Conditions for businesses to an IPO on the stock exchange

Conditions for an IPO on the stock exchange is a decisive factor for businesses to officially enter the capital market, attract the attention of investors and enhance their brand. Meeting IPO criteria not only helps businesses increase their ability to mobilize capital but also improves reputation, transparency and competitiveness. Understanding these conditions is an important stepping stone for businesses to develop sustainably and integrate into the global economy.

Benefits of conducting an IPO in Vietnam today

Vietnam’s stock market is growing strongly, bringing many opportunities for businesses that want to expand their scale and improve their financial capacity. IPO (Initial Public Offering) is not only an effective method of raising capital but also an opportunity for businesses to:

• Enhance reputation and brand recognition: Listing on the stock exchange helps businesses improve their reputation and create trust with partners, customers and investors. This not only strengthens the brand but also opens up opportunities to cooperate with large businesses and increase presence in the market;
• Improve capital structure and liquidity: IPO helps businesses access large capital sources from investors, while improving capital structure and enhancing liquidity. This provides financial stability and the ability to scale operations more effectively;
• Expand investment network and business relationships: Listing on the stock exchange opens up opportunities to connect with a large network of investors, thereby strengthening business relationships, promoting cooperation and enhancing sustainable development;
• Create conditions for business development and expansion: IPO not only provides financial resources but also creates favorable conditions for businesses to expand operations, invest in research and development of new products, thereby achieving sustainable growth and affirming their position in the market.

Conditions for IPO on the stock exchange for businesses

Financial and capital conditions

According to the provisions of Article 15 of the Law on Securities 2019, to carry out an IPO, businesses need to meet the following financial conditions:

• Contributed charter capital at the time of registration for offering is 30 billion VND or more calculated according to the value recorded in the accounting books;
• Business activities for 02 consecutive years immediately preceding the year of registration for offering must be profitable, and at the same time have no accumulated losses up to the year of registration for offering;
• Have an issuance plan and a plan to use capital obtained from the stock offering approved by the General Meeting of Shareholders;
• Prior to the initial public offering of shares of the issuing organization, major shareholders must commit to jointly holding at least 20% of the issuing organization’s charter capital for at least 01 year from the date of completion of the offering.

Conditions of management and operations

In addition, business operations management must ensure the following factors:

• Stable business operations;
• The issuing organization is not under criminal prosecution or has been convicted of one of the crimes of violating the economic management order but has not had its criminal record erased;
• There is a securities company that advises on registration documents to offer shares to the public, except in cases where the issuing organization is a securities company;
• A minimum of 15% of the voting shares of the issuer must be sold to at least 100 investors who are not major shareholders; In case the issuing organization’s charter capital is 1,000 billion VND or more, the minimum ratio is 10% of the issuing organization’s voting shares.

Charter conditions and commitments to shareholders

Regarding implementation commitment and corporate charter, important requirements include:

• Have a commitment and must list or register to trade shares on the stock exchange system after the end of the offering;
• The issuing organization must open a escrow account to receive money to buy shares in the offering;
• Prior to the initial public offering of shares of the issuing organization, major shareholders must commit to jointly holding at least 20% of the issuing organization’s charter capital for at least 01 year from the date of completion of the offering.

Risks when conducting an IPO today

Listing an IPO on the stock exchange requires a lot of experience and understanding of current regulations. When implementing an IPO, businesses often encounter risks such as:

• Stock price risk: If the market is not favorable or the issuance strategy is not optimal, the stock price may decrease after listing, leading to damage to the business and affecting the company’s reputation;
• Legal and compliance risks: Compliance with strict legal regulations is mandatory. If a business does not fully meet information disclosure or financial reporting standards, it may face legal problems, fines or loss of reputation;
• Corporate governance risks: Moving from a private governance model to a public company brings great challenges in terms of control and transparency. Businesses will have to adapt to higher governance requirements, and failure to manage well can cause conflict or imbalance within the organization;
• Cost and time risks: The IPO process requires significant costs for consulting, legal, auditing and promotional services. Without a clear financial plan, costs may exceed expectations and prolong the listing period, affecting the business’s development strategy.

Benefits of using in-depth consulting services on conditions for conducting an IPO

When a business decides to conduct an IPO, using professional support services will bring many important benefits to help the listing process go smoothly and successfully. Below are the benefits that businesses will receive when choosing support services during the IPO process:

First, professional services help businesses fully comply with legal regulations, accurately prepare necessary documents, thereby minimizing legal risks and protecting businesses from legal issues that may arise during the IPO process.

Second, experts will help businesses build detailed, clear and transparent listing documents, ensuring the profile is accepted by regulatory agencies, while enhancing the reputation and trust of investors.

Third, consulting services help businesses build appropriate issuance strategies, optimize stock value and ensure a successful issuance, thereby helping businesses achieve financial goals and attract investor interest.

Fourth, consulting helps businesses allocate financial resources appropriately between equity and debt, optimize capital structure to ensure stable development and the ability to expand business scale in the future.

>>> Reference: Procedures for registering to offer securities to the public.

Consulting services on conducting IPO for businesses in Long Phan

Long Phan provides comprehensive IPO consulting services including:

• Support customers in evaluating financial capacity when conducting IPO activities for businesses;
• Support in preparing IPO documents to ensure speedy compliance with current regulations;
• In-depth advice on the pros and cons of implementing an IPO for businesses;
• Support to answer questions and difficulties during the IPO implementation process;
• Providing comprehensive consulting services and support for IPO implementation for businesses.

Customers who are considering an IPO, please contact Long Phan consultants immediately for comprehensive support. We are committed to accompanying and resolving all legal challenges during the IPO process. If you need in-depth advice and support, please contact Long Phan immediately via the hotline: 0906735386 for advice.