Inspection Conclusion No. 39/KL-TT on Inspection of Phuoc An Port Investment and Exploitation Joint Stock Company

In implementation of Decision No. 20/QD-TT dated March 25, 2025, regarding the inspection of Phuoc An Port Investment and Exploitation Joint Stock Company (the Company/PAP), from April 15, 2025, to April 25, 2025, the Inspection Team of the State Securities Commission (SSC) conducted an inspection at the Company; the inspection period was from January 1, 2023, to the date of issuance of the Inspection Decision (April 1, 2025).

Considering the Inspection Result Report dated June 2, 2025, of the Inspection Team Leader, Chief Inspector of the SSC, the inspection conclusion is as follows:

1. General Overview

Phuoc An Port Investment and Exploitation Joint Stock Company (JSC) is an entity established to implement the investment and exploitation of Phuoc An Port and the port logistics service area, as agreed upon by Vietnam Oil and Gas Group - now Vietnam National Petroleum and Energy Group - and the People's Committee of Dong Nai Province. The Company was established and operates under the first Business Registration Certificate No. 4703000541 dated May 14, 2008, issued by the Department of Planning and Investment of Dong Nai Province.

At the time of inspection, the Company operated under Business Registration Certificate No. 3601010336, amended for the 12th time on August 7, 2024; the Company has two Legal Representatives: Mr. Nguyen Thanh Dat - Chairman of the Board of Directors (BOD) and Mr. Truong Hoai Hai - General Director.

In 2010, the Company registered as a public company with the SSC. On July 7, 2021, the Company's shares were approved for trading at the Hanoi Stock Exchange (HNX) under Decision No. 334/QD-SGDHN of the HNX General Director; officially traded on the UpCom trading system from July 14, 2021, with stock code PAP, registered trading volume of 150 million shares (equivalent to 1,500 billion VND).

• Main business lines (according to Business Registration Certificate): Direct support services for water transport: Port exploitation and logistics area; Construction of other civil engineering works: Investment in port and logistics area development, investment in construction and operation of container service bases, cargo warehouses, and specialized works...

• Shareholder structure and major shareholders: According to the shareholder list certified by the Vietnam Securities Depository Corporation (VSDC) on January 17, 2025, for the purpose of obtaining shareholder opinions via written ballot for 2025, the Company has 242 shareholders, including 7 major shareholders owning 60.86% of the Company's shares (5 individual major shareholders owning 28.44% of shares, 2 organizational major shareholders owning 32.42% of shares).

• Charter capital: According to the audited Financial Statements (FS) for 2023 and 2024 by Ernst & Young Vietnam Co., Ltd. and the Q1/2025 FS prepared by the Company, the Company's charter capital at the points in time of January 1, 2023, December 31, 2023, December 31, 2024, and March 31, 2025, were 2,000 billion VND, 2,000 billion VND, 2,320 billion VND, and 2,320 billion VND, respectively.

• Business results: According to the audited FS for 2023 and 2024 and the Q1/2025 FS prepared by the Company, the Company's net profit for 2023, 2024, and the first three months of 2025 were (6,799,413,067) VND, (17,308,427,564) VND, and (122,603,943,108) VND, respectively.

• Process of increasing charter capital: After registering share trading on HNX, the Company conducted 2 rounds of private share placements, specifically: In 2022, the Company placed 50,000,000 private shares to increase charter capital from 1,500 billion VND to 2,000 billion VND; In 2024, the Company placed 32,000,000 private shares to increase charter capital from 2,000 billion VND to 2,320 billion VND.

2. Inspection and Verification Results

2.1. Compliance with legal regulations on information disclosure (ID)

2.1.1. Regarding the process and organization of ID

• The Company has built and promulgated the Regulation on ID according to Clause 1, Article 300 of Government Decree No. 155/2020/NĐ-CP dated December 31, 2020, detailing the implementation of some articles of the Securities Law (Decree No. 155/2020/NĐ-CP).

• The Company has established an electronic information page at the address https://pap.vn/. The Company's electronic information page has a dedicated section for shareholder relations to perform ID.

• Person performing ID: Mr. Nguyen Van Hoang - Head of Organization and Administration Department/Secretary of the BOD is the person authorized to perform ID for the Company according to Authorization Certificate No. 593/UQ-PAP dated June 21, 2022.

• The Company has registered and used the SSC's ID system (IDS Pro system) and HNX's system (CIMS system) according to point b, c, Clause 1, Article 7 of Circular No. 96/2020/TT-BTC dated November 16, 2020, of the Minister of the Ministry of Finance guiding ID on the securities market (Circular No. 96/2020/TT-BTC).

2.1.2. Regarding compliance with legal regulations on ID

Basically, during the inspection period, the Company fulfilled the obligation to report and ID periodic and abnormal information according to Circular No. 96/2020/TT-BTC; however, the Company ID late on the SSC's ID system. Official Letter No. 123/PAP-TCKT dated March 8, 2023, explained the fluctuation of Net Profit on the Statement of Business Results before and after audit for the year 2022, and Official Letter No. 124/PAP-TCKT dated March 8, 2023, explained the fluctuation of Net Profit on the Statement of Business Results in the audited FS for 2022 (the Company ID these documents on time on the HNX and Company's electronic information pages).

2.2. Compliance with legal regulations on corporate governance

2.2.1. Documents related to corporate governance

• The Company's Charter was last amended and supplemented on July 29, 2024, approved at the Annual General Meeting of Shareholders (AGMS) 2023 Resolution No. 45/NQ-PAP dated June 23, 2023. The contents of the Company's Charter basically comply with the Enterprise Law and Decree No. 155/2020/NĐ-CP, updated according to the Model Charter issued with Circular No. 116/2020/TT-BTC dated December 31, 2020, of the Minister of the Ministry of Finance guiding some articles on corporate governance applied to public companies under Decree No. 155/2020/NĐ-CP (Circular No. 116/2020/TT-BTC).

• The Company has built and promulgated the Internal Regulation on Corporate Governance (Corporate Governance Regulation), the Regulation on the Operation of the BOD, and the Regulation on the Organization and Operation of the Supervisory Board (SB) according to Clause 2, Article 270, Clause 4, Article 278, and Clause 6, Article 288 of Decree No. 155/2020/NĐ-CP. The contents of these Regulations basically conform to the templates in Appendices II, III, and IV of Circular No. 116/2020/TT-BTC. However, the Company has not stipulated in the Corporate Governance Regulation the application of modern information technology for shareholders to attend and express opinions at the AGMS via online meetings, electronic voting, or other electronic forms, violating point b, Clause 2, Article 41 of the Securities Law.

2.2.2. Person in charge of corporate governance

At the time of inspection, Mr. Nguyen Van Hoang - Head of Organization and Administration Department/Secretary of the BOD was the person in charge of corporate governance according to BOD Resolution No. 04/NQ-PAP dated February 14, 2023.

2.2.3. Regarding the operation of the BOD, SB, and Management Board

• Structure and operation of the BOD: At the time of inspection, the Company's BOD had 7 members, of which 5/7 were non-executive BOD members according to Clause 2, Article 276 of Decree No. 155/2020/NĐ-CP. During the inspection period, the Company's BOD organized 11 meetings and 31 written opinion polls, meeting the number of meetings per quarter according to point c, Clause 3, Article 41 of the Securities Law. The Company fully kept Minutes and Resolutions of BOD meetings according to Clause 2, Article 279 of Decree No. 155/2020/NĐ-CP.

• Structure and operation of the SB: At the time of inspection, the Company's SB had 3 members according to Clause 1, Article 286 of Decree No. 155/2020/NĐ-CP; the Chairman of the SB of the Company has a university degree in accounting, meeting the requirements of Clause 3, Article 286 of Decree No. 155/2020/NĐ-CP. During the inspection period, the SB organized 10 meetings and kept Minutes of SB meetings according to Clause 1, Article 289 of Decree No. 155/2020/NĐ-CP.

• Management Board, Executive Board: At the time of inspection, the Company's Management Board, Executive Board had 5 members including the General Director, 3 Deputy General Directors, and the Chief Accountant.

2.2.4. Regarding the organization of the AGMS

During the inspection period, the Company organized 2 AGMS meetings for the annual meetings of 2023 and 2024; 2 written shareholder opinion polls for 2024 and 2025.

• Regarding the deadline for organizing AGMS meetings: The AGMS for the annual meetings of 2023 and 2024 were organized within 6 months from the end of the fiscal year according to Clause 2, Article 139 of the Enterprise Law.

• Regarding meeting invitations and documents: The Company sent invitations for the AGMS for the annual meetings of 2023, 2024, and sent letters requesting shareholder opinions via written ballot for 2024, 2025 by sending registered mail to the shareholder's contact address (via courier unit) and directly to some shareholders (with confirmation signature) according to Clause 1, Article 143 and Clause 2, Article 149 of the Enterprise Law.

The Company posted documents for the AGMS for the annual meetings of 2023 and 2024, and documents for written shareholder opinion polls for 2024 and 2025 on the Company's electronic information page according to Article 143 of the Enterprise Law, Clause 3, Article 10, and point b, Clause 3, Article 11 of Circular No. 96/2020/TT-BTC.

• The list of shareholders with the right to attend the AGMS and the list of shareholders sending ballots for opinion polls was compiled based on the Company's shareholder register provided by VSDC. The Company ID the closing of the list of shareholders with the right to attend the annual AGMS and the list of shareholders sending ballots for opinion polls according to Clause 1, Article 273 of Decree No. 155/2020/NĐ-CP and Clause 4, Article 11 of Circular No. 96/2020/TT-BTC.

• Regarding the BOD and SB activity reports at the AGMS: The BOD activity report at the AGMS for the annual meetings of 2023 and 2024, and the SB activity report at the AGMS for the annual meeting of 2023, lacked the content: Report on transactions between the company, subsidiaries, and companies controlled by the public company with more than 50% of charter capital with BOD members and their related persons; transactions between the company and companies where BOD members are founding members or managers in the 3 years prior to the transaction according to Articles 280, 290 of Decree No. 155/2020/NĐ-CP.

2.2.5. Regarding transactions with related parties

a) Regarding borrowing money from organizations related to internal persons of the Company:

According to the audited FS for 2024 and documents provided by the Company, it shows: In 2024, the Company incurred a borrowing transaction from the One Member Limited Liability Company Investment Construction of Nhơn Trạch 6A Industrial Zone, which is an organization related to the Company's internal person (Mr. Nguyen Thanh Dat is the General Director of the One Member Limited Liability Company Investment Construction of Nhơn Trạch 6A Industrial Zone and simultaneously the Chairman of the BOD of PAP), for the amount of 144,210,000,000 VND.

The Company (Mr. Truong Hoai Hai - General Director and simultaneously a BOD Member of the Company) signed Capital Support Contract No. 30/HDHTV/NT6A-PAP dated July 31, 2024, and Capital Support Contract No. 31/HDHTV/NT6A-PAP dated August 8, 2024, with the One Member Limited Liability Company Investment Construction of Nhơn Trạch 6A Industrial Zone. Accordingly, the Company borrowed from the One Member Limited Liability Company Investment Construction of Nhơn Trạch 6A Industrial Zone 126,500,000,000 VND and 50,000,000,000 VND, loan term 12 months, cost of capital use 8%/year and 7.5%/year (according to bank statements provided by the Company, in 2024 the Company received a total of 144,210,000,000 VND).

However, this borrowing transaction was not approved by the AGMS/BOD of the Company according to point b, Clause 6, Article 41 of the Securities Law, Clause 2, Article 167 of the Enterprise Law.

b) Regarding providing loans to shareholders and organizations related to shareholders:

• Regarding the Company providing a loan to Saigon Construction and Building Materials Investment JSC - an organization related to Mr. Nguyen Thanh Hoang (shareholder of the Company and simultaneously General Director of Saigon Construction and Building Materials Investment JSC):

According to the audited FS for 2023, 2024, and the self-prepared Q1/2025 FS, in 2023, 2024, and Q1/2025, the Company lent to Saigon Construction and Building Materials Investment JSC 20,000,000,000 VND (according to bank statements dated December 26, 2023, December 28, 2023 of Vietnam Joint Stock Commercial Bank for Industry and Trade, the Company has recovered this loan), 23,200,000,000 VND (according to bank statements dated June 27, 2024, September 27, 2024, November 12, 2024, November 25, 2024 of Vietnam Joint Stock Commercial Bank for Industry and Trade, the Company has recovered this loan), 20,000,000,000 VND.

Thus, in 2023, 2024, and Q1/2025, the Company lent money to Saigon Construction and Building Materials Investment JSC, an organization related to a shareholder, violating Clause 3, Article 293 of Decree No. 155/2020/NĐ-CP.

• Regarding the Company providing a loan to Tam Thanh Tai Trading, Service and Production Joint Stock Company (shareholder of the Company and simultaneously an organization related to a shareholder of the Company (Mr. Tran Ba Tai is a shareholder of the Company and simultaneously Director of Tam Thanh Tai Trading, Service and Production Joint Stock Company)):

According to documents provided by the Company, on January 22, 2025, the Company signed Capital Support Contract No. 83/HDKT-PAP dated January 22, 2025, with Tam Thanh Tai Trading, Service and Production Joint Stock Company. Accordingly, on January 22, 2025, the Company lent to Tam Thanh Tai Trading, Service and Production Joint Stock Company 81,000,000,000 VND (according to bank statements dated February 8, 2025, February 20, 2025 of Vietnam Joint Stock Commercial Bank for Industry and Trade, the Company has recovered this loan).

Thus, the Company lent money to Tam Thanh Tai Trading, Service and Production Joint Stock Company (shareholder of the Company and simultaneously an organization related to a shareholder of the Company), violating Clause 2 and Clause 3, Article 293 of Decree No. 155/2020/NĐ-CP.

2.3. Regarding share placement

2.3.1. 2022 private share placement round

• Regarding the plan and results of placement:

The private share placement was implemented by the Company according to the AGMS 2022 Resolution No. 192/NQ-PAP and No. 200/NQ-PAP dated May 10, 2022, BOD Resolution No. 546/NQ-PAP dated June 16, 2022, approving the implementation of the private share placement plan and related issues, BOD Resolution No. 591/NQ-PAP dated June 16, 2022, approving the registration dossier for private share placement.

On November 11, 2022, the Company's BOD approved Resolution No. 1223/NQ-PAP on the results of private share placement to 4 investors, including: Bui Huu Quoc Bao (12,500,000 shares), Hoang Thanh Hung (12,500,000 shares), Ha Van Nam (12,500,000 shares), Vo Trung Thanh (12,500,000 shares).

According to the Private Share Placement Result Report No. 1230/PAP-TCHC dated November 14, 2022, of the Company, the placement end date was November 11, 2022, the Company placed 50,000,000 shares to 4 individual investors (placement price: 11,600 VND/share), total funds raised from the placement: 580,000,000,000 VND, restricted transfer period is 1 year.

According to the Account Balance Confirmation Letter dated November 11, 2022, of Vietnam Joint Stock Commercial Bank for Industry and Trade - Nhơn Trạch Branch (Vietinbank Nhơn Trạch), the account balance at the time of placement end (November 11, 2022) was 580,022,348,053 VND (of which the difference of 22,348,053 VND is from the balance at the time before the placement and deposit interest).

On November 30, 2022, the Company submitted the dossier to register additional trading of 50,000,000 shares of private placement. On December 6, 2022, HNX issued Decision No. 838/QD-SGDHN approving the change of trading registration, quantity of securities changed: 50,000,000 shares.

• Regarding the change of capital use plan:

At the AGMS 2022 Resolution No. 192/NQ-PAP dated May 10, 2022, the Company's AGMS approved the private share placement plan, the capital use plan from the placement, according to which: All funds raised from the placement (580 billion VND) are used to pay advances to construction contractors (Contract No. 518/2022/HD-PAP dated June 12, 2022 of Package XL01: Construction of land leveling and foundation treatment for Phuoc An Port (Phase 1) belonging to the Phuoc An Port and Port Logistics Service Area project; simultaneously authorizing the Company's BOD to choose to replace, adjust the capital use plan if deemed necessary to ensure effective fundraising and suitability with the funds raised from the placement.

Based on documents provided by the Company, the Company has changed the capital use plan 8 times, approved by the AGMS at Resolutions No. 1404/NQ-PAP dated December 26, 2022, No. 45/NQ-PAP dated June 23, 2023, and approved by the BOD at Resolutions No. 1409/NQ-PAP dated December 26, 2022, No. 07/NQ-PAP dated March 9, 2023, No. 15/NQ-PAP dated April 25, 2023, No. 49/NQ-PAP dated June 23, 2023, No. 82/NQ-PAP dated December 26, 2023, No. 30/NQ-PAP dated May 15, 2024, No. 46/NQ-PAP dated June 27, 2024, No. 96/NQ-PAP dated November 4, 2024. The detailed capital use plan of the Company according to BOD Resolution No. 96/NQ-PAP dated November 4, 2024, is as follows: (1) Paying costs related to packages belonging to the contractor selection plan for Phase 1 of the Phuoc An Port and Logistics Service Area project (557,000,000,000 VND); (2) Paying Phase 1 Project Management costs - Phuoc An Port and Port Logistics Service Area Project; Supplementing working capital of the company (23,000,000,000 VND).

The Company has reported to the AGMS at the most recent meetings (annual meetings 2023, 2024 regarding the change of capital use plan/funds raised from the placement and ID the Reports on the change of capital use plan, funds raised from the placement on the SSC's ID system, on the electronic information pages of HNX and the Company according to Clause 2, 3, Article 9 of Decree No. 155/2020/NĐ-CP.

• Regarding the ID of the Report on the progress of capital use

The Company has prepared 4 Reports on the progress of capital use, funds raised from the placement (Report No. 306/PAP-TCHC dated May 12, 2023, Report No. 1068/PAP-TCHC dated November 13, 2023, Report No. 544/PAP-TCHC dated May 13, 2024, Report No. 1771/PAP-TCHC dated November 12, 2024) and has performed ID of these Reports on the SSC's ID system, on the electronic information pages of HNX and the Company. However, based on documents provided by the Company, it shows that the Company ID inaccurately some contents in the Reports on the progress of capital use, specifically:

• The Company ID inaccurately the amount of money used for Package GS2 in the Report on the progress of capital use No. 1068/PAP-TCHC dated November 13, 2023, specifically: According to the Report on the progress of capital use No. 1068/PAP-TCHC dated November 13, 2023, as of November 13, 2023, the funds raised from the 2022 private share placement used for Package GS2 were 3,532,431,166 VND; however, according to documents provided by the Company, the amount used for Package GS2 was 4,713,095,165 VND.

• The Company ID inaccurately the amount of money used for Package GS1, Package GS2, Package Purchase 2 in the Report on the progress of capital use No. 544/PAP-TCHC dated May 13, 2024, specifically: According to the Report on the progress of capital use No. 544/PAP-TCHC dated May 13, 2024, as of May 13, 2024, the funds raised from the 2022 private share placement used for Package GS1, Package GS2, Package Purchase 2 were 967,400,002 VND, 6,869,664,856 VND, 2,473,735,037 VND; however, according to documents provided by the Company, the amounts used for these items were 1,238,774,548 VND, 7,021,340,415 VND, 319,709,252 VND, respectively.

• The Company ID inaccurately the amount of money used for Package Purchase 3 in the Report on the progress of capital use No. 544/PAP-TCHC dated May 13, 2024, specifically: According to the Report on the progress of capital use No. 544/PAP-TCHC dated May 13, 2024, as of May 13, 2024, the funds raised from the 2022 private share placement used for Package Purchase 3 were 1,800,000,000 VND; however, according to the Audit Report on the progress of capital use from the placement of 50,000,000 private shares for individual investors for the accounting period from November 11, 2022, to November 12, 2024, which was audited by Ernst & Young Vietnam Co., Ltd. (Audit Report on capital use as of November 12, 2024), the Company did not use the funds raised from the placement for Package Purchase 3.

• Regarding the use of funds raised from the placement:

Based on the Audit Report on capital use as of November 12, 2024, and documents provided by the Company, it shows that as of November 8, 2024, the Company had used all the funds of 580,000,000,000 VND raised from the placement for the purposes according to the plan approved by the AGMS, BOD of the Company.

2.3.2. 2024 private share placement round

• Regarding the plan and results of placement:

The private share placement was implemented by the Company according to the AGMS 2023 Resolution No. 45/NQ-PAP dated June 23, 2023, and the AGMS 2024 Resolution No. 54/NQ-PAP dated June 28, 2024; BOD Resolution No. 09/NQ-PAP dated January 24, 2024, regarding the implementation of the private share placement plan and related issues; BOD Resolution No. 15/NQ-PAP dated March 20, 2024, regarding the approval of the registration dossier for private share placement; BOD Resolution No. 62/NQ-PAP dated July 1, 2024, regarding the continued implementation of the private share placement plan to increase charter capital from 2,000 billion VND to 2,380 billion VND.

On July 23, 2024, the Company's BOD approved Resolution No. 71/NQ-PAP on the results of private share placement to 5 investors, including: Nguyen Thanh Hoang (6,500,000 shares), Phan The Anh (6,500,000 shares), Tran Manh Cuong (6,500,000 shares), Banh Xuan Hoai (8,500,000 shares), Truong Cong Nghia (4,000,000 shares).

According to the Private Share Placement Result Report No. 1076/PAP-TCHC dated July 23, 2024, of the Company, the placement end date was July 23, 2024, the Company placed 32,000,000 shares to the 5 individual investors mentioned above (placement price: 12,000 VND/share), total funds raised from the placement: 384,000,000,000 VND, restricted transfer period is 1 year.

According to the Account Balance Confirmation Letter dated July 23, 2024, of Vietinbank Nhơn Trạch, the account balance at the time of placement end (July 23, 2024) was 384,025,196,923 VND.

On August 14, 2024, the Company submitted the dossier to register additional trading of 32,000,000 shares of private placement. On December 3, 2024, HNX issued Decision No. 1224/QD-SGDHN approving the change of trading registration.

• Regarding the change of capital use plan:

At the AGMS 2023 Resolution No. 45/NQ-PAP dated June 23, 2023, the Company's AGMS approved the private share placement plan, the capital use plan from the placement, according to which: The funds raised from the placement are used to pay costs related to packages belonging to the contractor selection plan for Phase 1 of the Phuoc An Port and Logistics Service Area project; paying the Company's loan debts; simultaneously authorizing the BOD to choose to replace, adjust the Capital Use Plan if deemed necessary to ensure effective fundraising and suitability with the funds raised from the placement after adjusting the number of shares registered for placement (if any) and reporting to the most recent AGMS. On January 24, 2024, the Company's BOD issued Resolution No. 09/NQ-PAP implementing the private share placement plan and related issues.

Based on documents provided by the Company, it shows that the Company has changed the capital use plan 2 times, approved at BOD Resolution No. 75/NQ-PAP dated July 30, 2024, AGMS Resolution No. 84/NQ-PAP dated September 23, 2024, and BOD Resolution No. 86/NQ-PAP dated September 23, 2024. The capital use plan at AGMS Resolution No. 84/NQ-PAP dated September 23, 2024, BOD Resolution No. 86/NQ-PAP dated September 23, 2024, is as follows: (1) Paying costs related to packages belonging to the contractor selection plan for Phase 1 of the Phuoc An Port and Logistics Service Area project (376,000,000,000 VND); (2) Paying Phase 1 Project Management costs - Phuoc An Port and Port Logistics Service Area Project; Supplementing working capital of the company (8,000,000,000 VND).

The Company has ID the Reports on the change of capital use plan, funds raised from the placement on the SSC's ID system, on the electronic information pages of HNX and the Company according to Clause 2, 3, Article 9 of Decree No. 155/2020/NĐ-CP.

• Regarding the ID of the Report on the progress of capital use

The Company has ID the Report on the progress of capital use, funds raised from the placement No. 102/PAP-TCHC dated January 24, 2025, on the SSC's ID system, on the electronic information pages of HNX and the Company.

• Regarding the use of funds raised from the placement:

Based on documents provided by the Company, as of April 15, 2025, the Company had used the amount of 283,710,499,631 VND (out of the total 384,000,000,000 VND) raised from the placement for the purposes according to the plan approved by the AGMS, BOD of the Company.

The amount of raised capital not used as of April 15, 2025, is 100,289,500,389 VND, the Company deposited in savings (100,205,000,000 VND) and the remaining 84.