New capital withdrawal, share sale regulation boosts SOEs
A new regulation on capital withdrawal, share sale, trading and listing registration on the securities market has been hailed as creating more favourable conditions for State-owned enterprises (SOEs).
Head of the State Securities Commission’s Issuance Management Department Truong Le Quoc Cong said, under Decision 51/2014/QD-TTg, there were some “breakthrough” points, including the allowance to withdraw capital below par value or accounting book value, defined starting prices, and the fixed conditions for share auctions.
However, the capital withdrawal below par value or accounting book value must ensure the maximum limit of investment loss and State capital preservation at the highest level upon capital transfer.
For capital transfer by companies listed on the stock exchange or that have registered their trading on Upcom, the agreed price must be within the trading price range of the securities code on the day of the transfer.
Regarding auctions, the shares will be sold at the starting price during the public auction opened by SOEs. If the shares are not sold out, an agreement sale will be permitted with the written approval of the relevant managing agencies and provincial People’s Committees.
In the case of an unsuccessful first auction or where the offered shares have not been sold out, the representative of the state capital owner will make a decision to adjust the price at a second auction. The starting price at the second auction can be up to 10% lower than the lowest successful price of the first auction.
If the second auction is also unsuccessful or the offered shares are still not sold out, the representative of the state capital owner will make a decision on an agreement sale at a price that must be higher than the starting price of the second unsuccessful auction.
Another new point in the regulation that creates favourable conditions for businesses is that it allows SOEs to organise share auctions even when they suffer a loss in the year preceding the auction year and permit accumulated losses right up to the year of registration.
The regulation, which went into effect last November, also allows the State Bank of Viet Nam and the State Capital Investment Corporation to consider acquiring SOEs’ stakes if the firms fail to withdraw from banks, finance and insurance companies.-VNS