation to redemption of shares and sale of treasury shares.
5.2. Any public company whose shares are not listed on a Stock Exchange or Securities Trading Centre shall only be allowed to carry out the redemption of shares via a securities company as a broker, but [the redemption] shall not affect the trading price and the maximum value of the redemption shall not exceed 10% of the total number of such shares traded in the day.
5.3. The public company shall finish the redemption of shares or the sale of treasury shares within the period specified in the announcement of information, but the maximum period shall not exceed 90 days from the day of commencement of the transaction.
5.4. Within a period of 10 days after termination of the transaction for redemption of shares or sale of treasury shares, the public company must report the result of the transaction to the State Securities Commission and announce information to the public; where the company cannot archive in full the proposed number of shares for redemption or sale, it must report the matter and announce the reasons therefor.
Public companies whose shares are listed on a Stock Exchange and Securities Trading Centre shall concurrently report the result of the transaction to both the Stock Exchange and Securities Trading Centre.
6. Change in transactions
Public companies shall not be permitted to change their intention or plan for redemption of shares or sale of treasury shares for which a report has been submitted and information has been announced to the public, except for cases of force majeure, in which case a report and announcement of information shall be required.
7. The management and accounting of treasury shares shall be subject to guidelines provided by the Ministry of Finance.
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