SELLING SHARES IN BLOCKS

This Decision deals with withdrawal of state capital of unlisted public companies from joint-stock companies that have not been listed or registered on Upcom (Hanoi Stock Exchange), the ownership of which is represented by Ministries, ministerial agencies, Governmental agencies , (hereinafter referred to as regulatory Ministries), People’s Committees of central-affiliated cities and provinces (hereinafter referred to as provinces), state-owned corporations, and companies whose 100% charter capital is held by the State (hereinafter referred to as wholly state-owned companies).

This Decision applies to:

1. Equitized enterprises in which investment must be withdrawn.

2. Owners of state capital invested in joint-stock companies (regulatory Ministries and the People’s Committees of provinces), and authorized representatives of state capital invested in other enterprises (hereinafter referred to as representatives) who withdraw state capital from joint-stock companies that are not listed or registered on Upcom (hereinafter referred to as unlisted joint-stock companies).

3. The Board of members of state-owned corporations, companies or presidents of companies 100% charter capital of which is held by the State (hereinafter referred to as wholly state-owned companies), authorized representatives of capital invested by state-owned corporations and companies in other enterprises when capital is withdrawn from unlisted joint-stock companies.

4. State-owned corporations and enterprises that decide to transfer their right to represent the state capital owner after they are equitized into State Capital and Investment Corporation are not regulated by this Decision.

1. “Selling shares in blocks" means publicly selling shares of a joint-stock company mentioned in Article 1 of this Decision to investors, each of whom must register to buy the whole quantity of shares sold in blocks.

2. “Deposit” means an amount paid in advance by the investor to secure the right to buy shares.

3. “IPO” means initial public offering.

4. “Unsuccessful auction” means an auction in which no investor buys shares (because the investor violate auction rules or the successful investor refuses to buy shares)

5. “Unsuccessful competitive offering” means an auction in which no investor buys shares (because the investor violates auction rules or the successful investor refuses to buy shares or the investors offer the same price).

1. The sale of shares in blocks prescribed in this Decision and relevant regulations on withdrawal of state capital must be transparent and conformable with the charters of state-invested joint-stock companies.

2. The sale of shares in blocks must be put up at auction via the Stock Exchange under a plan approved by a competent authority as prescribed in Article 5 of this Decision. The plan for selling shares in blocks must contain the following information: quantity of blocks of shares to be sold at auction; quantity of shares of each block; starting price, requirements for participation in the auction; contingency plan in case the auction is unsuccessful.

3. Investors who participate in the auction to buy shares in blocks under this Decision are not required to hold a public procurement according to regulations of law on securities and securities market.

4. Shares may be divided into multiple blocks to be sold at auction depending on the quantity of shares and market development. However, only one block of shares shall be sold in an auction. The quantity of shares in a block must be at least 5% of charter capital of the joint-stock company prescribed in Article 1 of this Decision.

5. In case of selling without auction (without the Stock Exchange), the Prime Minister’s decision shall apply.

6. Shares shall be sold to strategic shareholders of IPO enterprises in the following cases:

- When selling shares to strategic shareholders under an approved equitization plan within 12 months from the equitization date, the approved equitization plan or decision of to approve the equitization plan issued by a competent authority shall apply.

- When selling share to strategic shareholders after 12 months from the date of equitization, regulations on capital withdrawal shall apply.

- When selling shares to strategic shareholders under another plan, the Prime Minister’s decision shall apply.

Regulatory ministries and the People’s Committees of provinces shall consider approving the plans for selling shares in blocks in the joint-stock companies they represent the owner of which after consulting with the Ministry of Finance and the Ministry of Planning and Investment; approving the plans for capital withdrawal of state-owned corporations and companies from other enterprises.

The Board of members of state-owned corporations, companies or presidents of companies shall decide the sale of shares of joint-stock companies they represent owner of which in blocks under the approved plan.

With regard to the plan for selling state capital in the form of shares in parent companies of state-owned corporations after equitization, regulatory Ministries and the People’s Committee of the provinces shall decide the plan after the Prime Minister grants an approval.

1. Vietnamese, foreign organizations and individuals are entitled to buy shares in blocks. Vietnamese and foreign investors may buy an unlimited quantity of shares if regulations of law and the international agreements to which the Socialist Republic of Vietnam is a signatory prescribe a maximum ratio of investment by foreign investors, such regulations shall apply.

2. Investors buying shares in blocks must be financially capable; commit themselves to the enterprise’s interest; have plans for keep existing employees; support the enterprise in expanding its market, improving its capacity in terms of finance, business administration, transfer and application of new technologies, training; improve the enterprise’s business efficiency and competitiveness.

3. According to Clause 2 of this Article, the representative shall establish criteria for selecting investors eligible to buy shares in blocks at auction and submit a report to the owner to formulate a plan for selling shares in blocks, which will be submitted to a competent authority for approval.

1. Request relevant documents and reports; survey the business performance of the enterprise to decide whether to buy shares in blocks.

2. After shares are bought and the investor becomes a shareholder of the enterprise, he/she must perform the rights and obligations of shareholders according to applicable regulations of law, adhere to the commitment and support the enterprise in accordance with the criteria for selection of eligible buyers. The investor that fails to adhere to commitment and causes damage for the enterprise shall pay compensation according to applicable regulations of law.

1. The starting price of the block of shares equals (=) the starting price of a share multiplied by (x) the quantity of shares in a block.

2. Starting price of a share is determined by the valuation organization.

3. According to the Decision to approve the plan for selling shares in blocks issued by a competent authority and regulations on selling shares in blocks, the owner’s representative agency, the Chairperson of the Board of members, the President of the enterprise shall request the representative to cooperate with Stock Exchange in formulating the enterprise’s own statute on selling shares in blocks. Information shall be published for at least 20 days.

4. The sale of shares in blocks shall be held in accordance with the statute on selling shares in blocks at auctions prescribed in Clause 3 of this Article.

The sale of shares in blocks shall comply with Point c Clause 2 Article 39 of the Law on management and investment of state capital in enterprises. To be specific:

1. Shares shall be sold in blocks at auction as prescribed in Article 4 of this Decision. The investor who offers the highest price at the auction is the successful investor. If multiple investors offer the same price for a block of share, a competitive offering in the form of ballot shall be held among such investors. In this case, the starting price will be the initially offered price and the investor who offers the highest price will be the successful investor.

In case the competitive offer is not successful (because the investors offer the same price), Clause 2 of this Clause shall apply.

2. In case there is only one investor registers to buy shares, competitive offering is not successful, or the Prime Minister grants a written permission, shares shall be sold under a direct agreement with the investor.

The sales of shares under direct agreement with the investor must comply with the following regulations:

- With regard to parent companies - corporations: The owner’s representative agencies shall request the Prime Minister to consider approving the sale of shares under direct agreements with investors.

- With regard to companies eligible for selling shares in blocks: the Prime Minister shall permit the sale of share in blocks under direct agreements with investors.

- With regard to other enterprises: the owner’s representative shall decide the sale of share under direct agreements with investors. When deciding the sale of shares under a direct agreement with the investor, the owner’s representative agency is legally responsible for its decision and must comply with the following principle: The person who has the power to decide capital transfer must not decide the transfer of capital to another enterprise whose manager is his/her spouse, birth parent, adoptive parent, birth child, adopted child, sibling, son-in-law, or daughter-in-law; and must not decide the transfer of capital to any of the aforementioned persons.

- In case the competitive offer is not successful because the investors offer the same price, the quantity of shares in the block shall be evenly divided to be sold to the investors. The power to decide the sale of shares in this case shall comply with this Clause.

3. In case the successful investor refuses to pay for the shares, the deposit shall not be returned.

Proceeds from selling shares in blocks shall be handled as follows:

- Proceeds shall be transferred to Enterprise Arrangement and Development Fund in case of selling shares in a joint-stock company the ownership of capital in which is represented by a Ministry or the People’s Committee of a province (after deducting reasonable costs of transfer).

- Proceeds from selling shares in joint-stock companies having capital contributions of a state-owned corporation or wholly state-owned company shall be included in income from financial activities of the enterprise after deducting the value of investment, transfer costs, and taxes as prescribed.

The owner’s representative agency of the joint-stock company shall hire a consultancy organization to formulate the capital withdrawal plan and estimate capital withdrawal costs. The selected consultancy organization is legally responsible for their decisions.

1. Direct the State Securities Commission to issue the model statute on selling shares in blocks at auction.

2. Cooperate with other ministries and the People’s Committees of provinces in resolving difficulties; request competent authorities to consider the difficulties beyond its competence.

1. Request the representative to:

a) Formulate the plan for selling shares in blocks (including criteria for selecting eligible investors) and submit it to a competent authority for approval.

b) Cooperate with the Stock Exchange to formulate the statute on selling shares in blocks at auction.

c) Cooperate with investors in surveying the business operation of the enterprise.

d) Supervise the implementation of the plan for selling shares in blocks; report difficulties that arise to the owner’s representative.

2. Hire a capable valuation organization to determine the starting price when selling shares in blocks; hire a consultancy organization to formulate the capital withdrawal plan and estimate capital withdrawal costs.

3. Inspect, supervise the implementation of the plan for selling shares in blocks of enterprises under their management as prescribed.

4. Resolve or request competent authorities to resolve difficulties procedures arise during the implementation of the plan for selling shares in blocks.

1. This Decision comes into force from the day on which it is signed.

2. In case a capital withdrawal plan that was approved before the effective date of this Decision has to be revised to sell shares in blocks, regulations of this Decision shall apply.

3. Ministries, Heads of ministerial agencies, Heads of Governmental agencies, Presidents of the People’s Committees of provinces, the Board of members of state-owned corporations, presidents of wholly state-owned companies, authorized representatives of capital of state-owned corporations, companies, and relevant entities are responsible for the implementation of this Decision./.