Public Company Registering to Issue Shares to Swap Shares for Shareholders of Non-Public Joint Stock Company

A Public Company Registering to Issue Shares to Swap Shares for Shareholders of a Non-Public Joint Stock Company is a corporate restructuring activity requiring strict compliance with State Securities Commission (SSC) regulations. This process impacts capital structure and ownership rights. This article clarifies legal conditions, dossiers, and procedures to minimize risks.

Conditions for a public company to issue shares to exchange for shares with shareholders of a non-public joint-stock company.

Based on Article 49 of Decree 155/2020/ND-CP (amended by Clause 23, Article 1 of Decree 245/2025/ND-CP), the public company must meet the following conditions:

1. Approval: The issuance plan for share swap must be approved by the General Meeting of Shareholders (GMS).
2. Transfer Restriction: Issued shares are restricted from transfer for at least 01 year from the completion date (except for court judgments, arbitration decisions, or inheritance).
3. Swap Asset: The shares/capital contributions being swapped must not be restricted from transfer at the time of swap.
4. Financial Statements: The latest annual financial statements of the company whose shares are being swapped must be audited by an approved auditing organization (minimum 12-month accounting period) with an unqualified opinion (full acceptance).
5. Foreign Ownership: Must comply with foreign ownership limit regulations.
6. Cross-Ownership: Must not violate cross-ownership regulations under the Law on Enterprises.
7. Interval: The interval between private placement tranches must be at least 06 months.

The competent authority registers the issuance of shares for the purpose of exchanging shares.

State Securities Commission (SSC): The main authority responsible for receiving dossiers, appraising, and issuing the Registration Certificate.

State Bank of Vietnam (SBV): Approves charter capital increase if the issuer is a credit institution.

Ministry of Finance: Approves capital increase if the issuer is an insurance business.

National Competition Commission: Provides opinions if the swap triggers economic concentration thresholds.

VSDC & Stock Exchanges (HNX/HOSE): Handle depository registration and additional listing post-issuance.

Documents of a public company registering to issue shares to exchange for shares with shareholders of a non-public joint-stock company.

According to Article 50 of Decree 155/2020/ND-CP (amended by Clause 24, Article 1 of Decree 245/2025/ND-CP), the dossier includes:

1. Registration Form: Form No. 11 (Decree 245/2025/ND-CP).
2. GMS Decision: Approving the plan (purpose, quantity, investor list, swap ratio/method). The Board must report the swap ratio determination method and independent valuation opinion (if any) to the GMS. Interested parties must abstain from voting.
3. Transferability Commitment: Commitment from shareholders of the swapped company confirming their shares are freely transferable.
4. Audited Financial Statements: Latest annual audited FS of both the issuer and the company whose shares are being swapped.
5. Foreign Ownership Decision: GMS/Board decision ensuring compliance with foreign ownership limits.
6. Cross-Ownership Commitment: Issuer’s commitment not to violate cross-ownership rules.
7. Information Document: Materials provided to investors (if any).
8. Board Decision: Approving the registration dossier.
   • Specifics: SBV approval (for banks) or MOF approval (for insurers).

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The sequence and procedures for issuing shares to exchange for shares of shareholders in a non-public joint-stock company.

The procedure follows regulations for private placement (Article 48 & 59, Decree 155/2020/ND-CP):

Step 1: Submission and Appraisal The issuer submits the dossier to the SSC. Within 07 working days of receiving a valid dossier, the SSC issues a written approval and publishes receipt on its website. If invalid, the SSC requests amendment/supplementation.

Step 2: Issuance (Swap Execution) Upon SSC approval, the issuer distributes shares (executes the swap) to approved investors. The issuance must be completed within 90 days.

Step 3: Reporting Within 10 days of completion, the issuer sends a Report on Issuance Results to the SSC and publishes it on the issuer’s and Stock Exchange’s websites.

• Note: If swapping under a consolidation contract, the report must include the Consolidated Enterprise Registration Certificate.

Long Phan provides consulting services for the procedures of registering a share issuance for exchange.

Long Phan Consulting Company provides comprehensive M&A support:

• Structuring & Consulting: Assessing conditions; advising on swap ratios and valuation; analyzing cross-ownership and foreign ownership issues.
• Dossier Drafting: Preparing Registration Forms, GMS Resolutions, and disclosure documents; reviewing financial statements; coordinating with auditors/valuers.
• Representation: Submitting dossiers to the SSC; explaining issues during appraisal; handling post-issuance reporting, depository, and listing procedures.

Frequently Asked Questions

Below are some frequently asked questions regarding public companies registering to issue shares to exchange for shares with shareholders of non-public joint-stock companies. Please refer to them:

Do existing shareholders have preemptive rights?

No. This is a private placement for specific swap subjects, not an issuance to existing shareholders. (Legal Basis: Clause 1, Article 49 and Clause 2, Article 50, Decree 155/2020/ND-CP).

Is a blocked account required?

No. Since the transaction involves swapping shares (non-cash), a blocked account for receiving money is not required. (Legal Basis: Clause 1, Article 59, Decree 155/2020/ND-CP).

How is the swap ratio determined?

It is approved by the GMS based on the Board’s report. The Board typically seeks an independent valuation opinion to ensure market conformity and transparency. (Legal Basis: Clause 2, Article 50, Decree 155/2020/ND-CP).

Is a qualified audit opinion acceptable?

No. The audit opinion on the latest annual financial statements must be an unqualified opinion (acceptance in full). (Legal Basis: Clause 4, Article 49, Decree 155/2020/ND-CP).

Is a public tender offer required if ownership exceeds 25%?

No, provided the GMS has approved the issuance plan specifying the investor list and swap quantity. (Legal Basis: Point b, Clause 2, Article 35, Law on Securities 2019).

Conclusion

The Issuance of Shares for Swap (Public Company with Non-Public Company) requires meticulous legal preparation and transparent valuation. Please contact Long Phan Consulting Company via Hotline 1900636389 for expert advice and deal execution support.