Shares are a form of securities. The issuance of shares when establishing a share-holding company is regulated in Decree No. 48/1998/ND-CP dated July 11, 1998, by the Government on stocks and the stock market.
Therefore, according to Item 6 of Decree No. 48/1998/ND-CP, the enterprise which issues shares to the public for the first time must be complied with the following conditions:
1. Minimum legal capital at VND10 billion
2. Profitable business operations in the two latest consecutive years
3. Members of the Management Board and Director (General Director) are experienced in business management
4. Achieving feasible scheme about using capital collected from the share issuance
5. At least 20% of the shares are sold to 100 outside investors. In case the shares are more than VND100 billion, this minimum rate is 15%.
6. The founding shareholders must hold at least 20% of the total capital in at least three years after the termination of the share issuance.
7. In case the share value issued exceeds VND10 billion, there should be an underwriter for the issuance process.
* Item 7 of Decree No. 48/1998/ND-CP on conditions of issuing more shares regulates the issuance of more shares to the public to increase capital, besides being complied with the regulations of the Items 1, 2, 3, 4, 5, 6, and 7 in Decree No. 48, the company should also be complied with the following conditions:
1. The additional share issuance is at least one year after the first one.
2. The value of the additional shares issued cannot be larger than value of current shares.
* According to Item 9 of Decree No. 48/1998/ND-CP dated July 11, 1998, on stocks and the stock market, the application file for share issuance consists of:
- Application of share issuance
- Business registration certificate
- Company regulations
- Resolution of the shareholders meeting on share issuance
- List of members of the management board and director (general director)
- Financial report of the latest two consecutive years certified by legal auditing organizations
- Minutes of the enterprise�s total assets verified by the authorities in case the enterprise is state-owned
- Issuance pledge (if any)
According to Item 11 of Decree No. 48/1998/ND-CP dated July 11, 1998, on stocks and the stock market, procedures and time of share issuance licensing are regulated as follows:
Application form of share issuance has to be submitted to the State Securities Commission. Within 45 days from the admission of sufficient documents, the State Securities Commission will issue or refuse to issue the license. In the case of refusal, the Commission must clarify by a written document.
Besides, according to Item 61 Article 1.a of the Enterprise Law effective as from January 1, 2000, enterprises are only allowed to issue shares after having completed business registration.