- Suspension of public offering of securities
Cases of suspension of public offering of securities are specified in Article 27 of the Law on Securities 2019, including:
The State Securities Commission reserves the right to suspend the offering of securities to the public for up to 60 days in the following cases:
- The registration dossier for public offering of securities contains false information, omits important contents that may affect investment decisions and cause damage to investors;
- The distribution of securities does not comply with the provisions of Article 26 of the Law on Securities 2019.
Within 07 working days from the date on which the public offering of securities is suspended, the issuer must announce the suspension of the public offering of securities in the manner specified in Clause 3, Article 25 of the Law on Securities 2019 and must withdraw the issued securities if requested by investors, At the same time, refund money to investors within 15 days from the date of receipt of the request.
When the deficiencies leading to the suspension of the public offering of securities are overcome, the State Securities Commission issues a written notice of cancellation of the suspension and the securities are allowed to resume the offering.
Within 07 working days from the date of issuance of the notice of suspension cancellation, the issuer must announce the cancellation of suspension in the method specified in Clause 3, Article 25 of the Law on Securities 2019.
- Cancellation of public offering of securities
Cases of cancellation of public offering of securities are specified in Article 28 of the Law on Securities 2019, including:
The State Securities Commission shall decide to cancel the public offering of securities in the following cases:
- Expiring the suspension period specified in Clause 1, Article 27 of the Law on Securities 2019 without overcoming the shortcomings leading to the suspension of the public offering of securities;
- An initial public offering of shares that does not meet the conditions for the minimum percentage of voting shares of the issuer to be sold to at least 100 investors who are not major shareholders of the issuer as prescribed at Point d, Clause 1, Article 15 of the Law on Securities 2019;
- The additional public offering of shares does not meet the conditions for raising sufficient capital to implement the project of the issuer as prescribed at Point d, Clause 2, Article 15 of the Law on Securities 2019.
In addition to the above cases, the public offering of securities shall be canceled according to the judgment, decision of the Court that has taken legal effect, the decision of the Arbitrator or the competent authority as prescribed by law.
Within 07 working days from the date the public offering of securities is canceled, the issuer must announce the cancellation of the public offering of securities in the method specified in Clause 3, Article 25 of the Law on Securities 2019 and must withdraw the issued securities, and refund funds to investors within 15 days from the date the offering is canceled. At the expiration of this period, the issuer must compensate the investor for damages in accordance with the terms committed to the investor.
In addition, the decision to suspend or cancel a public offering of securities is an important one and must be carefully reviewed.
- Causes
Here are some of the reasons a company may decide to suspend or cancel its initial public offering:
Unfavorable market conditions: If financial market conditions are unfavorable, such as a significant decline in the stock market or large fluctuations in the share price, the company may decide to suspend or cancel the offering to avoid unnecessary risks.
Insufficiently large offering size: If the expected offering size does not reach the company’s target level or does not meet the necessary financial requirements, the company may decide to suspend or cancel the offering.
Volatility in the business: If there is a major upheaval in the business, such as a change in strategy or organizational structure, the company may decide to postpone the offering to focus on resolving internal issues.
Changes in securities regulations or regulations: If there is a change in securities legislation or regulation that may affect the offering process or pose a legal risk to the company, the company may decide to suspend or cancel the offering.
Negative reaction from the market or investment community: If there is a strong negative reaction from the market or investment community to the offering plan, the company may decide to suspend or cancel to avoid affecting their image and reputation.
Above is the content of KALF’s advice on public companies suspending, canceling securities offerings and some related legal issues. All of our above advice opinions are based on applicable legal provisions. If you have any questions or requests about legal issues, please contact us for timely answers.
