The Ministry of Finance (MoF) is putting the final touches to a draft decree to replace Government Decree No. 109/2007/ND-CP of June 26, 2007, on the transformation of state-owned enterprises (SOEs) into joint-stock companies.
The draft decree, for the first time, is set to promulgate a new regulation requiring qualified enterprises to carry out procedures of registration for listing or transaction on the stock exchange while undergoing the equitization process. This regulation, according to the MoF, aims to help create high-quality sources of supply for the securities market and, at the same time, prevent enterprises from postponing the listing for unclear reasons.
Regarding the selection of strategic investors for equitized SOEs, under the draft decree, the sale of shares to strategic investors may be carried out either before or after initial public offerings (IPOs).
If the equitized SOE wishes to select strategic investors before IPOs, it would hold a separate auction to select potential strategic investors and, after announcing the auction results, organize IPOs for ordinary investors. In case strategic investors are to be selected through direct negotiation, share auction would be organized only for ordinary investors. Negotiations for sale of shares to strategic investors would be carried out based on the winning prices of ordinary investors but the sale prices applicable to strategic investors must not be lower than the average winning price of ordinary investors.
If the sale of shares to strategic investors is carried out after an IPO is organized, the sale price would be negotiated between the equitization steering board and strategic investors but must not be lower than the lowest IPO winning price.
Strategic investors would not be allowed to transfer the purchased shares to others within three years after the joint-stock company is granted a business registration certificate. If wishing to sell these shares ahead of time, they must seek approval from the company’s Board of Directors.
According to the draft decree, the value of land use rights to be calculated into enterprise value upon equitization would be determined based on the land prices set by provincial-level People’s Committees. In case land prices fixed by local administrations are considered far below the market price, enterprises would send to the provincial-level People’s Committee a dossier of request for re-determination of land prices and would comply with the re-set prices. However, if enterprises receive no reply from local administrations within 30 days after sending a complete dossier, they may apply the first fixed land prices.-