Decision No. 137/1999/QD-BTC On the issuance of stamps and the printing, issuance, management, and use of domestic cigarette stamps.

CIRCULAR

Gradually sell shares to foreign investors

(Pursuant to Decision No. 145/1999/QĐ-TTg

dated June 28, 1999 of the Government Prime Minister)

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Pursuant to Decision No. 145/1999/QĐ-TTg dated June 28, 1999 of the Government on the issuance of Regulations on selling shares to foreign investors, the Ministry of Finance guides financial issues as follows:

I. GENERAL PROVISIONS:

1. The objects eligible for selling shares to foreign investors include state-owned enterprises undergoing shareholding reform and joint-stock companies engaged in production and business activities in sectors specified in the Appendix attached to Decision No. 145/1999/QĐ-TTg dated June 28, 1999 of the Government.

2. Foreign investors purchasing shares of Vietnamese enterprises include:

- Foreign economic and financial organizations operating outside the territory of Vietnam, including economic organizations currently having investment capital in Vietnam.

- Foreign individuals not permanently residing in the territory of Vietnam.

- Vietnamese individuals residing abroad.

- Foreign individuals permanently residing in Vietnam.

3. The amount of shares sold to foreign investors:

The total value of shares sold to foreign investors shall not exceed 30% of the charter capital of the company. In cases where the joint-stock company has not yet raised its full charter capital, the total number of shares sold to foreign investors shall not exceed 30% of the shares already raised.

In cases where only one foreign investor registers to purchase shares of the company, that foreign investor may also purchase up to a maximum of 30% of the charter capital or the total number of shares already raised.

4. Selling shares to foreign investors shall be carried out directly at the enterprise or through underwriting organizations or issuing agents.

In cases where shares are sold through underwriting organizations or issuing agents, the enterprise and the underwriting organization must have an underwriting agreement; the fee level and conditions for underwriting shall be agreed upon by both parties but shall not exceed the maximum underwriting fee rate prescribed by the State.

5. Enterprises permitted by the Prime Minister's decision to sell shares to foreign investors must publicly announce in at least five consecutive issues of a central newspaper and a local newspaper before organizing the sale or in cases requiring auction as stipulated in Section 2.2 Part II below. The announcement content includes: the Prime Minister's decision on selling shares to foreign investors, the enterprise's value, the state capital value at the enterprise announced by the competent authority, the charter capital amount, the total number of shares sold to foreign investors, the total number of shares sold to domestic investors, business performance indicators, and the enterprise's debts before selling shares to foreign investors.

6. Selling shares to foreign investors shall be conducted in Vietnamese dong. If foreign investors purchase shares with foreign currency, they must convert it into Vietnamese dong according to the current foreign exchange management regulations of the State Bank of Vietnam.

Foreign investors wishing to purchase shares of Vietnamese enterprises are allowed and must open accounts at financial institutions or commercial banks operating within the territory of Vietnam. All activities of buying and selling shares, receiving and using dividends, and transferring investment proceeds out of Vietnam must be conducted through this account.

II. SPECIFIC PROVISIONS

1Determining the enterprise value for selling shares to foreign investors:

1.1- For state-owned enterprises implementing shareholding reform:

State-owned enterprises undergoing shareholding reform that are permitted to sell shares to foreign investors shall apply the valuation method according to Circular No. 104/1998/TT-BTC dated July 18, 1998, and other guiding documents of the Ministry of Finance regarding financial matters when converting state-owned enterprises into joint-stock companies.

The result of determining the enterprise's value published by the finance agency serves as the basis for calculating the preferential share price for employees in the enterprise according to the current regime, and is the minimum price (referred to as the floor price) for organizing an auction in cases requiring auction.

1.2- For joint-stock companies: The determination of the enterprise's value for selling shares to foreign investors shall be organized by the company's Valuation Board. The board may invite organizations or experts knowledgeable about enterprise valuation to provide advice or hire independent auditing agencies within the country that meet the required conditions and are trustworthy to determine the enterprise's value.

2. Share selling price to foreign investors:

2.1- The price of selling shares to foreign investors, in principle, corresponds to the price sold to domestic investors. The enterprise owner and foreign investor may agree on a different price, but it cannot be lower than the price sold to domestic investors.

2.2- Organizing meetings with foreign investors and determining the share selling price:

After announcing the sale of shares to foreign investors, the enterprise together with the underwriting and issuing organizations shall individually contact each foreign investor to understand their technological capacity, financial status, market, and willingness to participate in management.

Based on the results of these meetings, the enterprise selects suitable foreign investors according to the enterprise's requirements. The share selling price cannot be lower than the price sold to domestic investors.

In cases where multiple foreign investors register to purchase shares exceeding the controlled ratio of 30%, an auction will be organized according to the current regulations. The selling price is the highest bid made by an investor.

2.3- The authority to decide the price of selling shares to foreign investors is determined by the enterprise according to the principle stated in Point 2.1 above. For state-owned enterprises undergoing shareholding reform, if only a lower price than the floor price can be sold, the adjustment of the share selling price to foreign investors shall be carried out according to the分级授权规定在财政部1998年7月18日第104/1998/TT-BTC号通令第二部分第二章第八点二的规定。对于正在进行股份制改革的国有企业，如果只能以低于底价的价格出售，则调整向外国投资者出售股份的价格应按照财政部1998年7月18日第104/1998/TT-BTC号通令第二部分第二章第八点二的规定进行。

3. Provisions on selling shares:

- Selling shares to foreign investors must comply with the provisions of Decree No. 48/1998/NĐ-CP dated July 11, 1998 of the Government on Securities and the Securities Market, and Circular No. 01/1998/TT-UBCK dated October 13, 1998 of the State Securities Commission. Depending on the issuance form (directly or through underwriting organizations or agents), the enterprise may require investors to perform registration, deposit, sign underwriting or agency contracts. Specifically, for direct sales, the enterprise has the right to require investors to deposit a maximum of 10% of the value of the shares registered for purchase.

- In cases where multiple independent organizations simultaneously register for underwriting, the enterprise must organize a bidding process or request the underwriting organizations to cooperate to establish a combined underwriting group as stipulated in Section VII of Circular No. 01/1998/TT-UBCK dated October 13, 1998 of the State Securities Commission.

4. Management of proceeds from the sale of shares to foreign investors:

4.1- State-owned enterprises undergoing shareholding reform; joint-stock companies selling part of the state capital in the enterprise to foreign investors, the entire proceeds from the sale of shares belonging to the state capital shall be handled according to Section V Part II of Circular No. 104/1998/TT-BTC dated July 18, 1998 on guiding financial matters when converting state-owned enterprises into joint-stock companies; after deducting the underwriting fees (if any) corresponding to the shares of state capital sold to foreign investors, the remaining amount shall be deposited into the state's privatization revenue account according to the current regime.

4.2- Regarding the issuance of additional shares to raise capital for joint-stock companies: Joint-stock companies issuing additional shares to foreign investors to raise capital shall deposit the proceeds into the company's account.

5. Shares of foreign shareholders: These are named ordinary shares with a nominal value of one hundred thousand Vietnamese dong per share. The Treasury uniformly prints, manages, and provides blank share certificates to enterprises.

The enterprise shall simultaneously process the procedures to purchase blank share certificates for foreign investors along with purchasing share certificates for domestic investors. The Chairman of the Board of Directors of a joint-stock company is responsible for managing and implementing the tasks prescribed regarding recording share certificates and providing share certificates to shareholders.

6. Rights and benefits of employees and state-owned enterprises implementing shareholding reform that sell shares to foreign investors: Shall be applied as state-owned enterprises implementing shareholding reform according to Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government and guiding circulars.

7. Rights and obligations of foreign investors as shareholders:

7.1- Have the right to participate or not participate in the management of joint-stock companies according to the provisions of the Company Law and the Articles of Organization and Operation of the joint-stock company.

7.2- Can use shares as collateral in credit relationships in Vietnam.

7.3- Share transfers may be made after one year if not participating in the management of the company, and after three years if participating in the management of the company from the date of ownership of shares in a joint-stock company, in accordance with the guidelines of the State Securities Commission.

7.4- Can convert dividends and proceeds from the transfer of shares received in Vietnamese dong into foreign currency according to the current foreign exchange management regime guided by the State Bank of Vietnam to be transferred abroad after fulfilling tax obligations as prescribed in the Foreign Investment Law and the current Tax Law.

If foreign investors use dividends received for reinvestment in Vietnam, they shall be subject to the provisions of the Law on Encouraging Domestic Investment.

Enjoy other rights like domestic shareholders in the company and rights prescribed by law.

7.5- Fulfill obligations prescribed in the Company Law, the Foreign Investment Law, the Law on Encouraging Domestic Investment, and the Articles of Organization and Operation of the joint-stock company.

7.6- Implement obligations prescribed in the Company Law, the Foreign Investment Law, the Law on Encouraging Domestic Investment, and the Articles of Organization and Operation of the joint-stock company.

III. IMPLEMENTATION PROVISIONS

This Circular takes effect from the date on which Decision No. 145/1999/QĐ-TTg dated June 28, 1999 of the Prime Minister comes into force. During implementation, any difficulties should be reported by enterprises and foreign investors to the Ministry of Finance for study and resolution.