Thông tư 18/2007/TT-BTC

CIRCULAR

PROVIDING GUIDELINES ON PURCHASE OR RE-SALE OF SHARES AND A NUMBER OF CASES OF ISSUE OF ADDITIONAL SHARES BY PUBLIC COMPANIES

To implement the Law on Securities, the Ministry of Finance hereby provides the following guidelines on purchase or re-sale of shares and a number of cases of issue of additional shares by public companies:

I. GENERAL PROVISIONS

1. This Circular makes detailed provisions on public companies redeeming their own shares, re-selling redeemed shares, offering publicly to purchase shares; issuing shares for payment of dividends, issuing bonus shares originated from sources of capital of the owner, and issuing shares in accordance with an option program to their employees.

2. Interpretation of terms: in this Circular, the following terms shall be construed as follows:

2.1 Treasury share means a share which was issued by a public company and redeemed by such company by a lawful source of capital.

2.2 Outstanding share means a fully-paid share about which information on the purchaser is recorded correctly and fully in the register of shareholders; from this point of time, the share purchaser becomes a shareholder of the company.

II. REDEMPTION OF SHARES AND SALE OF TREASURY SHARES

1. Conditions for redemption of shares

Any public company redeeming its own shares to use as treasury shares must satisfy the following conditions:

1.1 A resolution passed by the General Meeting of Shareholders shall be required in the case of redemption of more than 10% but not more than 30% of the total number of outstanding shares, or a resolution passed by the General Meeting of Shareholders shall be required in the case of redemption of 10% or less of the total number of outstanding shares in each period of 12 months.

Where a public company redeems its own shares resulting in the number of treasury shares being equal to 25% or more of the total number of its outstanding shares, the company must offer publicly the redemption in accordance with the Law on Securities and the guidelines provided in Section III of this Circular.

1.2. Sufficient capital from the following sources is available for redemption [of shares] for treasury shares:

(a) Surplus capital;

(b) Retained profit;

(c) Other sources in accordance with the law.

1.3. A plan for redemption specifying a period of implementation and principles for determination of a price is available.

2. Cases in which [a company] is not permitted to redeem its own shares

2.1 A company shall not be permitted to redeem its own shares in the following cases:

(a) It suffers losses in its business or currently has any overdue debt;

(b) It is under the process of offering shares for sale to raise additional capital;

(c) It is currently carrying out a split or consolidation of shares;

(d) Its shares are the subject of a public offer for purchase.

2.2. A company shall not be allowed to redeem shares from the following shareholders to use as its treasury shares:

(a) Managers of the company, their spouses, parents, adoptive parents, children, adopted children, brothers and sisters;

(b) Shareholders subject to a limit of transfer in accordance with law and the charter of the company;

(c) Shareholders holding a controlling shareholding, unless the State sells certain shares to reduce its proportion of ownership.

3. Conditions for sale of treasury shares

3.1. A public company shall only be allowed to sell its treasury shares after 6 months from the last day of the most recent redemption, unless [such treasury shares] are distributed to its employees or used as bonus shares. Where they are used as bonus shares for employees, [the company] must ensure a sufficient sum for payment from its welfare or reward funds.

3.2. A specific plan for sale specifying the period of implementation and principles of determination of a price must be available.

4. Report and announcement of information

4.1. Any public company redeeming shares or selling treasury shares must submit a report in writing to the State Securities Commission at the same time as announcing information on the mass media no later than 7 days before the date of implementation of the redemption or sale. The report and the announcement of information shall include the following main items:

(a) Objectives of the redemption of shares or the sale of treasury shares;

(b) Proposed maximum number of shares to be redeemed or sold;

(c) Capital sources for redemption;

(d) Principles of determination of prices;

(dd) Period of implementation of the transaction;

(e) Name of the securities company appointed to conduct the transaction;

(g) Price stated in the announcement of information (if any).

4.2. Where a company announces the price for redemption [of shares], it must specify that such price is the proposed price. The price for redemption [of shares] shall be determined and announced before the day of implementation of the redemption.

4.3. Any public company whose shares are listed on the Stock Exchange or Securities Trading Centre, upon redemption of its own shares or sale of treasury shares, must concurrently submit a report to the Stock Exchange or Securities Trading Centre and announce information on the announcement of information media of the Stock Exchange or Securities Trading Centre. The timing of reporting and announcement of information shall be subject to paragraph 4.1.

5. Implementation of transactions

5.1. Any public company whose shares are listed on a Stock Exchange or Securities Trading Centre, upon redemption of its own shares or sale of treasury shares, must comply with regulations of the Stock Exchange or Securities Trading Centre in relation to redemption of shares and sale of treasury shares.

5.2. Any public company whose shares are not listed on a Stock Exchange or Securities Trading Centre shall only be allowed to carry out the redemption of shares via a securities company as a broker, but [the redemption] shall not affect the trading price and the maximum value of the redemption shall not exceed 10% of the total number of such shares traded in the day.

5.3. The public company shall finish the redemption of shares or the sale of treasury shares within the period specified in the announcement of information, but the maximum period shall not exceed 90 days from the day of commencement of the transaction.

5.4. Within a period of 10 days after termination of the transaction for redemption of shares or sale of treasury shares, the public company must report the result of the transaction to the State Securities Commission and announce information to the public; where the company cannot archive in full the proposed number of shares for redemption or sale, it must report the matter and announce the reasons therefor.

Public companies whose shares are listed on a Stock Exchange and Securities Trading Centre shall concurrently report the result of the transaction to both the Stock Exchange and Securities Trading Centre.

6. Change in transactions

Public companies shall not be permitted to change their intention or plan for redemption of shares or sale of treasury shares for which a report has been submitted and information has been announced to the public, except for cases of force majeure, in which case a report and announcement of information shall be required.

7. The management and accounting of treasury shares shall be subject to guidelines provided by the Ministry of Finance.

III. PUBLIC OFFER FOR PURCHASE

1. Registration of offers for purchase

1.1 Any organization or individual making a public offer to purchase shares of a public company must submit documents for registration of its offer for purchase to the State Securities Commission at the same time as sending them to the public company whose shares are offered for purchase.

Within a time-limit of 7 days from the date of receipt of the documents for registration of an offer for purchase, the State Securities Commission shall give its opinion in writing; where [the registration] is not approved, [the State Securities Commission] shall specify the reasons therefor, including a case where such documents are incomplete after the State Securities Commission has requested an addition to the documents or [such documents] contain artificialm or misleading information.

1.2 The documents for registration of an offer for purchase shall comprise:

(a) Application for registration of a public offer for purchase in accordance with the form in the Appendix to this Circular;

(b) Audited financial statements of the last year in respect of legal entities, or banks confirmation of financial ability in respect of individuals;

(c) Written agreement with members of the board of management and major shareholders of the public company whose shares are offered for purchase in the case where there is a prior agreement between the two parties;

(d) Name of the securities company as the agent delivering the offer for purchase;

(dd) Documents proving that the Company satisfies all conditions for redemption of shares stipulated in Section II.1 of this Circular in the case where a public company redeems its own shares by way of making a public offer to purchase.

2. Opinion of the company [whose shares] are offered for purchase

2.1 Within a time-limit of 7 days from the date of receipt of the documents for registration of an offer for purchase, the public company whose shares are offered for purchase shall provide the State Securities Commission with and notify all shareholders of its opinion on whether or not it accepts the offer for purchase.

2.2 The opinion of the company must be in writing, be signed by at least two-third of the total number of the members of the board of management, and specify the evaluation of the offer for purchase by the board of management and recommend to shareholders whether they should accept or refuse the offer for purchase; where [the offer] is refused, the company must specify the reasons therefor.

3. Transaction of public offer for purchase

3.1 A public offer for purchase shall only be implemented after it is approved by the State Securities Commission and announced by the organization or individual making the offer, in three consecutive issues of a central newspaper and a local newspaper of the locality in which the head office of the company whose shares are offered for purchase is located before the proposed timing of implementation. Where the company [whose shares] are offered for purchase is a listed company, the announcement shall be made on the media of the Stock Exchange or Securities Trading Centre at which such company is listed.

3.2 Upon public announcement, the purchase offeror shall not be allowed to change its intention to make the offer for purchase as announced, but in a cases of force majeure or where the total number of shares registered for sale is less than the proposed number of shares registered for purchase and [the matter] has been reported already to the State Securities Commission, the withdrawal of the registration of an offer for purchase shall be approved.

3.3 The purchase offeror must appoint a securities company as an agent to make the offer for purchase. Before making the offer for purchase, the purchase offeror must deposit a sum of money as an escrow deposit corresponding to 100% of the value of the shares which are registered for the offer for purchase and calculated on the basis of the price of the offer for purchase.

3.4 During the process of offering publicly for purchase, the purchase offeror shall not be permitted to carry out the following conduct:

(a) Directly or indirectly purchase or undertake to purchase shares which are being offered for purchase outside the offer for purchase;

(b) Sell or undertake to sell the shares that it currently offers for purchase;

(c) Treat unfairly holders of shares of the same type as the shares currently being offered for purchase;

(d) Provide separate information to certain shareholders or information at different levels or different points of time to shareholders. This provision shall also apply to issuing organizations whose shares are offered for purchase.

3.5 The period of implementation of a public offer for purchase shall not be less than 30 days and more than 60 days from the date of its announcement. An offer for purchase, including any offer for additional purchase or any adjustment to the initially registered [offer for purchase], must be performed on conditions which are not less favourable than those in the previous offer for purchase. The purchase offeror may increase the price of the offer for purchase at least seven days before expiration of the period of the offer for purchase. Adjustments to the initially registered offer for purchase must be announced in accordance with paragraph 3.1 of this section.

3.6 Any organization or individual who has deposited his or her shares for a public offer for purchase shall be entitled to withdraw such shares at any time during the period of the offer for purchase.

3.7 Where the number of shares which are offered for purchase is less than the number of outstanding shares of a company, shares shall be purchased in the relevant proportion.

3.8 After performance of a public offer for purchase, any purchase offeror holding 80 per cent or more of the outstanding shares of a public company must continue to purchase within a time-limit of thirty (30) days shares of the same class held by other shareholders at the announced price of the offer for purchase, if such shareholders so request.

3.9 Within a time-limit of seven days from the date of expiry of the period of the public offer for purchase, the securities company designated as an agent must transfer proceeds to the shareholders selling shares and the shares to the purchase offeror.

3.10 Upon a time-limit of ten (10) days from the date of expiry of the period of the public offer for purchase, the purchase offeror must report in writing the result of the offer for purchase to the State Securities Commission at the same time as announcing it to the public.

3.11. The purchase offeror shall not be allowed to sell the purchased shares within 6 months from expiration of the public offer for purchase.

IV. A NUMBER OF CASES OF ISSUE OF ADDITIONAL SHARES BY PUBLIC COMPANIES

1. Issue of shares for payment of dividends

A public company issuing shares for payment of dividends to its existing shareholders in order to increase its charter capital must obtain the approval of the general meeting of shareholders and have sufficient funds for implementation from after-tax profit as stated in the latest financial statements certified by an auditor.

2. Issue of bonus shares

A public company issuing bonus shares to its existing shareholders in order to increase its charter capital must obtain the approval of the general meeting of shareholders and have sufficient funds for implementation from the following sources:

2.1 Investment and development fund;

2.2 Surplus capital fund (the share of capital that a shareholding company is entitled to in accordance with the regulations);

Where capital surplus is derived from the difference between the selling price and the par value of shares which are issued for implementation of an investment project, the company shall be only permitted to use [such capital surplus] for addition to its charter capital after three years from the date the project is completed and brought into operation or use. Where capital surplus is derived from the difference between the selling price and the face value of the additional shares issued, the company shall only be permitted to use [such capital surplus] for addition to its charter capital after one year from the date of expiry of the issue.

2.3 Accumulated profit;

2.4 Other reserve funds in accordance with the laws on finance or banking (if any).

3. Documents for reporting an issue of shares for payment of dividends or an issue of bonus shares shall comprise the following:

3.1 Resolution of the general meeting of shareholders approving the plan for issue [of shares];

3.2 Latest audited financial statements and other necessary documents proving lawful sources of capital used for issue of additional shares.

4. Issue of shares in accordance with a program of option to employees of the company:

Any public company issuing shares in accordance with a program of option to its employees must satisfy the following conditions:

(a) The program of option and the plan for issue of shares are approved by the general meeting of shareholders;

(b) The total number of shares to be issued in accordance with the program shall not exceed 5% of outstanding shares;

(c) The board of management must announce clearly criteria and a list of employees entitled to participate in the program, and principles of determination of selling prices and period of implementation.

5. Documents for reporting an issue of shares in accordance with a program of option to employees of the company shall comprise the following:

(a) The resolution of the general meeting of shareholders approving the program of option and the plan for issue [of shares] to employees;

(b) The resolution of the general meeting of shareholders approving the criteria and the list of employees, and principles of determination of selling prices and the period of implementation.

6. Reporting issue of shares and announcing information

6.1. An issuing organization must submit the documents specified in paragraph 3 or 5 of Section IV of this Circular to the State Securities Commission at the same time as announcing information on the mass media at least ten (10) days before the date the issue is carried out. Within a time-limit of ten (10) days upon completion of the issue, the issuing organization must submit a report on the result of the issue to the State Securities Commission. In the case of the issue of shares in accordance with a program of option to employees, the report on the result of the issue shall be accompanied by a list with signatures of the employees who purchased shares.

6.2. Public companies whose shares are listed at the Stock Exchange or Securities Trading Centre shall also submit a report to the Stock Exchange or Securities Trading Centre.

V. ORGANIZATION OF IMPLEMENTATION

1. This Circular shall be full of force and effect fifteen (15) days from the date of its publication in the Official Gazette.

The State Securities Commission, the Stock Exchange and Securities Trading Centres shall, depending on their functions and duties, be responsible to guide and supervise the implementation of this Circular by public companies.

2. Any amendment of and addition to this Circular shall be determined by the Minister of Finance.