How is the offering securities to the public regulated?

Offering securities to the public is an important method to help issuers mobilize capital from the stock market. This is an activity in which an organization issues securities, such as stocks, bonds or fund certificates, offered for sale to the public in specific forms. The article below will provide detailed information about the methods, forms and conditions of offering securities to the public.

What is a public offering of securities? Methods of offering securities

Offering securities to the public according to Clause 19, Article 4 of the Law on Securities 2019 is defined as the act of issuing securities to an unknown large number of investors. Types of securities that may be offered include:

• Stocks, bonds, fund certificates;
• Warrants, covered warrants, share purchase rights, depository certificates;
• Derivative securities;
• Other types of securities are regulated by the Government.

Offering securities to the public can be done through methods such as:

• Offering for sale through mass media;
• Offering to 100 or more investors, not including professional securities investors;
• Offering to unidentified investors.

This helps ensure transparency and fairness in the stock market, while creating effective capital mobilization opportunities for issuers.

CSPL: Clause 1, 19 Article 4 of the Law on Securities 2019.

Form of offering securities to the public

There are three forms of public securities offerings, including:

• Initial public offering (IPO): This is the first form of offering securities to the public, helping a company raise capital to expand operations or become a public company.
• Offering additional shares to the public: For public companies listed on the stock market, issuing additional shares to raise additional capital is a common form of offering securities.
• Offering bonds and fund certificates: Organizations can also offer bonds or fund certificates to the public to mobilize capital from investors.

Each form of securities offering requires compliance with different, clearly stipulated conditions to ensure transparency and fairness for all parties involved.

CSPL: Article 14 of the Law on Securities 2019.

Conditions for offering securities to the public

According to Article 15 of the Law on Securities 2019, securities issuers must meet certain conditions before offering securities to the public. Depending on each case, including:

Initial public offering of shares:

• Charter capital is 30 billion VND or more.
• Business operations have been profitable for 2 consecutive years and have no accumulated losses.
• There is a plan to issue and use capital approved by the General Meeting of Shareholders.
• Sell ​​at least 15% of shares to at least 100 investors (10% if charter capital is over 1,000 billion VND).
• Major shareholders commit to holding at least 20% of capital for 1 year.
• Not be prosecuted for criminal liability or convicted of economic crimes.
• There is a securities company that advises on documents.
• Commitment to listing shares after the offering.
• Open a blocked account to receive money from the offering.

Offering additional shares to the public:

• Meets regulations on issuance plan, capital use, and listing.
• Business activities in the previous year were profitable and there were no accumulated losses.
• The value of issued shares is not greater than the total value of outstanding shares, unless there is an underwriting.
• At least 70% of the shares must be sold to investors to raise capital for the project.

Offering bonds to the public:

• Charter capital is 30 billion VND or more.
• Last year’s business activities were profitable, there were no accumulated losses, and the debt was overdue for more than 1 year.
• The plan for issuance and use of capital has been approved.
• There is a commitment to protect investors’ interests.
• There is a securities company that advises on documents.
• Credit rating according to Government regulations.
• Open a blocked account to receive money from the offering.
• Commitment to listing bonds after the offering.

Offering convertible bonds: Applies according to the provisions in Clause 2 and Point d, Clause 3, Article 15 of the Law on Securities 2019.

Initial public offering of fund certificates:

• Minimum total value 50 billion VND.
• The capital issuance and investment plan has been approved.
• Supervised by the custodian bank.
• Must be listed on the stock exchange system, except for open fund certificates.

Regulations on public securities registration activities

According to the provisions of Article 16 of the Law on Securities 2019, issuers and shareholders of public companies must register with the State Securities Commission before offering securities to the public, except in the following cases:

• Offering for sale of Government debt instruments, Government guarantee bonds, local government bonds.
• Bond offering by international financial institutions approved by the Vietnamese Government.
• Offering shares to convert state-owned enterprises and limited liability companies with 100% state capital into joint stock companies.
• Sell ​​securities according to the judgment or decision of the Court or Arbitration in case of bankruptcy.

Consulting services for offering securities to the public

With a team of consulting experts with many years of experience in the field of securities consulting. Long Phan will support customers with the following services:

• Consulting helps businesses determine the purpose of issuing securities.
• Consulting on choosing the appropriate issuance method.
• Advise on reasonable valuation of securities to be issued.
• Consulting helps draft and complete the necessary documents to conduct a securities offering.
• Support procedures related to securities issuance.
• Consulting on processes and requirements for listing securities on the stock exchange.
• Consulting on other regulations and procedures related to securities offerings.

Offering securities to the public is a very important process for organizations wanting to raise capital from the stock market. Understanding the regulations and complying with the requirements will help issuers succeed and protect the interests of investors. Using consulting services can help issuers minimize financial risks during the securities offering process. Contact Long Phan via the hotline 0906735386 for advice and support.