CIRCULAR No CIRCULAR No. 02/2001/TT-UBCK OF SEPTEMBER 28, 2001 GUIDING THE IMPLEMENTATION OF DECREE No. 48/1998/ND-CP OF JULY 11, 1998 ON ISSUANCE OF SHARES AND BONDS TO THE PUBLIC In furtherance of the Government’s Decree No. 48/1998/ND-CP of July 11, 1998 on securities and securities market, the State Securities Commission hereby guides matters regarding the issuance of shares and bonds to the public for listing up at the Securities Trading Centers as follows: I. GENERAL PROVISIONS 1. In this Circular, the following terms shall be construed as follows: 1.1. Shares include common shares and preferred shares, which constitute a type of securities in form of certificate or book entry certifying the shareholders’ ownership and legitimate interests over the assets or capital of a joint-share company. 1.2. Bond is a type of securities issued in form of certificate or book entry certifying the obligation to repay debts (including principals and interests) of the bond-issuing organizations towards bond owners. 1.3. Registered shares, bonds are types of shares or bonds where the owners’ names are inscribed. 1.4. Bearer shares, bonds are types of shares or bonds where the owners’ names are not inscribed. 1.5. Stock option means the option reserved for current shareholders of a joint-stock company to buy a quantity of stocks in a new issuance of common shares corresponding to their respective stock proportions in the company. 1.6. Convertible bonds are those which can be converted into common shares of the same issuing organization under pre-determined conditions. 1.7. Issuance underwriting means that the issuance-underwriting organizations assist the issuing organizations in carrying out procedures for compilation and submission of dossiers of application for issuance before making securities sale offer and agreeing to buy securities of issuing organizations for resale or to buy the remaining quantity of securities not yet distributed out. The issuance-underwriting activities only mean that the issuance-underwriting organizations underwrite securities for the issuing organizations, excluding the performance of obligations toward investors, performed by the underwriting organizations on behalf of the issuing organization. 1.8. Distributing organizations are those which sell securities by mode of issuance underwriting or through issuing agents. 1.9. Issuing agents are securities companies, commercial banks, investment banks and financial companies, which undertake to sell securities for issuing organizations on the basis of agreement or through the principal issuance-underwriting organization. 1.10. Approved auditing organizations mean independent auditing organizations approved by the State Securities Commission to be the auditing organizations for securities issuing and trading organizations. 1.11. Equitized enterprises mean State enterprises or enterprises of other types, which conduct the equitization. 1.12. Rights mean a type of securities issued together with preferred bonds or shares, permitting the authorized securities holders to buy a certain amount of common shares at a pre-set price in a given period of time. 1.13. Listed companie s mean joint-stock companies which have their common shares listed at the Securities Trading Centers or Stock Exchange. 2. Par values of shares and bonds are inscribed in Vietnam dong. Shares have the uniform par value of VND 10,000. Bonds have the minimum par value of VND 100,000 or the multiple of VND 100,000. In a bond-issuing drive of the issuing organizations, bonds of the same term must have the same par value. 3. Shares and bonds issued to the public for transaction at the Central Trading Market shall be registered in concentration at the Securities Trading Centers or Stock Exchanges. 4. Share certificates, bond certificates issued to the public must contain the following principal contents: 4.1. Name and head-office of the issuing organization; 4.2. Serial number and date of issuance of the establishment permit (or decision) and the business registration certificate; 4.3. Type, par value, serial number; 4.4. The amount of equities allowed to be issued (for shares); 4.5. Interest rate, interest payment schedule, bond term ( for bonds); 4.6. Owners’ names (for registered shares and bonds); 4.7. Date of issuance; 4.8. Seal and signature of the chairman of the Managing Board of the issuing organization. 5. Where shares and bonds are issued in form of book entry, the share or bond buyers shall be granted the ownership certificates. 6. Shares and bonds may be sold to the following subjects: 6.1. Economic organizations, social organizations, Vietnamese citizens and overseas Vietnamese; 6.2. Foreign organizations and individuals. 7. The percentages of shares or bonds held by foreign organizations and individuals in an issuing organization shall comply with the Prime Minister’s decisions. II. CONDITIONS FOR SHARE ISSUANCE 1. The share-issuing conditions as prescribed in Article 6 of Decree No.48/1998/ND-CP of July 11, 1998 of the Government on securities and securities market for the issuing organizations to issue shares to the public for the first time shall include: 1.1. Being joint-stock companies, equitized enterprises; 1.2. Having the minimum charter capital actually obtained by the date of applying for issuance being VND 10 billion; 1.3. Having profitable production and business operation in the two latest consecutive years counting to the date of submitting the dossiers of application for issuance, the healthy financial situation and good development prospect. For equitized enterprises, the above-said two-year duration shall cover the pre-equitization time; 1.4. Having feasible plans on the use of capital gathered from the issuance, which have been approved by the shareholders’ congress; 1.5. The Managing Board members and the director (general director) have experiences in business management; 1.6. At least 20% of the stock capital of the issuing organization must be sold to more than 100 investors outside the issuing organization; where the stock capital of an issuing organization is VND 100 billion or more, this minimum percentage shall be 15% of the stock capital of the issuing organization; 1.7. The founding shareholders must hold at least 20% of the stock capital of the issuing organization by the time of ending the issuing drive and must maintain this percentage for at least 3 years as from the end of the issuing drive; 1.8. Where the issued shares have the total value according to their par values exceeding VND 10 billion, there must be the issuance-underwriting organization. 2. The listed companies, when additionally issuing shares to increase their capital, apart from satisfying the conditions prescribed at Points 1.1,1.2, 1.3,1.4,1.5,1.6 and 1.8 of Section II of this Circular, shall also have to meet the following conditions: 2.1. The interval between the additional issuance and the previous issuance must be at least one year counting from the time of being granted the issuing permit; 2.2. The value of the additionally issued shares is not larger than the total value of the being-circulated shares. The share value is calculated according to par value. 3. Where the capital-increasing shares are issued together with the stock option, the preferred shares are issued together with rights, the issuing organizations must clearly state the right-exercising modes in the prospectus with the following contents: 3.1. The right-exercising duration; 3.2. The conversion price, calculation method; 3.3. Other terms related to the interests of holders of stock option or rights (if any). III. CONDITIONS FOR BOND ISSUANCE 1. The conditions for bond issuance as prescribed in Article 8 of the Government’s Decree No.48/1998/ND-CP of July 11, 1998 on securities and securities market for the issuing organizations to issue bonds to the public shall include: 1.1. Being State enterprises, joint-stock companies, equitized enterprises, limited liability companies; 1.2. The minimum charter capital level by the date of application for issuance is VND 10 billion; 1.3. Having profitable production and business activities for the two latest consecutive years counting to the date of submitting the dossiers of application for issuance, the healthy financial situation and good development prospect. For equitized enterprises, the above-said two-year time limit shall cover the pre-equitization period; 1.4. Having feasible plans on the use of capital gathered from the issuing drive approved by the Managing Board, for joint-stock companies; by the Members’ Council, for limited liability companies; or by the managing agencies, for State enterprises; 1.5. The Managing Board members and the director (general director) have experiences in business management; 1.6. At least 20% of the total value of the to be-issued bonds must be sold to more than 100 investors; where the total value of the to be- issued bonds reaches VND 100 billion or more, this minimum percentage shall be 15% of the total value of the to be- issued bonds; 1.7. There must be the issuance-underwriting organization, except for cases where the issuing organizations are credit institutions; 1.8. Having committed to fulfill the obligations towards investors; 1.9. Determining the representatives of bond owners. 2. Bonds issued under Point 1 above may be unsecured bonds, secured bonds, convertible bonds and bonds accompanied with rights. 3. Bonds may be secured partially or wholly by either of the following two modes: 3.1. Payment guarantee of the Finance Ministry or a financial institution, for State enterprises; 3.2. Security with the secured assets of the issuing organizations or a third organization. 4. Where the secured bonds are issued under the provisions at Point 3.2, Section III of this Circular, the issuing organizations must clearly state the security rates and list in detail the secured assets in the dossiers of application for issuance and have valid documents proving that such assets are under the ownership of their own (or the third organization) and have adequate value for bond repayment. The secured assets must satisfy the requirements prescribed at Points 6,7 and 8 of Section III of this Circular. 5. Assets which are allowed to be used as security for the issuance of secured bonds shall include: 5.1. The Government’s bonds of various kinds. 5.2. Bonds of other kinds, which are repaid with both principals and interests by underwriting organizations unconditionally; 5.3. The right to use land under the land legislation; 5.4. Dwelling houses and construction works affixed to land; 5.5. Such production and business establishments as factories, hotels, shops, warehouses; instruments, machinery and equipment closely associated with factories, sea-going ships, airplanes…. 6. Assets used as security prescribed at Points 5.4 and 5.5, Section III of this Circular must be insured through contracts. 7. The assets securing for a bond issuance must satisfy the following requirements: 7.1. The value of the secured assets stated at Points 5.1 and 5.2, Section III of this Circular must be at least equal to the total bond value; 7.2. The value of the secured assets stated at Points 5.3,5.4 and 5.5, Section III of this Circular must be at least equal to 1.5 time of the total bond value. 8. The evaluation or calculation of the value of the secured assets must be effected as follows: 8.1. The secured assets defined at Points 5.1 and 5.2, Section III of this Circular shall be calculated at the lowest price of one of the following prices: 8.1.1. The market price; 8.1.2. The par value; 8.1.3. The purchasing prices of such secured assets, including the interests or discount amount received by the date of applying for issuance. 8.2. The secured assets defined at Points 5.3, 5.4 and 5.5, Section III of this Circular must be valued by a competent asset pricing agency. This valuation shall be valid for not more than 12 months as from the date of valuation. 9. Where the convertible bonds or bonds accompanied with rights are issued, the issuing organizations must clearly state the terms for purchase or conversion in the dossiers of application for issuance, which include the following principal contents: 9.1. Conditions and time for effecting the purchase and/or conversion; 9.2. Conversion rate and method of calculating the purchasing and/or converting price; 9.3. The method of calculating and compensating for damage in cases where the bond-issuing organizations fail to issue shares to satisfy the right to purchase and/or conversion; 9.4. Other terms (if any). IV. DOSSIERS OF APPLICATION FOR ISSUANCE 1. The dossier of application for issuance of shares to the public as provided for in Article 9 of the Government’s Decree No.48/1998/ND-CP of July 11, 1998 on securities and securities market shall include: 1.1. The application for issuance; 1.2. The notarized copy of the establishment permit (or decision); 1.3. The notarized copy of the business registration certificate; 1.4. The company’s charter as provided for at Point 6, Section IV of this Circular; 1.5. The resolution of shareholders’ congress approving the issuance of new shares; 1.6. The prospectus as provided for at Point 4, Section IV of this Circular; 1.7. The lists and curricula vitae of the members of the Managing Board and the directorate; 1.8. The financial statements for the two latest consecutive years counting to the date of submitting the dossiers of application for issuance as provided for at Point 5, Section IV of this Circular; 1.9. The decision on valuation of the enterprise, issued by the competent body for the State enterprises conducting the equitization; 1.10. The commitment to underwrite the issuance as provided for at Point 7, Section IV of this Circular (if any); 2. The dossier of application for the issuance of bonds to the public shall include: 2.1. The documents prescribed at Points 1.1, 1.2, 1.3, 1.4, 1.6, 1.7, 1.8, 1.9 and 1.10 of Section IV, this Circular; 2.2. The Managing Board’s resolution on the application for bond issuance to the public; where the issuing organizations are State enterprises, there must be the approving opinions of the managing bodies of such enterprises; 2.3. The commitment to fulfil the issuing organization’s obligation towards the investors as provided for at Point 8 of Section IV, this Circular; 2.4. The contract between the bond- issuing organization and the bond owners’ representatives as provided for at Point 3, Section VIII of this Circular; 2.5. The record determining the value of the secured assets or the written approval of payment guarantee by the underwriting organization (for case of issuing secured bonds). 3. The dossiers of application for additional issuance of shares/bonds to the public shall be exempt from the documents prescribed at Point 1.2, 1.3 and 1.9 of Section IV, this Circular. 4. The prospectus must satisfy the following requirements: 4.1. Containing all necessary, truthful and clear information in order to help investors and securities companies accurately assess the financial situation, business activities and prospect of the issuing organization. 4.2. Containing the following major contents: - The full name and transaction name of the issuing organization; - The head-office’s address; the transaction telephone and fax numbers; - The serial numbers, days, months and years of the establishment permit (or decision) and the business registration certificate; - The brief operation charter; - The commitment of persons who assume the prime responsibility for the contents of the prospectus; - The outline of the formation and development process; - The structure of the organization or the group, of which the issuing organization is a member (if any); - The managerial apparatus organization; - The analysis of financial activities; - The capital ownership structure of the current shareholders, the names and addresses of current shareholders holding 5% or more of the stock capital of the company; - The names and addressed of the Managing Board members, the executive director (or general director), the chief accountant, the percentages of share and bond ownership by each of the above-mentioned members in the issuing organization; - The results of business and marketing activities in the two latest consecutive years, principal products or services; - The situation of new product research and development; - The policies towards laborers; - Taxes and the performance of tax obligation towards the State; - The current situation on debts; - The issuance plan: The purpose of using money amount earned from the issuance drive, the total capital amount planned to be issued, the quantity of shares or bonds expected to be issued, the projected selling price, mode of distribution, principle of distribution, time limit for registration for purchase of shares or bonds, mode of payment and transfer of shares or bonds, interests of owners. 4.3. In cases of issuing shares accompanied with the stock option, preferred shares accompanied with rights or issuing convertible bonds, bonds accompanied with rights and secured bonds, the prospectus must clearly reflect the conditions and rights related to shares or bonds mentioned above. 4.4. The financial data in the prospectus must be compatible with the data of the already audited financial statement in the dossier of application for issuance. 4.5. There must be the signatures of the chairman and members of the Managing Board (at least 2/3 of the Managing Board members), the head of the Control Commission, the director (general director) and the chief accountant of the issuing organization and the executive directors (general directors) of all issuance- underwriting organizations (if any). In case of signing by their representatives, there must be letters of authorization. 4.6. The cover pages must contain: - The full names enclosed with head-office addresses, transaction telephone and fax numbers of the auditing organization, the consulting organization and all issuance-underwriting organizations (if any); - The capital letter line shall be as follows: "THAT THE STATE SECURITIES COMMISSION PERMITS THE SECURITIES ISSUANCE ONLY MEANS THAT THE SECURITIES ISSUANCE HAS MET THE LAW PROVISIONS BUT DOES NOT IMPLY THE GUARANTEE OF THE VALUE OF SECURITIES. ALL STATEMENTS CONTRARY TO THIS ARE ILLEGAL"; - The venue for supply of the prospectus; - The information (names, telephone numbers) on individuals responsible for the announcement of information of the issuing organization. - The cover page of the official prospectus approved by the State Securities Commission must be clearly inscribed with the serial number and date of issuance of the issuing permit. 4.7. The prospectus must be presented on white paper, A4 size, in vertical position, black letters. 5. The financial statement must satisfy the following requirements: 5.1. Complying with the current accounting regulations of the State; 5.2. The annual financial statements must be certified by an approved auditing organization. The auditing opinions on the financial statements must be the full agreement or the agreement with exceptions. The exceptions shall not greatly affect the financial situation of the issuing organization; 5.3. The duration between the signing date of the latest annual financial statement and the time of sending the dossiers of application for issuance to the State Securities Commission must not exceed 90 days. In cases where the above duration exceeds 90 days, the issuing organization must make additional financial statements at the request of the State Securities Commission; 5.4. Where the issuing organization owns 50% or more of the stock capital (or contributed capital) of another organization, or 50% or more of the stock capital of the issuing organization are held by another organization, the issuing organization must send also the financial statem

Circular 02/2001/TT-UBCK