State stake transfers must go through auctions

16-Mar-2018 Intellasia | The Saigon Times | 6:00 AM Print This Post

Holding public auctions will be the first and foremost option when it comes to transferring State-held shares in businesses, according to government Decree 32/2018/ND-CP.

Decree 32, which amends Decree 91/2016/ND-CP, specifies transfers of State capital in joint stock and limited liability companies must be conducted under Term 2 in Article 39 of the law on management of State capital invested in production and business activities.

In particular, the withdrawal of State investment capital from joint stock companies which have listed or registered to trade shares on the stock market must ensure the trading price, or the floor price, is no lower than the reserve price.

Capital transfers can come in the form of public auction, competitive bidding or negotiation (not going through the stock exchange).

On the day of public auction, competitive bidding or signing of capital transfer contracts, if the trading price is below the payment price or there is no floor price as a result of no transaction, investors would pay State ownership representatives based on the price set for the form of capital transfer. The trading price must be made transparent.

At joint stock companies which have not listed or have registered to trade on the stock market but do not make transactions on the market, if the first form of capital transfer is not successful, the next can be adopted.

If companies fail to transfer all State capital, State ownership representatives can pick a suitable time to proceed with the transfer.

In addition, companies can opt for book building to transfer State capital. The use of this measure must prove that it is more efficient than public auction or competitive bidding.


Category: Stocks, Vietnam

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