Joint Resolutions, Circulars

NUMBER 80/2002/TT-BTC OF SEPTEMBER 12, 2002 GUIDING
ISSUANCE AND AUCTION SALE OF SHARES TO OUTSIDE PARTIES OF STATE ENTERPRISES IMPLEMENTING SHARE CAPITALIZATION

Implementing Decree No. 64/2002/NĐ-CP dated June 19, 2002 of the Government on converting state-owned enterprises into joint-stock companies, the Ministry of Finance guides procedures and methods for selling shares to outside parties of state enterprises implementing capitalization through auction or underwriting issuance as follows:

Part I
General Provisions

1. Scope and Applicability

State enterprises and units affiliated with state enterprises must follow the guidelines set forth in this Circular when selling their initial shares to external entities. Add

2. The terms used in this Circular shall be understood as follows:

2.1. Auction sale of shares refers to the public sale of shares of state enterprises undergoing share capitalization to external entities with competitive bidding.

2.2. Underwriting issuance (in the case of the first sale of shares of state enterprises undergoing share capitalization) involves an organization accepting underwriting to ensure the implementation of the share issuance plan of the state enterprise undergoing share capitalization to external entities through an auction. In the event that not all shares are sold, the underwriter must purchase the remaining shares at the starting price.

2.3. An underwriting organization is one or a group of financial intermediaries that meet the conditions to undertake underwriting issuance services for enterprises in accordance with securities laws and the securities market.

2.4. Organizations conducting the auction sale of shares are joint-stock enterprises undergoing capitalization and financial intermediaries selected by the authority deciding on capitalization to carry out the initial public offering of shares of the joint-stock enterprise to external entities.

2.5. Financial intermediaries participating in underwriting or organizing the auction sale of shares include securities companies, financial companies, commercial banks, and other credit institutions...

2.6. Participants in the auction are economic organizations and individuals both domestically and internationally as stipulated by law.

2.7. Bid deposit is a sum of money from participants in the auction deposited in advance to guarantee their right to participate in the auction.

2.8. Starting price is the initial price of a share offered for sale to external parties established by the Auction Committee but not lower than the floor price.

2.9. The floor price of a share is determined to be 100,000 Vietnamese dong.

3. Costs for auction activities and underwriting issuance shall be agreed upon between the joint-stock enterprise and the auction organizing body or the underwriting organization, but shall not exceed the permissible share capitalization costs of the state enterprise.

PART II
SPECIFIC PROVISIONS

1. The organization of the auction sale of initial shares to external parties of joint-stock enterprises shall be carried out through financial intermediaries or directly by the enterprise itself (if authorized by the authority deciding on capitalization), ensuring transparency, fairness, and protection of the legitimate rights and interests of all parties involved.

2. Auction Committee.

2.1. The Auction Committee is established by the authority deciding on capitalization to guide and supervise the auction sale of shares.

2.2. The composition of the Auction Committee is as follows:

a. In cases where financial intermediaries (including underwriting organizations) conduct the auction sale of shares, the composition of the Auction Committee includes:

- The director or a person authorized by the financial intermediary tasked with conducting the auction serves as the Chairman of the Auction Committee.

- A representative of the authority deciding on capitalization of the enterprise.

- A representative of the Holding Company or company (if the unit or part of the enterprise is being capitalized).

- A representative of the enterprise's financial authority at the same level.

- A representative of the joint-stock enterprise.

b. In cases where state enterprises undergoing capitalization are directly assigned by the authority deciding on capitalization to conduct the auction sale of shares, the composition of the Auction Committee includes:

- The director of the joint-stock enterprise or a person authorized by the director serves as the Chairman of the Auction Committee.

- A representative of the authority deciding on capitalization of the enterprise.

- A representative of the enterprise's financial authority at the same level.

- A representative of the Parent Company or Holding Company (if applicable).

2.3. Responsibilities and powers of the Auction Committee:

a. Issuing auction rules for the sale of shares to external parties of joint-stock enterprises in accordance with the provisions of the law and the guidance of this Circular.

b. Monitoring and supervising the auction sale of shares according to the issued rules.

c. Deciding on the announcement of the starting price.

d. Supervising and managing the distribution of participation certificates.

e. Preparing minutes and announcing the results of the auction.

g. Declaring the auction unsuccessful (if it occurs).

h. Reporting to the authority deciding on capitalization the situation and results of the auction sale.

3. Responsibilities of the organization conducting the auction sale of shares

3.1. Cooperating with relevant agencies to establish the Auction Committee as prescribed in Point 2 of Part II of this Circular.

3.2. Drafting auction rules for the sale of shares to submit to the Auction Committee for promulgation.

3.3. Proposing the starting price and reporting it to the Auction Committee for decision and formal announcement.

3.4. Displaying information about the auction sale of shares of the joint-stock enterprise at the auction site or the headquarters of the joint-stock enterprise and announcing in five consecutive daily issues of a central newspaper and a local newspaper in the location where the main office of the joint-stock enterprise is located thirty days before the auction takes place.

3.5. Verifying the eligibility of auction participants, notifying and organizing for eligible individuals and legal entities to register for participation in the auction.

3.6. Organizing the auction and selling shares according to the auction results.

3.7. Refunding bid deposits to non-winning bidders.

3.8. Carrying out other activities related to the auction sale of shares or underwriting issuance.

Main information about the auction sale of shares must be publicly displayed and announced including:

4.1. Name and address of the joint-stock enterprise;

4.2. Number of shares up for auction;

4.3. Main economic and financial information of the enterprise for the three years prior to shareholding reform (including issues related to products and business sectors, consumption markets, labor skills) and production and business plans for the three years following reform;

4.4. Time and location of the auction;

4.5. Name and address of the organization conducting the auction;

4.6. Conditions for participating in the auction;

4.7. Deadline and method for submitting registration forms to participate in the auction;

4.8. Date, time, and location for registering to participate in the auction;

4.9. Initial bidding price (starting price) of the auction;

4.10. Payment methods;

5. Conditions for participating in the auction;

5.1. Economic organizations and individuals meeting the following conditions may participate in the auction:

a. Having legal personality, individual status; having a specific and clear address; If the legal representative is not the head of the unit, they must have a power of attorney; Individuals must have a national identity card, valid identification documents, or be sponsored by a person with full citizenship rights.

Foreign organizations and individuals must open accounts at payment service providers operating within the territory of Vietnam and comply with Vietnamese laws.

b. Submitting a registration form to participate in the auction according to the prescribed model (as stipulated in Appendix 1 or Appendix 2) and submitting it within the deadline announced in the invitation to attend the public auction.

c. The minimum number of shares each organization and individual registers to purchase is 100 shares.

d. Paying a deposit of 10% of the value of the registered shares based on the starting price.

5.2. The following entities are not entitled to participate in the auction:

a. Members of the Auction Committee.

b. Parents, siblings, spouses, and children of members of the Auction Committee.

c. Economic organizations managed or owned by members of the Auction Committee.

d. Persons who directly performed the valuation of the shareholding enterprise; parents, spouses, and children of such persons.

e. Other organizations and individuals as provided by law.

6. Registration to participate in the auction.

Three days before the auction of shares begins, the organization conducting the auction must complete the procedures for registering participation, paying the deposit, and issuing participation certificates to individuals and organizations that have been accepted to participate in the auction.

Participation certificates are numbered, clearly stating the name of the participating entity or individual, the quantity of shares registered for purchase, the amount of deposit paid, and bearing the seal of the organization conducting the auction.

7. Conducting the auction.

7.1. Before the auction begins, the organization conducting the auction must report to the Auction Committee on the conditions for conducting the auction and the list of organizations and individuals eligible to participate in the auction.

7.2. The auction is considered to meet the conditions for proceeding when there are at least two qualified participants (or their authorized representatives) present at the auction. In cases where participants cannot attend the auction directly, they must notify the reason for absence and submit the participation certificate (with the expected purchase price of the registered shares) to the Auction Committee one day before the auction opens and will be deemed to have attended.

Participants who have registered but do not attend the auction directly or in absentia as described above will not be refunded the deposit.

7.3. In cases where fewer than two qualified participants attend the auction, the Auction Committee declares the auction unsuccessful, refunds the deposit to those who have registered and attended, and is responsible for reviewing and adjusting the starting price to reorganize the auction within fifteen days from the date of announcing the unsuccessful auction.

If the adjusted starting price equals the floor price but the auction still fails:

- If the shareholding enterprise applies the issuance guarantee scheme, the guarantor organization must purchase the shares at the starting price and retain the deposit paid for these shares.

- If the shareholding enterprise does not apply the issuance guarantee scheme, the Auction Committee is responsible for reporting to the authority deciding on the shareholding reform to review and decide on adjusting the enterprise's value in the shareholding reform plan and allowing the auction to be conducted again. The re-auction must be organized within thirty days from the date of receiving permission to conduct the re-auction.

If the second auction does not sell all the shares intended for sale, the Auction Committee reports to the authority deciding on the shareholding reform to review and adjust the registered capital in the shareholding reform plan (for cases involving new share issuance) or increase state capital in the registered capital structure to continue implementing the plan to convert state-owned enterprises into joint-stock companies.

7.4. At the start of the auction, the Chairman of the Auction Committee or the authorized person announces key information about the auction, including:

- The name of the enterprise undergoing shareholding reform, the estimated registered capital, and the number of shares to be sold externally.

- The starting price of the offered shares and actions considered violations of the auction rules, leading to exclusion from the auction and non-refund of the deposit.

- Steps in the auction process and principles for determining the right to purchase shares at the bid price.

- Clarifying any questions raised by participants in the auction.

7.5. The auction for purchasing shares is conducted through a sealed bid process. Participants record their expected purchase prices for the registered shares on the participation certificate and submit them to the Auction Committee for review.

8. Determining the selling price and announcing the auction results:

8.1. The auction results for selling shares are determined according to the principle:

a. Those offering the highest price have priority to purchase shares based on the number of shares registered for purchase and the number of shares offered. If the highest bidder has fewer shares registered for purchase than the number of shares offered, the remaining shares (after allocation to the highest bidder) are considered for the next highest bidder. If there are still remaining shares, the principle continues to be applied.

Example:

The total number of shares sold outside the enterprise is 20,000 shares, which equals 20% of the registered capital. The initial price set by the Auction Council is VND 102,000 per share.

* The bidding prices of the participating parties are as follows: as follows:

- Legal entity A registers to purchase 10,000 shares at VND 110,000 per share.

- Individual B registers to purchase 3,000 shares at: VND 125,000 per share

- Individual C registers to purchase 4,000 shares at: VND 115,000 per share

- Legal entity D registers to purchase 8,000 shares at: VND 107,000 per share

- Individual E registers to purchase 4,000 shares at: 10,300 shares at:

VND 103,000 per share - Individual G registers to purchase 1,000 shares at:

VND 102,000 per share

* The auction results are determined as follows: - Individual B : is granted the right to purchase VND 125,000 per share

3,000 shares at : - Individual C is granted the right to purchase VND 115,000 per share

4,000 shares at

- Legal entity A is granted the right to purchase 10,000 shares at VND 110,000 per share is granted the right to purchase VND 107,000 per share

- Legal entity D is granted the right to purchase:

Accordingly, individual E's registration to purchase 4,000 shares at VND 103,000 per share, individual G's registration to purchase 1,000 shares at VND 102,000 per share, and 5,000 out of the 8,000 shares registered for purchase by individual D at VND 107,000 per share are not approved by the seller.

b. In cases where the bidding parties offer the same price, the Auction Council prioritizes selling shares to investors with greater potential in terms of capital, management experience, technological level, market, or creditors.

c. In cases where the bidding parties have equal potential and offer the same price but the number of shares offered for sale is less than the total number of shares registered for purchase, the right to purchase shares of each party shall be determined based on: The total number of shares offered for sale and the ratio between the shares of each party registered for purchase compared to the total number of shares registered for purchase by all parties.

8.2. Any bid lower than the initial price is deemed invalid and excluded from the auction.

8.3. The auction results must be reflected in the auction minutes and signed by all members of the Auction Council. The auction minutes must be prepared in at least three copies and kept at: the authority deciding on the shareholding reform, the organization implementing the auction, and the shareholding reform enterprise.

8.4. The Auction Council is responsible for publicly announcing the auction results before the auction concludes. 9. Based on the auction results, the organization implementing the auction and related parties are responsible for completing the share purchase and sale within ten working days from the date of announcing the auction results.

Share purchases and sales must be settled in Vietnamese Dong. In cases of purchase using foreign currency, it must be converted into Vietnamese Dong according to the average exchange rate on the inter-bank foreign exchange market published by the State Bank of Vietnam at the time of the auction. Payment may be made directly at the office of the organization implementing the auction or transferred according to the regulations of this organization.

10. If a participant in the auction does not purchase the full quantity of shares they are entitled to buy according to the auction results, they will not be refunded the deposit corresponding to the shares they refuse to purchase. The remaining shares will be considered by the Auction Council and decided to sell to the next highest bidder who wishes to purchase them.

In case all participants in the auction do not wish to purchase additional shares, the remaining shares will be handled as follows:

a. If the shareholding reform enterprise adopts the underwriting issuance method, the underwriting organization must repurchase at the initial price and enjoy the deposit amount corresponding to these shares.

b. If the shareholding reform enterprise does not adopt the underwriting issuance method, the Auction Council reports to the authority deciding on the shareholding reform for consideration and decision to allow the auction to be held again or adjust the registered capital structure.

11. The organization implementing the share auction is not responsible for the value of the shares sold at auction, except in cases where necessary information related to the shares sold at auction is not fully and accurately communicated to the auction participants.

Within five days from the date of purchasing the auctioned shares, the buyer has the right to return the shares to the auction seller and request the organization implementing the auction to compensate for losses if the information provided by the auction seller about the enterprise does not match the announced information.

12. Management of deposits:

- For parties participating in the auction but not granted the right to purchase shares, the organization implementing the auction is responsible for refunding the deposit within five days (from the end of the auction).

- For organizations and individuals granted the right to purchase shares according to the auction results, the deposit amount will be deducted from the total payment corresponding to the number of shares purchased at the auction price.

- For deposits not required to be refunded as stipulated in Clause 7.2 Point 7 and Point 10 of this Circular, they will be handled as follows:

+ In the case of underwriting issuance, the underwriting organization enjoys the deposit amount corresponding to the remaining shares that must be purchased.

+ In other cases, the organization implementing the auction is responsible for remitting the deposit to the Enterprise Reorganization Fund at the same level.

PART III
IMPLEMENTATION

This Circular takes effect from the date of signature.

During implementation, if there are any issues, please report to the Ministry of Finance for research and resolution.

SOCIALIST REPUBLIC OF VIET NAM

Independence - Freedom - Happiness

Hanoi, on the year 200...

ANNEX 1

APPLICATION FOR PARTICIPATION IN SHARE AUCTION

Respectfully submitted to: The Auction Council of the...Company

Name of organization or individual participating:...

Address: …

Phone number:...

Business registration number (or place of permanent residence for individuals):...

Account number... opened at...

Financial capacity, technology, market, and management experience relevant to the activities of the joint-stock company (if any):

Number of shares registered to purchase:

After studying the share auction documents of the...Company, we voluntarily participate in the auction organized by the...Auction Council and commit to strictly adhere to the Auction Regulations and the auction results announced by the Auction Council.

If violated, we accept responsibility under the law.

Organization or individual submitting the application

Signature and stamp (if applicable)

SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness

APPLICATION FOR the year...

ANNEX 2

APPLICATION FOR PARTICIPATION IN SHARE AUCTION

Respectfully submitted to: The Auction Council of the...Company

Name of organization or individual (foreign):...

(Recorded according to the professional experience declaration form confirmed by the organization where the applicant has worked or is currently working):

Address: …

Telephone: 2. Intellectual Property Rights Owner: Email (if available):

Trading name and business registration number (or ID number for foreign individuals):...

Account number... opened at (payment service providers operating in Vietnam):…

Financial capacity, technology, market, and management experience relevant to the activities of the joint-stock company (if any):

Number of shares registered to purchase:

Certified copy of the business registration certificate and certified copy of the power of attorney granted to the representative of the organization or individual for the auction by the authorized person (attached).

After studying the Auction File for the sale of shares of Company..., we voluntarily participate in the auction organized by the Auction Committee... and commit to strictly comply with the Auction Regulations and the auction results announced by the Auction Committee.

If violated, we accept responsibility under the law.