1. Psings shares to swap shares for shareholders in a public company

Pursuant to Article 51 of Decree 155/2020/ND-CP stipulating the conditions for public companies to issue shares to swap shares for the number of shareholders determined in other public companies as follows:

• There is a plan to issue shares for swap approved by the General Meeting of Shareholders of the issuing organization.
• The issued shares are restricted from transfer for at least 01 year from the end of the issuance, unless the transfer is carried out in accordance with a legally effective court judgment or decision, an arbitration decision or inheritance in accordance with law.
• Shares and contributed capital to be swapped are not restricted from transfer at the time of swap in accordance with the company’s Charter and law.

• Have the most recent annual financial statements audited by an approved auditing organization of the company whose shares or contributed capital are swapped. The audit opinion on the financial statements is a fully accepted opinion.
• The issuance of shares for swap must meet the regulations on foreign ownership ratio as prescribed by law.
• The swap must ensure that it does not violate the provisions on cross-ownership of the Law on Enterprises.
• There is an opinion of the National Competition Commission on the implementation of economic concentration or conditional economic concentration in case the swap leads to economic concentration activities within the threshold of economic concentration that must be notified.
• The gap between private placements must be at least 06 months apart from the end of the private placement.
• There is a written approval in principle of the subjects to be swapped on the share swap.

2. Psings shares to pay dividends

Pursuant to Article 60 of Decree 158/2020/ND-CP stipulating the conditions for issuing shares to pay dividends as follows:

• There is a plan to issue shares to pay dividends approved by the General Meeting of Shareholders.

• Having undistributed after-tax profit based on the latest year’s financial statements audited by an approved auditing organization is sufficient to pay dividends. 

– In case a public company is a parent company that issues shares to pay dividends, the profit decided to be distributed must not exceed the undistributed after-tax profit on the audited consolidated financial statements. 

– In case the profit decided to be distributed is lower than the undistributed after-tax profit on the consolidated financial statements and higher than the undistributed after-tax profit on the parent company’s separate financial statements, the company may only make the distribution after transferring profits from subsidiaries to the parent company.

• There is a plan to handle fractional shares and odd shares (if any) approved by the General Meeting of Shareholders or the Board of Directors.
• Approved by the State Bank of Vietnam for the proposal to increase charter capital in accordance with the law on credit institutions for the issuance of shares of credit institutions or the Ministry of Finance for the increase of charter capital in accordance with the law on insurance business for the issuance of shares of business organizations insurance.

3. Issuance of shares for debt swap

Article 57 of Decree 155/2020/ND-CP stipulates the conditions for public companies to issue shares for debt swap as follows:

• There is an issuance plan for debt swap approved by the General Meeting of Shareholders.
• Swapped debts must be those presented in the most recent annual financial statements audited by an approved auditing organization and approved by the General Meeting of Shareholders.
• There is a written approval in principle of the creditor on the debt swap.

• The gap between private placements must be at least 06 months apart from the end of the latest private placement.
• The issued shares are restricted from transfer for at least 01 year from the end of the issuance, unless the transfer is carried out in accordance with a legally effective court judgment or decision, an arbitration decision or inheritance in accordance with law.
• The issuance of shares for swap must meet the regulations on foreign ownership ratio as prescribed by law.
• The swap must ensure that it does not violate the provisions on cross-ownership of the Law on Enterprises.
• There is an opinion of the National Competition Commission on the implementation of economic concentration or conditional economic concentration in case the swap leads to economic concentration activities within the threshold of economic concentration that must be notified.

4. Issuance of shares under the employee option program

Pursuant to Clause 4, Article 64 of Decree 155/2020/ND-CP stipulating the conditions for public companies to issue shares under the option program for employees in the company as follows:

• The source of equity used to issue bonus shares to employees is based on the latest financial statements audited by an approved auditing organization, including the following sources: surplus of share capital; development investment fund; undistributed after-tax profits; other funds (if any) shall be used to supplement charter capital in accordance with law;

• In case a public company being a parent company issues stocks to reward employees from the surplus of share capital, development investment funds or other funds, the realized capital sources shall be based on the parent company’s financial statements;
• In case a public company being a parent company issues stocks to reward employees from undistributed after-tax profits, the profits decided to be used to reward employees must not exceed the undistributed after-tax profits on the audited consolidated financial statements. 
• In case the profit decided to be used to reward employees is lower than the undistributed after-tax profit on the consolidated financial statements and higher than the undistributed after-tax profit on the parent company’s separate financial statements, the company may only distribute it after transferring profits from subsidiaries to the company mother.

Above is the entire content of consultation related to the conditions for issuing shares in each specific case. If you need support, please contact KALF for answers.

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