Decision No. 145/1999/QĐ-TTg On Issuing the Regulation on Selling Shares to Foreign Investors

DECISION OF THE PRIME MINISTER

Regarding the issuance of the Regulation on selling shares to foreign investors

_____________________________ 

PRIME MINISTER

Pursuant to the Government Organization Law dated September 30, 1992;

Pursuant to the Law on Encouraging Domestic Investment (amended) dated May 20, 1998;

Approves the plan for the privatization of the state-owned enterprise Tan Binh Real Estate Trading and Development Company under Saigon Real Estate Corporation based on the proposal in Document No. 180/UB-KT dated January 13, 2000 from the Chairman of the People's Committee of Ho Chi Minh City:

At the proposal of the Minister of Finance,

 

DECISION:

- Office of the President of the StateArticle 1. The Regulation on selling shares to foreign investors for application in state-owned enterprises undergoing shareholding reform and joint-stock companies in Vietnam is hereby issued together with this Decision.

Article 2. The Minister of Planning and Investment, the Minister of Finance, the Chairman of the State Securities Commission, the Governor of the State Bank of Vietnam, relevant ministries and sectors shall guide the implementation of this Decision.

Article 3. This Decision shall take effect fifteen days from the date of signature.

Article 4. The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairmen of provincial People's Committees under central city administrations, Boards of Directors of General Corporation 91 shall be responsible for implementing this Decision./.

 

REGULATIONS

Selling shares to foreign investors

(Issued together with Decision No. 145/1999/QĐ-TTg dated June 28, 1999 of the Government Prime Minister)

 

I. GENERAL PROVISIONS

- Office of the President of the StateArticle 1. Selling shares to foreign investors aims at mobilizing capital, technology, and business management methods from abroad, enhancing production and business efficiency, promoting competition, and expanding markets to develop Vietnamese enterprises.

Article 2. Enterprises eligible to sell shares to foreign investors are those engaged in production and business activities in fields specified in the annex attached to this Decision, including:

1. State-owned enterprises undergoing shareholding reform;

2. Joint-stock companies and other types of enterprises that have been authorized to issue shares to convert into joint-stock companies.

Article 3. Terms used in this Regulation shall be understood as follows:

1. "Foreign investor" means a foreign economic organization or a foreign individual owning or purchasing shares of Vietnamese enterprises.

2. "Vietnamese enterprise" means enterprises eligible to sell shares to foreign investors as stipulated in Article 2 of this Regulation.

Article 4.Foreign investors purchasing shares in Vietnamese enterprises shall enjoy rights guaranteed by the Socialist Republic of Vietnam and must fulfill obligations as prescribed in this Regulation and other Vietnamese laws.

Article 5.The purchase of shares, dividend transfer, and sale proceeds of foreign investors may be conducted directly or through financial organizations, banks operating in Vietnam or abroad within its territory. Foreign investors are allowed to open accounts at these financial organizations and banks.

Article 6.The total value of shares sold to foreign investors shall not exceed 30% of the charter capital of the company. In cases where multiple foreign investors register to purchase shares exceeding 30% of the company's charter capital, an auction shall be organized.

Article 7.Selling shares to foreign investors shall be conducted in Vietnamese currency. If purchased in convertible foreign currencies, it shall be converted according to the average inter-bank exchange rate published by the State Bank of Vietnam at the time of share sale.

The organization of share sales shall be publicly announced through mass media.

Article 8Shares purchased by foreign investors in Vietnamese enterprises shall be registered shares printed and managed by the Ministry of Finance. The nominal value of each share on the share certificate is 100,000 Vietnamese dong.

Article 9. At state-owned enterprises selling shares to foreign investors, the enterprise and workers in the state-owned enterprise shall enjoy incentives as stipulated in Articles 13 and 14 of Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government on converting state-owned enterprises into joint-stock companies.

II. SPECIFIC PROVISIONS

Article 10. Enterprise value and share selling price

1. The selling price of shares for both foreign and domestic investors shall be unified. This price ensures that both the enterprise owner (seller) and the foreign investor (buyer) agree.

2. For state-owned enterprises undergoing shareholding reform, the Director of the enterprise shall establish a pricing plan and organize the determination of the enterprise's value and the state capital value in the enterprise according to current regulations, report to the direct supervisory agency or the Ministry of Finance for decision.

3. For joint-stock companies, the Shareholders' Meeting or Board of Directors shall decide after consulting the guarantor of issuance and foreign investors.

The announced price by the competent authority according to the current classification for state-owned enterprises undergoing shareholding reform and joint-stock companies is the minimum price when organizing an auction for foreign investors.

Article 11.Issuing shares

1. All state-owned enterprises undergoing shareholding reform and joint-stock companies selling shares to foreign investors shall conduct such activities through a guarantor or agent issuing shares.

2. The guarantor of issuance shall contact each foreign investor individually to determine: the number of shares, the selling price of shares, and other conditions required by the issuing enterprise to select foreign investors to purchase shares.

3. The guarantor of issuance shall organize an auction when multiple foreign investors register to purchase shares of the enterprise according to the current auction regulations.

4. The level of fees for the guarantor or agent issuing shares shall be agreed upon between both parties within the shareholding reform costs or as a percentage (%) of the total value of issued shares.

Article 12. Rights of shareholders who are foreign investors:

1. They have the right to participate or not participate in managing the joint-stock company according to the Law on Enterprises and the organizational and operational charter of the joint-stock company.

2. They can convert dividends and proceeds from share transfers in Vietnam into foreign currency to transfer abroad after fulfilling all tax obligations as stipulated in the Law on Foreign Investment in Vietnam and current Tax Laws.

In cases where foreign investors use dividends obtained for reinvestment in Vietnam, they shall be subject to the provisions of the Law on Encouraging Domestic Investment.

3. They can use their shares as collateral in credit relationships in Vietnam;

4. They are entitled to multiple-entry exit-entry visas during their investment period in purchasing shares in Vietnam.

5. They shall enjoy other benefits like domestic shareholders and other rights prescribed by law.

Article 13. Shareholders are foreign investors who fulfill the obligations stipulated in the Law on Enterprises, the Law on Foreign Investment, and the Law on Encouraging Domestic Investment of the Socialist Republic of Vietnam, as well as the Articles of Association governing the organization and operation of the Joint Stock Company.

Article 14. Foreign investors may transfer their shares only after three years (if participating in the management of the Joint Stock Company) or after one year (if not participating in the management of the Joint Stock Company) from the date of holding shares in the company.

III. IMPLEMENTATION

Article 15.Procedure for selling shares to foreign investors:

1. State-owned enterprises implementing shareholding reform shall prepare plans in accordance with the procedures prescribed in Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government and accompanying guiding documents of relevant ministries, specifying: the proportion of shares to be sold to foreign investors, the proportion of state shares (if any), and the proportion of shares to be sold to domestic individuals and legal entities; and the organization providing guarantees or acting as agents for issuing shares.

Joint Stock Companies must also prepare plans to sell shares to foreign investors according to the above contents and submit them to the People's Committee of the province or centrally governed city.

2. The shareholding reform plan and the plan to sell shares to foreign investors shall be submitted to the People's Committee of the province or centrally governed city, or the ministry managing the sector, or the Board of Directors of State-owned Enterprise 91, established by the Prime Minister's decision.

3. The People's Committee of the province or centrally governed city, the ministry managing the sector, and the Board of Directors of State-owned Enterprise 91 shall have the responsibility to review each enterprise's plan and report it to the Prime Minister for decision.

4. After the Prime Minister's decision, the enterprise shall enter into a contract with the guaranteeing agency and announce in the mass media about the sale of shares to foreign investors, and complete the implementation within a maximum period of six months from the date of the Prime Minister's decision.

Article 16. Authority to decide on selling shares to foreign investors: All enterprises selling shares to foreign investors are decided by the Prime Minister./.