Socialist Republic of Vietnam

GOVERNMENT
No. 145-1999-QD-TTg Hanoi, 28 June 1999


DECISION PROMULGATING REGULATIONS ON SALE OF SHARES TO FOREIGN INVESTORS


The Prime Minister

Pursuant to the Law on the Organization of the Government dated 30 September 1992;

Pursuant to the Law on Promotion of Domestic Investment (as amended) dated 20 May 1998;

Pursuant to Decree 44-1998-ND-CP dated 29 June 1998 of the Government on conversion of State owned enterprises into shareholding companies;

On the proposal of the Minister of Finance;

Decides:


Article 1

To issue with this Decision the Regulations on Sale of Shares to Foreign Investors applicable to equitized Vietnamese State owned enterprises and shareholding companies.

Article 2

The Minister of Planning and Investment, the Minister of Finance, the Chairman of the State Securities Commission, the Governor of the State Bank of Vietnam and relevant ministries and branches shall provide guidelines for the implementation of this Decision.

Article 3

This Decision shall be of full force and effect after fifteen (15) days from the date of its signing.

Article 4

Ministers, heads of ministerial equivalent bodies, heads of Government bodies, chairmen of people’s committees of provinces and cities under central authority, and boards of management of Corporations 91 shall be responsible for the implementation of this Decision.


The Prime Minister

PHAN VAN KHAI

GOVERNMENT SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness



REGULATIONS
ON
SALES OF SHARES TO FOREIGN INVESTORS

(Issued with Decision 145-1999-QD-TTg of the Prime Minister dated 28 June 1999)


I. GENERAL PROVISIONS

Article 1

Shares shall be sold to foreign investors in order to mobilize foreign capital, technology and enterprise management methods, to improve production and business efficiency and competitiveness and to expand the market for investment in and development of Vietnamese enterprises.

Article 2

Enterprises which may sell shares to foreign investors shall be enterprises conducting business or production activities in the fields stipulated in the Appendix to this Decision, comprising:

1. State owned enterprises conducting equitization;

2. Shareholding companies and other types of enterprises having a decision of the competent authority for issue of shares for conversion into shareholding companies.

Article 3

The following terms used in these Regulations shall have the meanings ascribed to them hereunder:

1. Foreign investors are foreign economic organizations and foreign individuals owning shares and purchasing shares in Vietnamese enterprises.

2. Vietnamese enterprises are enterprises which may sell shares to foreign investors in accordance with article 2 of these Regulations.

Article 4

Foreign investors purchasing shares in Vietnamese enterprises shall have their interests guaranteed by the State of the Socialist Republic of Vietnam and must perform the obligations stipulated in these Regulations and other laws of Vietnam.

Article 5

Foreign investors may purchase shares and remit overseas dividends or proceeds of sale of shares directly or through Vietnamese or foreign financial institutions or banks operating in Vietnamese territory. Foreign investors may open accounts at such financial institutions or banks.

Article 6

The total value of shares to be sold to foreign investors shall not exceed thirty (30) per cent of the charter capital of the company. Where the value of shares registered to be purchased by foreign investors exceeds thirty (30) per cent of the charter capital of the company, an auction shall be conducted.

Article 7

Sale of shares to foreign investors shall be made in Vietnamese dong. If payment for purchased shares is made in convertible foreign currency, conversion shall be at the average inter-bank rate published by the State Bank of Vietnam at the time of sale of shares.

The sale of shares shall be publicly announced by means of the mass media.

Article 8

Shares of foreign investors purchasing shares in Vietnamese enterprises shall be named shares printed and controlled by the Ministry of Finance. The nominal value of a share stated on the share certificate shall be one hundred thousand (100,000) Vietnamese dong.

Article 9

With respect to State owned enterprises selling shares to foreign investors, enterprises and employees working for State owned enterprises shall be entitled to the incentives provided for in articles 13 and 14 of Decree 44-1998-ND-CP dated 29 June 1998 of the Government on conversion of State owned enterprises into shareholding companies.


II. DETAILED PROVISIONS

Article 10 Value of enterprises and share selling prices

1. The share selling price for foreign investors and domestic investors shall be the same. This price shall satisfy the principle of being acceptable to both the enterprise owner (namely, the seller) and the foreign investor (namely, the purchaser).

2. With respect to State owned enterprises conducting equitization, the director of the enterprise shall prepare a pricing plan, organize the valuation of the enterprise and of the State owned capital in the enterprise in accordance with applicable regulations, and report to the body directly responsible for management or the Ministry of Finance for decision.

3. With respect to shareholding companies, the general meeting of shareholders or the board of management shall make a decision upon consultation with the underwriter and foreign investors.

The price announced by the competent authority as currently delegated in respect of equitized enterprises and shareholding companies shall be the minimum price for the purpose of organizing auctions for foreign investors.

Article 11 Issue of shares

1. All equitized enterprises and shareholding companies which sell shares to foreign investors shall do so through underwriters or share-issuing agents.

2. The underwriter shall contact each foreign investor in order to determine the quantity of shares, share selling price and other conditions required by the issuing enterprise, and to select the foreign investors to purchase shares of the enterprise.

3. Where many foreign investors register to purchase shares of an enterprise, the underwriter shall organize an auction in accordance with applicable regulations on auctions.

4. The costs for underwriters or issuing agents shall be agreed by the two parties in the costs for equitization or as a percentage (%) of the total value of shares to be issued.

Article 12 Rights of shareholders being foreign investors

1. To participate or not participate in the management of the shareholding company in accordance with the Law on Companies and the charter of organization and operation of the shareholding company.

2. To convert income from dividends and assignment of shares in Vietnam into foreign currency for remittance abroad upon fulfilment of all tax obligations as stipulated in the Law on Foreign Investment in Vietnam and applicable laws on taxation.

Where a foreign investor uses its dividends for re-investment in Vietnam, the provisions of the Law on Promotion of Domestic Investment shall apply.

3. To mortgage or pledge shares in credit relations in Vietnam.

4. To be issued with multiple entry and exit visas for the duration of investment in purchasing shares in Vietnam.

5. To be entitled to all other rights and benefits as domestic shareholders and the rights stipulated by law.

Article 13

Shareholders being foreign investors shall perform the obligations stipulated in the Law on Companies, the Law on Foreign Investment, the Law on Promotion of Domestic Investment of the Socialist Republic of Vietnam and the charter on the organization and operation of the shareholding company.

Article 14

A foreign investor may only transfer its shares after three years (if it participates in the management of the shareholding company), or after one year (if it does not participate in the management of the shareholding company), from the time it commences to own shares in the company.


III. ORGANIZATION OF IMPLEMENTATION

Article 15 Procedures for sale of shares to foreign investors

1. State owned enterprises conducting equitization shall formulate plans in accordance with the procedures stipulated in Decree 44-1998-ND-CP of the Government dated 29 June 1998 and its implementing ministerial regulations, specifying: the percentage of shares to be sold to foreign investors, the percentage of State shares (if any) and the percentage of shares to be sold to domestic individuals, legal entities, underwriters or share-issuing agents.

Shareholding companies also must formulate plans for sale of shares to foreign investors in accordance with the above provisions for submission to the people’s committee of the province or city under central authority.

2. The plan for equitization and sale of shares to foreign investors shall be lodged with the people’s committee of the province or city under central authority or the line ministry or the board of management of a State owned corporation established by a decision of the Prime Minister (Corporation 91).

3. People’s committees of provinces and cities under central authority; line ministries, boards of management of Corporations 91 shall be responsible for evaluating the plan of each enterprise for submission to the Prime Minister for decision.

4. Following the decision of the Prime Minister, the enterprise shall sign contracts with the underwriter, cause the sale of shares to foreign investors to be announced by means of the mass media, and complete the implementation within six months from the date of decision of the Prime Minister.

Article 16 Authority for decision of sale of shares to foreign investors

All enterprises selling shares to foreign investors shall be subject to the decision of the Prime Minister.


The Prime Minister


PHAN VAN KHAI

Appendix


LIST OF SOES IN SECTORS PERMITTED TO SELL
SHARES TO FOREIGN INVESTORS


· Textiles and garments;
· Footwear manufacture;
· Leather processing;
· Manufacture and processing of agricultural, forestry and aquatic products;
· Manufacture of other consumer goods;
· Manufacture of building materials;
· Domestic road and water transportation; cargo transportation by container;
· Manufacture of study aids;
· Manufacture of children's toys;
· Commercial services and hotels;
· Mechanical manufacture;
· Manufacture of exports in above fields.