Circular No. 130/2012/TT-BTC guiding the repurchase of shares, sale of treasury shares, and certain additional share issuances by public companies

CIRCULAR

Guidelines on the repurchase of shares, sale of treasury shares, and certain cases of additional share issuance by public companies

BASED ON THE SECURITIES LAW NUMBER 70/2006/QH11 OF JUNE 29, 2006;

BASED ON THE LAW AMENDING AND COMPLEMENTING CERTAIN PROVISIONS OF THE SECURITIES LAW NUMBER 62/2010/QH12 OF NOVEMBER 24, 2010;

Pursuant to Law on Enterprises No. 60/2005/QH11 dated November 29, 2005;

Pursuant to Decree No. 118/2008/NĐ-CP dated November 27, 2008, of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 102/2010/NĐ-CP dated October 1, 2010 of the Government detailing and guiding the implementation of certain provisions of the Enterprise Law;

Pursuant to Decree No. 58/2012/NĐ-CP dated July 20, 2012 of the Government detailing and guiding the implementation of certain provisions of the Securities Law and the Law amending and supplementing certain articles of the Securities Law;

Considering the proposal of the Chairman of the State Securities Commission, the Minister of Finance issues this Circular guiding the repurchase of shares, sale of treasury shares, and certain cases of additional share issuance by public companies,

Chapter 1.

GENERAL PROVISIONS

Article 1. Scope and objects regulated

This Circular guides public companies in the repurchase of shares, sale of treasury shares, issuance of shares for dividend payment, issuance of shares to increase capital from retained earnings, and issuance of shares under an employee stock option program.

Article 2. Principles for the repurchase of shares, sale of treasury shares, and additional share issuance by public companies

1. The information in the report on the repurchase of shares, sale of treasury shares, issuance of shares for dividend payment, issuance of shares to increase capital from retained earnings, and issuance of shares under an employee stock option program must be accurate, truthful, not misleading, and contain all relevant information that may affect investors' decisions.

2. Public companies engaging in the repurchase of shares, sale of treasury shares, issuance of shares for dividend payment, issuance of shares to increase capital from retained earnings, and issuance of shares under an employee stock option program shall be responsible for the accuracy, truthfulness, and completeness of the reporting materials.

3. Public companies may only carry out the repurchase of shares, sale of treasury shares, issuance of shares for dividend payment, issuance of shares to increase capital from retained earnings, and issuance of shares under an employee stock option program when they meet the conditions stipulated by law.

Chapter 2.

REPURCHASE OF SHARES, SALE OF TREASURY SHARES

SECTION 1. REPURCHASE OF SHARES

Article 3. Conditions for Repurchasing Shares

Public companies repurchasing issued shares to become treasury shares must satisfy the following conditions:

1. The conditions specified in Clause 1, Article 37 of Decree No. 58/2012/NĐ-CP dated July 20, 2012 of the Government detailing and guiding the implementation of certain provisions of the Securities Law and the Law amending and supplementing certain articles of the Securities Law.

2. Having sufficient funds to repurchase shares based on the most recent audited financial report. In the case of a parent company, the company must ensure that it has sufficient funds belonging to and available for use by the parent company as shown in the consolidated audited financial statements.

Article 4. Situations Where Repurchasing Shares Is Not Permitted

1. Companies are not allowed to repurchase shares in the situations specified in Clause 1, Article 38 of Decree No. 58/2012/NĐ-CP dated July 20, 2012 of the Government detailing and guiding the implementation of certain provisions of the Securities Law and the Law amending and supplementing certain articles of the Securities Law.

2. Except in cases where the repurchase is carried out according to the ownership ratio of each shareholder or in cases where the company publicly offers to purchase shares already issued, the company is not permitted to repurchase shares from the following entities to become treasury shares:

a) Company managers and related persons as defined by the Securities Law;

b) Shareholders with restricted transferable shares as provided by law and the Company's Articles of Association;

c) Significant shareholders as defined in the Securities Law.

The provisions at Point a and Point c of Clause 2 of this Article do not apply to the situation where public companies with listed/shares traded on the Stock Exchange repurchase shares through matching trades.

3. Companies are not allowed to repurchase shares in other cases as prescribed by specialized laws.

Article 5. Documents for Reporting Share Repurchase

1. The report on share repurchase shall be prepared according to Appendix No. 01 of this Circular.

2. The decision of the General Meeting of Shareholders approving the repurchase of more than ten percent (10%) of the total number of ordinary shares or more than ten percent (10%) of the total number of preferred dividend shares issued, or the decision of the Board of Directors approving the repurchase of not more than ten percent (10%) of the total number of ordinary shares or not more than ten percent (10%) of the total number of preferred dividend shares issued within each twelve (12) months.

3. The document confirming the designation of the securities company to execute the transaction.

4. The decision of the Board of Directors approving the share repurchase plan.

5. The most recent audited financial report.

Article 6. Reporting and Announcing Information on Share Repurchase

1. A public company that repurchases shares must submit the reporting documents specified in Article 5 of this Circular to the State Securities Commission.

2. In case the report on share repurchase is incomplete or invalid, the State Securities Commission will provide comments on the report within seven (07) working days from the date of receipt of the report.

3. Within seven (07) working days from the date the State Securities Commission announces the receipt of complete reporting documents on share repurchase, the public company must announce information on mass media according to Appendix No. 02 of this Circular. The share repurchase must be carried out at least seven (07) working days after the public company has announced the information.

4. Within ten (10) working days from the end of the share repurchase transaction, the public company must submit the transaction result report to the State Securities Commission and publicly announce the information according to the form in Appendix No. 05 of this Circular. In case the public company does not complete the expected number of shares to be repurchased, the public company must report and publicly announce the reasons for non-completion.

5. A public company with listed/shares traded on the Stock Exchange when repurchasing shares must make public announcements on the Stock Exchange's information dissemination means. The content and time of announcement are regulated in Clause 3 and Clause 4 of this Article.

Article 7. Execution of Share Repurchase Transactions

1. A public company with listed/shares traded on the Stock Exchange when executing share repurchase transactions must comply with the trading regulations of the Stock Exchange.

2. A public company without listed/shares traded on the Stock Exchange when repurchasing shares can only be executed through a designated securities company.

3. A public company must conclude the share repurchase transaction within the time stated in the public announcement but not exceeding thirty (30) days from the start of the transaction, including cases of transaction changes as stipulated in Article 8 of this Circular.

Article 8. Changes to Share Repurchase

1. A public company may not change its intention or plan for share repurchase as reported and publicly announced unless in cases of force majeure (natural disasters, fire, war, and other cases approved by the State Securities Commission), in which case it must report to the State Securities Commission.

2. A public company must report to the State Securities Commission and simultaneously announce information about the change decision on mass media within twenty-four (24) hours from the date of making the decision to change the share repurchase according to Appendix No. 03 of this Circular.

3. The State Securities Commission will provide comments on the change in share repurchase within three (03) working days from the date of receiving the change report.

4. A public company may only change the share repurchase after obtaining approval from the State Securities Commission. The public company must announce the change in share repurchase on mass media and send it to the State Securities Commission within twenty-four (24) hours from the date of approval for the change in share repurchase according to Appendix No. 04 of this Circular.

5. A public company with listed/shares traded on the Stock Exchange, when changing the share repurchase, must make public announcements on the Stock Exchange's information dissemination means. The content and time of announcement are regulated in Clause 2 and Clause 4 of this Article.

Article 9. Management and Accounting of Treasury Shares

1. Treasury shares shall not be entitled to rights arising from the issuance of shares for dividend distribution or capital increase from own capital sources.

2. The management and accounting of treasury shares shall be carried out in accordance with accounting principles.

Article 10. Responsibilities of Securities Companies and Stock Exchanges

1. A securities company designated as an agent to execute the repurchase of shares shall have the following responsibilities:

a) Guide the public company to implement the share repurchase according to current regulations and the announced plan;

b) Ensure that the public company has sufficient funds in its trading account to execute the reported and announced transaction volume;

c) Not use non-public information related to the repurchase of shares of the designated public company to trade securities of the designated public company or disclose such information to third parties.

2. In cases where the public company has listed/shares registered for trading, the stock exchange shall have the following responsibilities:

a) Supervise the public company to announce information before and after executing the share repurchase transaction in accordance with current regulations;

b) Supervise the designated securities company to execute the share repurchase transaction in accordance with current regulations.

SECTION 2. SALE OF TREASURY SHARES

Article 11. Conditions for Selling Treasury Shares

1. A company selling treasury shares must comply with the conditions stipulated in Article 39 of Decree No. 58/2012/NĐ-CP dated July 20, 2012, of the Government detailing and guiding the implementation of certain provisions of the Securities Law and the Law Amending and Supplementing Certain Provisions of the Securities Law.

2. The use of treasury shares to distribute to existing shareholders or as rewards for employees must be approved by the General Shareholders' Meeting and the company must ensure there are adequate corresponding sources from own capital based on the most recent audited financial report from the following sources:

a) Capital surplus;

b) Development Investment Fund;

c) Undistributed post-tax profit;

d) Other reserves (if any) used to supplement the charter capital in accordance with the law.

In the case of a parent company, the company must ensure there are adequate sources belonging to and under the control of the parent company on the consolidated audited financial statements.

Article 12. Reporting Documents for Selling Treasury Shares

1. The report on the sale of treasury shares shall be prepared in accordance with Appendix No. 01 of this Circular.

2. Decision of the General Shareholders' Meeting or Board of Directors approving the sale of treasury shares.

3. The document confirming the designation of the securities company to execute the transaction.

4. The most recent audited financial report.

Article 13. Reporting and Disclosure of Information

1. Public companies selling treasury shares must submit the reporting documents specified in Article 12 of this Circular to the State Securities Commission.

2. If the reporting documents for the sale of treasury shares are incomplete or invalid, the State Securities Commission will provide comments on the reporting documents within seven (07) working days from the date of receipt of the reporting documents.

3. Within seven (07) working days from the date the State Securities Commission notifies the receipt of complete reporting documents for the sale of treasury shares, the public company must disclose information to the public through mass media in accordance with Appendix No. 02 of this Circular. The sale of treasury shares must be executed at least seven (07) working days after the public company discloses the information.

4. Within ten (10) working days from the end of the treasury share sale transaction, the public company must submit the transaction result report to the State Securities Commission and disclose information to the public in accordance with the form in Appendix No. 05 of this Circular. In the event the public company does not sell the entire planned quantity of treasury shares, the public company must report and disclose reasons for the failure to complete the sale.

5. Public companies with listed/shares registered for trading on the stock exchange, when selling treasury shares, must disclose information through the stock exchange's information disclosure means. The content and timing of the information disclosure are regulated in Clause 3 and Clause 4 of this Article.

Article 14. Implementation of transactions

1. Joint-stock companies with shares listed/traded on the Stock Exchange must comply with the transaction regulations of the Stock Exchange when selling treasury shares.

2. Joint-stock companies not listed/traded on the Stock Exchange can only sell treasury shares through designated securities companies.

3. Joint-stock companies must conclude the sale of treasury shares within the time specified in the information announcement, but not exceeding thirty (30) days from the start of the transaction, including cases where the sale of treasury shares is changed as provided for in Article 15 of this Circular.

Article 15. Changes to the Sale of Treasury Shares

1. Joint-stock companies may not change their intention or plan for selling treasury shares as reported and publicly announced, except in cases of force majeure (natural disasters, fires, wars, and other cases approved by the State Securities Commission).

2. Joint-stock companies must report to the State Securities Commission and simultaneously announce the decision to change on mass media within twenty-four (24) hours from the date of making the decision to change the sale of treasury shares according to Appendix 03 of this Circular.

3. The State Securities Commission will provide comments on changes to the sale of treasury shares within three (03) working days from the date of receipt of the change report.

4. Joint-stock companies may only implement changes to the sale of treasury shares after receiving approval from the State Securities Commission. They must announce the change on mass media and send it to the State Securities Commission within twenty-four (24) hours from the date of approval by the State Securities Commission according to Appendix 04 of this Circular.

5. Joint-stock companies with shares listed/traded on the Stock Exchange must announce information about changes to the sale of treasury shares on the Stock Exchange's information disclosure platform. The content and timing of the announcement shall be in accordance with Clause 2 and Clause 4 of this Article.

Article 16. Responsibilities of Securities Companies and Stock Exchanges

1. Designated securities companies responsible for executing the sale of treasury shares have the following responsibilities:

a) Guide joint-stock companies to sell treasury shares in accordance with current regulations and the announced plan;

b) Ensure that joint-stock companies have sufficient shares in their trading accounts to execute the reported and publicly announced transaction volume;

c) Do not use non-publicly disclosed information related to the sale of treasury shares of the designated joint-stock company to buy or sell the designated joint-stock company's securities or disclose such information to third parties.

2. In cases where the public company has listed/shares registered for trading, the stock exchange shall have the following responsibilities:

a) Monitor joint-stock companies' compliance with current regulations in announcing information before and after the sale of treasury shares;

b) Monitor designated securities companies' compliance with current regulations in executing the sale of treasury shares.

Chapter 3.

SOME CASES OF ADDITIONAL ISSUE OF SHARES BY JOINT-STOCK COMPANIES

PART 1. ISSUANCE OF SHARES TO PAY DIVIDENDS

Article 17. Conditions for Issuing Shares to Pay Dividends

A public company issuing shares to pay dividends to existing shareholders to increase share capital must meet the following conditions:

1. There must be a decision of the Shareholders' General Meeting approving the issuance plan for shares to pay dividends.

2. There must be sufficient sources from undistributed post-tax profits confirmed by an audit. In cases where the public company is a parent company issuing shares to pay dividends, the undistributed post-tax profits shall be based on the undistributed post-tax profits available for use by the parent company's shareholders as shown in the consolidated financial statements that have been audited.

Article 18. Documents for Reporting the Issuance of Shares to Pay Dividends

1. The report on the issuance of shares to pay dividends according to Appendix No. 06 of this Circular.

2. Decision of the Shareholders' General Meeting approving the issuance plan.

3. Most recent audited financial statements.

4. Plan for handling fractional shares (if any), approved by the Shareholders' General Meeting or the Board of Directors.

Article 19. Reporting the Issuance and Public Disclosure

1. The issuer must submit the documents specified in Article 18 of this Circular to the Securities Commission.

2. If the issuance reporting documents are incomplete or invalid, the Securities Commission will provide comments on the issuance report within seven (7) working days from the date of receipt of the report.

3. Within seven (7) working days from the date the Securities Commission notifies the issuer that it has received all the issuance reporting documents, the issuer must publicly disclose information about the issuance through mass media at least seven (7) days before the expected issuance date as stipulated in Appendix No. 07 of this Circular. The expected issuance date cannot exceed forty-five (45) days from the date the Securities Commission notifies the issuer of the receipt of all the issuance reporting documents.

4. Within ten (10) working days from the completion of the issuance of shares to pay dividends, the issuer must submit a report on the issuance results to the Securities Commission and publicly disclose information according to the form provided in Appendix No. 08 of this Circular.

5. Public companies with listed/traded shares must register additional listing/trading with the Stock Exchange for the number of shares issued to pay dividends within fifteen (15) days from the completion of the issuance.

Article 20. Handling Fractional Shares

1. Fractional shares refer to amounts less than one (1) share. During the issuance of shares to pay dividends, if fractional shares arise, the company must have a plan to handle them ensuring maximum shareholder benefits and fairness among shareholders. The plan for handling fractional shares must be approved by the Shareholders' General Meeting or the Board of Directors.

2. The company has the right to repurchase fractional shares as treasury shares. The number of shares arising from the handling of fractional shares must be recorded and processed according to the provisions of this Circular and related regulations.

PART 2. ISSUANCE OF SHARES TO INCREASE SHARE CAPITAL FROM OWNERSHIP CAPITAL

Article 21. Conditions for Issuing Shares to Increase Share Capital from Ownership Capital

A public company issuing shares to increase share capital from ownership capital must meet the following conditions:

1. There must be a decision of the General Meeting of Shareholders approving the plan to issue shares to increase share capital from ownership capital.

2. There must be sufficient funds to implement, based on the most recent audited financial report from the following sources:

a) Capital surplus;

b) Development Investment Fund;

c) Undistributed post-tax profit;

d) Other reserves (if any) used to supplement the charter capital in accordance with the law.

In the case where a public company is a parent company issuing shares to increase share capital from ownership capital, the source used to increase share capital is the capital belonging to the ownership and usage rights of the parent company as shown in the consolidated audited financial report.

3. The total value of the sources mentioned in Clause 2 of this Article must ensure that it is not lower than the total value of additional share capital according to the plan approved by the General Meeting of Shareholders.

Article 22. Documents for Reporting the Issuance of Shares to Increase Share Capital from Ownership Capital

1. Report on the issuance of shares to increase share capital from ownership capital according to Appendix No. 06 of this Circular.

2. Decision of the Shareholders' General Meeting approving the issuance plan.

3. Most recent audited financial statements.

4. Plan for handling fractional shares (if any), approved by the Shareholders' General Meeting or the Board of Directors.

Article 23. Reporting and Disclosure of Information on Issuance

1. The issuer must submit the documents specified in Article 22 of this Circular to the Securities Commission.

2. In the event that the report on the issuance of shares to increase share capital from ownership capital is incomplete or invalid, the Securities Commission will provide comments on the report within seven (7) working days from the date of receipt of the report.

3. Within seven (7) working days from the date the Securities Commission notifies of receiving all the documents for reporting the issuance of shares to increase share capital from ownership capital, the issuer must disclose information about the issuance on mass media at least seven (7) working days before the expected issuance date according to Appendix No. 07 of this Circular. The expected issuance date shall not exceed forty-five (45) days from the date the Securities Commission issues a notification regarding the receipt of all the documents for reporting.

4. Within ten (10) working days from the completion of the issuance of shares to increase share capital from ownership capital, the issuer must submit a report on the issuance results to the Securities Commission and publicly disclose information according to the form in Appendix No. 08 of this Circular.

5. Public companies with listed/shares traded must register for additional listing/trading with the Stock Exchange for the number of shares issued to increase share capital from ownership capital within fifteen (15) days from the completion of the issuance.

Article 24. Handling of Fractional Shares

The principles for handling fractional shares are implemented according to the provisions of Article 20 of this Circular.

PART 3. ISSUANCE OF SHARES UNDER EMPLOYEE STOCK OPTION PROGRAMS

Article 25. Conditions for Issuing Shares Under Employee Stock Option Programs

A public company issuing shares under employee stock option programs must ensure the following conditions:

1. There must be an option program and a share issuance plan approved by the General Meeting of Shareholders.

2. The total number of shares issued under the program in each twelve (12) months may not exceed five percent (5%) of the outstanding shares of the company.

3. The Board of Directors must clearly announce the criteria and list of employees eligible to participate in the program, pricing principles, allocation principles for each participant, and implementation timeline.

4. In the case where a company issues bonus shares to employees, in addition to the conditions stipulated in Clauses 1, 2, and 3 of this Article, the company must have sufficient funds to implement based on the most recent audited financial report from the following sources:

a) Capital surplus;

b) Development Investment Fund;

c) Undistributed post-tax profit;

d) Other reserves (if any) used to supplement the charter capital in accordance with the law.

In the case where a public company issuing shares is a parent company, the company must ensure there are sufficient funds to increase share capital from the capital belonging to the ownership and usage rights of the parent company as shown in the consolidated audited financial report.

5. In the case where a company issues bonus shares to employees, the total value of the sources mentioned in Clause 4 of this Article must ensure that it is not lower than the total value of additional share capital according to the plan approved by the General Meeting of Shareholders.

Article 26. Documents for reporting the issuance of shares under the employee share option program

1. The report on the issuance of shares under the employee share option program shall be prepared according to Appendix 09 of this Circular.

2. The decision of the Shareholders' Meeting approving the share option program and the issuance plan for employees. Those persons with interests related to the issuance of shares under the employee share option program shall not participate in voting on the Resolution of the Shareholders' Meeting regarding the issuance of shares under the employee share option program.

3. The decision of the Shareholders' Meeting or the Board of Directors approving the criteria and list of employees participating in the program, pricing principles, allocation principles for each participant, and implementation timeline.

4. The most recent audited financial statements in cases where bonus shares are issued to employees.

Article 27. Reporting on Issuance and Public Disclosure

1. The issuer must submit the documents specified in Article 26 of this Circular to the State Securities Commission.

2. In case the report on the issuance of shares under the employee share option program is incomplete or invalid, the State Securities Commission will provide comments on the report within seven (07) working days from the date of receipt of the report.

3. Within seven (07) working days from the date the State Securities Commission notifies that it has received all necessary documents for the report on the issuance of shares under the employee share option program, the issuer must publicly disclose information about the issuance through mass media at least seven (07) working days before the expected issuance date as specified in Appendix 10 of this Circular. The expected issuance date shall not exceed forty-five (45) days from the date the State Securities Commission issues a notification confirming the receipt of all necessary documents.

4. Within ten (10) working days from the completion of the issuance, the issuer must submit a report on the issuance results to the State Securities Commission and publicly disclose information according to the form specified in Appendix 11 of this Circular. The report on the issuance of shares under the employee share option program must include a list of the number of shares purchased and signed by the employees participating in the purchase.

5. Joint-stock companies with listed/traded shares must register additional listing/trading with the Stock Exchange for the number of shares issued under the employee share option program within fifteen (15) working days from the completion of the issuance.

Chapter 4.

IMPLEMENTATION

Article 28. Implementation Organization

1. This Circular takes effect from October 1, 2012, and replaces the provisions on the repurchase of shares, sale of treasury shares, and certain additional share issuance cases for joint-stock companies in Circular No. 18/2007/TT-BTC dated March 13, 2007, issued by the Ministry of Finance guiding the purchase and resale of shares and certain additional share issuance cases for joint-stock companies.

2. The State Securities Commission and the Stock Exchanges within their respective functions and duties are responsible for guiding and supervising joint-stock companies in implementing this Circular.

3. Organizations and individuals related to this matter are responsible for implementing this Circular.

4. Any amendments or supplements to this Circular shall be decided by the Minister of Finance./.