Cases of suspension of public securities offerings

Suspension of public securities offering is the decision of the State Securities Commission to temporarily suspend the offering when unusual problems are detected. This decision directly affects issuers and investors. This article analyzes suspension cases, processes, consequences, and prevention, and provides information about public securities offering consulting services at Long Phan.

What is suspension of public securities offerings?

Suspension of public securities offerings is an administrative measure applied by the State Securities Commission (SSC) to temporarily prevent public securities offerings when detecting signs of violating the law or causing damage to investors. The suspension of the offering is aimed at protecting the interests of investors and ensuring transparency and fairness of the stock market.

Clause 1, Article 27 of the Law on Securities 2019 clearly stipulates the authority of the State Securities Commission to suspend public offerings of securities. Accordingly, the SSC has the right to suspend the offering for up to 60 days in specific cases.

Suspension of public offering of securities is different from cancellation of offering. The suspension is temporary, allowing the issuer to correct violations. If the issue cannot be resolved, the offering may be completely canceled.

Cases of suspension of public securities offerings

The SSC has the right to suspend the public offering of securities in some specific cases specified in Clause 1, Article 27 of the Law on Securities 2019.

• First case: The public securities offering registration dossier contains false information and omits important content that can affect investors’ investment decisions and cause losses to investors. For example, businesses provide inaccurate financial data, hide information about bad debts, or do not fully disclose the risks of investment projects.
• Second case: The distribution of securities is not carried out in accordance with the provisions of Article 26 of the Law on Securities 2019. For example, businesses prioritize distributing shares to a certain group of investors, not ensuring fairness for other investors…

Suspension of securities offerings in these cases is necessary to prevent fraud, protect investors’ rights and maintain market stability.

Procedure for suspending public offering of securities

When deciding to suspend the public offering of securities, the State Securities Commission will issue a suspension decision and notify the issuing organization.

According to Clause 2, Article 27 of the Law on Securities 2019, within 07 working days from the date of receiving the suspension decision, the issuer must announce the decision to suspend the public offering of securities according to the method specified in Clause 3, Article 25 of the Law on Securities 2019. The issuer is also obliged to recall the issued securities if requested by the investor and refund the investor within 15 days from the date of receipt of the request.

During the suspension of the offering, the issuer must promptly correct the violations that led to the suspension. If it can be resolved, the State Securities Commission will issue a notice to cancel the suspension and allow the offering to continue. According to Clause 4, Article 27 of the Law on Securities 2019, within 07 working days from the date of notice of cancellation of suspension, the issuer must announce the cancellation of suspension according to the method specified in Clause 3, Article 25 of the Law on Securities 2019.

On the other hand, the SSC will decide to cancel the public offering of securities in the following cases:

• At the end of the suspension period specified in Clause 1, Article 27 of the Law on Securities 2019, if the shortcomings cannot be corrected, leading to the suspension of the public offering of securities;
• The initial public offering of shares does not satisfy the condition on the minimum percentage of voting shares of the issuing organization sold to at least 100 investors who are not major shareholders of the issuing organization as prescribed in Point d, Clause 1, Article 15 of the Law on Securities 2019;
• The public offering of additional shares does not meet the conditions of mobilizing enough capital to implement the project of the issuing organization as prescribed in Point d, Clause 2, Article 15 of the Law on Securities 2019;
• The public offering of securities is canceled according to the legally effective judgment or decision of the Court, the decision of the Arbitrator or a competent authority according to the provisions of law.

Within 07 working days from the date the public securities offering is canceled, the issuing organization must announce the cancellation of the public securities offering in the manner specified in Clause 3, Article 25 of this Law on Securities 2019 and must recall issued securities and refund money to investors within 15 days from the date the offering is canceled. At the end of this period, the issuer must compensate investors for damages according to the terms committed to the investor.

Consequences of suspension and how to avoid suspension

Suspension of public securities offerings can cause many negative consequences for the issuer.

• First, the reputation of the business is seriously affected. Suspension of the offering can cause investors to lose confidence in the business, making it difficult to raise capital in the future.
• Second, businesses may encounter financial difficulties due to not being able to mobilize capital as planned. This may lead to delay or cancellation of investment projects, affecting production and business activities.

To avoid suspension of securities offerings, issuers need to:

• Strictly comply with legal regulations on securities offering.
• Perform thorough due diligence before offering for sale.
• Disclose complete, accurate and transparent information in the offering documents.
• Choose a reputable and professional consulting partner.

Consulting on public securities offerings at Long Phan

Long Phan specializes in providing in-depth consulting services to businesses, including consulting on public securities offerings. With a team of experienced experts and a deep understanding of securities law, Long Phan is committed to providing customers with professional, effective and reliable consulting services.

Long Phan’s public securities offering consulting services include:

• Consulting on preparing registration documents for offering;
• Support in developing securities distribution plans;
• Consulting on compliance with securities laws;
• Support in handling issues that arise during the offering process;
• Review and appraise documents before submitting to the State Securities Commission;
• Consulting on pricing strategies and appropriate offering methods;
• Support in developing plans to use capital obtained from the offering;
• Consulting on information disclosure obligations and periodic reporting.

Long Phan is proud to be a trusted partner of many large enterprises in Vietnam in the field of public securities offerings. We are committed to accompanying our customers, helping them successfully carry out the offering, effectively raise capital and develop sustainably. Understanding the legal regulations on suspension of public securities offerings is extremely important for issuing organizations. For detailed advice and professional support, please contact Long Phan via the hotline 0906735386.