Guidance on Implementing Shareholding and Stock Market Participation for State-Owned Enterprises

To:

• Ministries, ministerial-level agencies, and agencies under the Government;
• People's Committees of provinces and centrally-run cities;
• State-owned General Corporations.

Based on Decision No. 528/QĐ-TTg dated June 14, 2005, of the Prime Minister approving the list of joint-stock companies implementing shareholding to sell shares via auction, list, and register for trading at Vietnam's stock trading centers, the Ministry of Finance provides guidance on implementing certain contents as follows:

1/ Enterprises included in the approved list under Decision 528/QĐ-TTg dated June 14, 2005, of the Prime Minister must consider and organize the implementation of work steps to bring the enterprise into the stock market in 2005. In special cases where objective reasons prevent participation in the stock market, they must report to the General Corporation, Ministry, sector, or People's Committee of the province or centrally-run city (hereinafter referred to as Ministry, sector, locality, and General Corporation) for aggregation and reporting to the Prime Minister.

In addition to the enterprises included in the approved list under Decision 528/QĐ-TTg dated June 14, 2005, of the Prime Minister, Ministries, sectors, localities, and General Corporations must organize reviews and establish plans to bring enterprises that have, are, or will be shareholding and meet the conditions to participate in the stock market in 2005.

2/ Regarding the initial sale of shares of shareholding enterprises at stock trading centers:

• Ministries, sectors, and localities must consider the scale, conditions, and development potential of the enterprise to decide immediately in the Shareholding Plan:
  • Initial sale of shares at the stock trading center; or
  • Initial sale of shares simultaneously with registration for trading at stock trading centers; or
  • Initial sale of shares simultaneously with immediate listing at stock trading centers.
• The procedure, formalities, and authority for approving the Shareholding Plan and the initial sale of shares of these companies shall be implemented according to the provisions of Government Decree No. 187/2004/NĐ-CP dated November 16, 2004, and the guidance in Section V of Circular No. 126/2004/TT-BTC dated December 24, 2004, of the Ministry of Finance guiding the implementation of Decree No. 187/2004/NĐ-CP.
• The procedure and formalities for implementing the initial sale of shares combined with registration for trading or immediate listing at stock trading centers shall be implemented according to the provisions of Decision No. 2592/QĐ-BTC dated August 4, 2005, of the Ministry of Finance.

3/ Regarding companies formed from the shareholding of state-owned enterprises:

• Based on the remaining state capital in shareholding companies; Decision No. 155/2004/QĐ-TTg dated August 24, 2004, of the Prime Minister on promulgating criteria and categories for classifying state-owned companies and independent accounting member companies under State-owned General Corporations; the Prime Minister's Decision approving the pilot project on converting operations according to the parent company - subsidiary company model; the operational and capital status of joint-stock companies, Ministries, sectors, localities, and General Corporations shall decide:
  • Sell off part of the state capital in joint-stock companies.
  • Combine the sale of state shares with bringing the joint-stock company to register for trading or list on the stock market.
  • Bring joint-stock companies to register for trading or list on the stock market.
• The Ministry of Finance, in coordination with central Ministries and sectors, shall decide on the sale of part of the state capital in shareholding companies from independent state-owned companies under Ministries and sectors where the Ministry of Finance is the owner's representative.

3.1/ Regarding companies implementing the sale of part of state shares:
a/ Ministries, sectors, localities, and General Corporations:

• Decide on the number of shares sold; time, method of sale; organization of share sale consulting; starting price.
• Direct the representative of state capital at the joint-stock company to build a share sale plan, implement procedures to sell shares according to law and the company charter, execute the sale according to the approved plan, and pay the share sale proceeds according to legal regulations.

b/ The representative of state capital at the joint-stock company shall perform the following tasks:

• Build a Share Sale Plan to submit to the capital owner's representative for decision.
• Report to the Board of Directors of the joint-stock company or the General Meeting of Shareholders according to legal and company charter regulations regarding the sale of part of state shares.
• Sign contracts with consulting organizations to implement share sales.
• Supervise the share sale and implement the payment of share sale proceeds according to regulations.

3.2/ Regarding companies implementing the sale of part of state shares combined with registration for trading or listing at stock trading centers:

• For shareholding companies implementing the sale of part of state shares linked with immediate registration for trading at the stock trading center, the following minimum conditions stipulated in Decision No. 244/QĐ-TTg dated January 20, 2005, of the Ministry of Finance on promulgating the Temporary Regulations on Organizing Stock Trading at the Hanoi Stock Trading Center must be met: charter capital of 5 billion VND or more; at least 50 shareholders; and transparent financial status; the production and business operations of the year immediately preceding the shareholding year must have been profitable.
• For shareholding companies implementing the sale of part of state shares linked with immediate listing at the stock trading center, the following minimum conditions stipulated in Government Decree No. 144/2003/NĐ-CP dated November 28, 2003, on securities and the stock market must be met: charter capital of over 5 billion VND; profitable business operations for the 2 years prior; shareholders who are members of the Board of Directors or the Supervisory Board must commit to holding 50% of their owned shares for 3 years after listing; at least 20% of the company's share capital must be held by at least 50 external shareholders; if the company has share capital of 100 billion VND or more, this ratio must be at least 15% of the share capital.

a/ Ministries, sectors, localities, and General Corporations:
In addition to the tasks stipulated in point a of section 3.1 above, they must direct the representative of state capital at the joint-stock company to build a Plan for registration for trading or listing at the stock trading center to report to the General Meeting of Shareholders according to the Company Charter and law; and implement the approved Plan for registration for trading or listing.

b/ The representative of state capital at the joint-stock company shall perform the following tasks:
In addition to the tasks stated in point b of section 3.1 above, they must build a Plan for registration for trading or listing at the stock trading center, report to the capital owner's representative, and submit it to the General Meeting of Shareholders. Organize the implementation of the Plan approved by the General Meeting of Shareholders. Report the results to the capital owner's representative.

3.3/ Regarding shareholding companies implementing registration for trading at the Hanoi Stock Trading Center:

• Ministries, sectors, localities, and General Corporations direct the representative of state capital at joint-stock companies to build a Plan for participating in registration for trading, submit it to the General Meeting of Shareholders for approval, and organize the implementation of the Plan.
• The procedure and formalities for implementing registration for trading shall be implemented according to the provisions of Decision No. 244/QĐ-TTg dated January 20, 2005, of the Ministry of Finance on promulgating the Temporary Regulations on Organizing Stock Trading at the Hanoi Stock Trading Center.

3.4/ Regarding shareholding companies implementing registration for listing at the Ho Chi Minh City Stock Trading Center:

• Ministries, sectors, localities, and General Corporations direct the representative of state capital at joint-stock companies to build a Plan for participating in registration for listing, submit it to the General Meeting of Shareholders for approval, and organize the implementation of the Plan.
• The procedure and formalities for implementing registration for listing shall be implemented according to the provisions of Government Decree No. 144/2003/NĐ-CP dated November 28, 2003, and Circular No. 59/2004/TT-BTC dated June 18, 2004, of the Ministry of Finance guiding the listing of stocks and bonds on the centralized stock market.

4/ Ministries, sectors, localities, and General Corporations implement the tasks assigned by the Prime Minister in Article 2 of Decision No. 528/QĐ-TTg dated June 14, 2005, specifically as follows:

• Direct the representative of state capital at joint-stock companies to conduct reviews, evaluations, classifications, and provide specific reports on the production and business operational status, ability to participate in the stock market, and difficulties requiring state support when participating in the stock market... for each shareholding enterprise (Form No. 1 attached).
  Completion time: Before September 10, 2005.

• Based on the reports from the representative of state capital, conduct aggregation, classification, and establish a plan to implement bringing enterprises into the stock market in 2005, report to the Prime Minister, and simultaneously send to the Ministry of Finance for coordinated implementation (Forms No. 2 to No. 5 attached).
  Completion time: Before September 20, 2005.

• Implement bringing enterprises into the stock market according to the established plan.

5/ The Ministry of Finance implements the tasks assigned by the Prime Minister in Article 3 of Decision No. 528/QĐ-TTg dated June 14, 2005, specifically as follows:

• Focus on supplementing guidance on mechanisms and policies related to the shareholding of state-owned companies, securities, and the stock market according to the content of Clause 2 and Clause 3 of Article 3 of Decision No. 528/QĐ-TTg.
  Completion time: Before September 10, 2005.

• Organize reviews, evaluations, classifications, and establish specific reports on the production and business operational status, ability to participate in the stock market, and difficulties requiring state support... for shareholding companies from independent state-owned companies under Ministries and sectors where the Ministry of Finance is the owner's representative (Form No. 1 attached).
  Completion time: Before September 10, 2005.

• Direct functional units to resolve and handle difficulties for each enterprise to ensure the implementation of the established plan to participate in the stock market.

• Organize training, dissemination, and regular propaganda on policies regarding shareholding, securities, and the stock market for Ministries, sectors, localities, General Corporations, and enterprises required to implement.
  Completion time: Before August 31, 2005.

• Aggregate the plan and implementation status of Decision No. 528/QĐ-TTg dated June 14, 2005, and report to the Prime Minister.

6/ The representative of state capital at enterprises subject to considering the implementation of share sale, registration for trading, and listing at stock trading centers has the responsibility to:

• Provide complete and truthful documents, data, and information on the production and business operational status of the unit to the representative of state capital at joint-stock companies.
• Coordinate with owner representative agencies in establishing plans and implementing related work steps to bring the company into the stock market after the owner and the General Meeting of Shareholders have approved the plan for share sale, registration for trading, and listing at stock trading centers.