CIRCULAR

GUIDELINES FOR AUCTIONS OF BLOCK SHARES TOGETHER WITH RECEIVABLE DEBT OF STATE ENTERPRISE AUTHORIZED TO BUY, SELL AND SETTLE DEBTS

Pursuant to Law on Enterprises No. 68/2014/QH13 dated November 26, 2014;

Pursuant to the Law on Management and Use of State Capital Invested in Manufacture and Busisness of Enterprises No. 69/2014/QH13 dated November 26, 2014;

Pursuant to the Law on Property Auction No. 01/2016/QH14 dated November 17, 2016;

Pursuant to Decree No. 91/2015/ND-CP dated October 13, 2015 of the Government on State Capital Investment in Enterprises and Management, Use of Capital and Property in Enterprises;

Pursuant to Decree No. 32/2018/ND-CP dated March 08, 2018 of the Government on amendments to a number of Articles of Decree No. 91/2015/ND-CP dated October 13, 2015 of the Government on State Capital Investment in Enterprises and Management, Use of Capital and Property in Enterprises;

Pursuant to Decree No. 87/2017/ND-CP dated July 26, 2017 of the Government on functions, tasks, powers, and organizational structure of the Ministry of Finance;

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The Ministry of Finance provides guidelines for auctions of block shares together with receivable debt of state enterprises authorized to buy, sell and settle debts according to Decree No. 32/2018/ND-CP as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation and regulated entities

1. Scope:

This Circular provides guidelines for the auctions of block shares together with receivable debt of state enterprises authorized to buy, sell and settle debts as specified in Point d Clause 3 Article 29a of Decree No. 91/2015/ND-CP (receives amendments in Clause 13 Article 1 Decree No. 32/2018/ND-CP).

2. Regulated entities:

The state enterprises authorized to buy, sell and settle debts (hereinafter referred to as “debt buyers, sellers”);

b) The joint-stock companies (have not been listed and registered for trade in the stock market; listed and registered for trade but yet to make any trades in the stock market) simultaneously possessing contributed capital and receivable debt of the debt buyers, sellers;

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d) The investors participating in the purchase of the block shares together with the receivable debt;

e) Other organizations and individuals related to the transfer of the capital together with the receivable debt.

Article 2. Term interpretation

1. “State enterprise authorized to buy, sell and settle debts" refers to a wholly state-owned enterprise whose function is to buy, sell or dispose the debt that the enterprise owes the credit institutions and other organizations, individuals.

2. “Auction of block shares together with receivable debt” refers to the auctions of the block shares and the receivable debt of the debt buyers, sellers simultaneously conducted in other enterprises.

3. “The auction organizations” include: the Stock Exchange, the securities coporations, the property auction service center and the property auction enterprises according to auction laws.

4. “Unsuccessful auctions” refer to any of the following cases:

a) The registration period ends without any investor registers for the auction or only 01 investor registers for the auction;

b) After the deposit submission, the submission period of the auction participation forms ends without any investor submitting the auction participation form;

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d) All of the highest bidders refuse to buy the bid or refuse to ballot;

dd) The winning bidder refuses to buy;

e) All of the investors violate the auction laws.

Article 3. Implementation principles and decision authorization

1. The auctions of block shares together with receivable debt of the debt buyers, sellers shall comply with the principles specified in Clause 1 Article 29 of Decree No. 91/2015/ND-CP (receives amendments in Clause 12 Article 1 Decree No. 32/2018/ND-CP).

2. The debt buyers, sellers must transfer the block shares together with the receivable debt according to the business plans and methods approved by the Board of Members or the Chairmen of the companies within their competence.

3. During the development of the methods for auction of the block shares together with the receivable debt, if the estimated transfer value that will be collected is lower than the value recorded in the accounting records of the debt buyers, sellers and is made provisions (including the stakes and the receivable debt), the decision on the methods for auction of the block shares together with the receivable debt must be made as follows:

a) If the provisions are equal or greather than the difference between the estimated collected value and the value specified in the accounting records (including the stakes and the receivable debt), the Board of Members or the Chairmen of the debt buyers, sellers shall decide the methods for auction of the block shares togetherw with the receivable debt;

If the provisions are smaller than the difference between the estimated collected transfer value and the value specified in the accounting records (including the stakes and the receivable debt), after informing the representative agencies of the owners about the reasons for the difference for consideration and actions against the organizations and individuals involved in the management of external investment capital (if any), the Board of Members or the Chairmen of the debt buyers, sellers shall decide to transfer the capital together with the receivable debt in the form of auctions in blocks.

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Chapter II

SPECIFIC PROVISIONS

Article 4. Starting price of block share auctions together with receivable debt

The Board of Members or the Chairmen of the debt buyers, sellers shall decide the starting price of the block share auctions together with the receivable debt but no less than the starting price of the block shares plusthe starting price of the receivable debt. To be specific:

1. The starting price of the block share shall be determined to be no lower than the value of a share multiplied with the number of shares offered for sale and based on the provisions specified in the Point c Clause 1 Article 29 Decree No. 91/2015/ND-CP (receives amendments in Clause 12 Article 1 Decree No. 32/2018/ND-CP).

2. The starting price of the receivable debt must not be lower than the value reassessed by the evaluating organizations. The value assessment shall comply with the value assessment laws and relevant law provisions.

Article 5. Organization for implementation of block share auction together with receivable debt

1. The debt buyers, sellers shall sign the contract to hire the auction organizations to organize the auction of the block shares together with the receivable debt.

2. The auction organizations shall decide to form the auction council. The presidents of the auction council shall be the representatives of the debt buyers, sellers.

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Article 6. Documentation of block share auction together with receivable debt

1. The dossier of block share auction together with receivable debt must include:

a) The decision of the competent authorities to approve the transfer method of the contributed capital together with the receivable debt;

b) The documents proving that the debt buyers, sellers are legal owners of the contributed capital in joint-stock companies.

c) Documents relating the debt: the debt reconciliation form of the last debt relative to the time of information publication, which includes both the original and the interest (if any); The information on the debt collateral (if any) and the value of the collateral (book value; reassessed value) and other documents relating the debt (if necessary);

d) The valuation certificate;

dd) The publicized information record made by following the sample in the Annex I in Decree No. 32/2018/ND-CP, which provides additional information on the debt sold together with the block shares including: the debt value (book vlue; reassessed value), information on the debt collateral (if any) and the value of the collateral (book vlue; reassessed value);

e) The regulations on the auction of block shares together with the receivable debt.

2. The debt buyers, sellers shall have the responsibilities to prepare the dossier of the auction of the block shares together with the receivable debt, cooperating with the auction organization to publicize information and organize the auction as per law.

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The information publication shall comply with provisions specified in Clause 3 Article 29a of Decree No. 91/2015/ND-CP (receives amendments in Clause 13 Article 1 of Decree No. 32/2018/ND-CP). To be specific:

1. The debt buyers, sellers/the auction organizations shall publicize the information on the compile auction dossiers as per law and send to the investor at least 20 days before the auction day at the headquarters of the debt buyers, sellers, at the head quarters of the joint-stock company having block shares and receivable debt, at the auction location and on mass media (03 consecutive issues of a national newspaper and a local newspaper where the debt buyers, sellers and the joint-stock company setting up their headquarters respectively) and shall upload on the website of the auction organizations, the debt buyers, sellers, the joint-stock companies whose block shares and receivable debt are up for auction (if any).

2. The debt buyers, sellers/the auction organization during the publication of information on the auction must send the auction dossiers prepared as per law to the representative agencies of the owners and the Ministry of Finance (Corporate Finance Department). Sending the dossiers to the State Securities Commission is not necessary.

Article 8. Auction implementation

1. The auction shall be conducted at the headquarters of the auction organizations, the debt buyers, sellers or other locations as agreed by the debt buyers, sellers and the auction organizations.

2. Before the deadline specified in the auction regulation, the investor eligible to participate in the auction shall register for the auction and submit the deposit. The debt buyers, sellers shall decide the deposit ratio of the investors but not lower than 10% of the total starting price of the block shares together with the receivable debt.

After the auction registration and completion of the deposit procedures, the investors shall be provided with the auction tickets by the auction organizations to set the buying prices (bids).

3. Within the duration specified in the auction regulations, the bidders shall write the buying prices (bids) into the auction tickets and cast directly at the auction premises or cast via post offices according to the regulations on the share auctions. Each bidder is only provided with one auction ticket and may only set 01 price for the entire block shares together with receivable debt.

Article 9. Determination of auction results

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2. The winning bid shall be determined as the highest eligible bid called by a bidder.

3. If there are at least 02 bidders call for the same highest bid which is not lower than the starting price, hold a ballot among such bidders until only one bidder calling the highest bid is determined. The ballot price must not be lower than the bid that the highest bidders have called after following the bid increments specified in the auction regulations.

The highest bidder after casting their ballot shall be the winning bidder and shall be able to buy the entire block shars and receivable debt offered by the debt buyers, sellers.

If all of the highest bidders refuse to hold a ballot, the next highest bidder whose bid is not lower than the starting price shall be considered as the winning bidder.

Article 10. Handling of auction results

1. Based on the auction results, immediately after the auction, the auction organizations shall have the responsibilities to make records determining the auction results; The auction organizations and the debt buyers, sellers shall simultaneously sign the record determining the auction results. The record determing the auction results shall be made following the form specified in the Annex II issued together with Decree No. 32/2018/ND-CP and must include: the specific starting price of the block shares together with the receivable debt, the starting price of the block shares and the starting price of the receivable debt.

2. Within a maximum of 05 working days from the date on which the auction concludes, the debt buyers, sellers/the auction organizations shall cooperate in the publication of the auction results at the auction location, on the website of the auction organizations, the debt buyers, sellers and inform the winning bidders.

3. Within a maximum of 05 working days from the date on which the share auction results are publicized, based on the announcement about winning the auction, the bidders shall fulfill the remaining of the payment for the purchase of block shares together with receivable debt according to the bids after deducted the deposits. During this period, the debt buyers, sellers shall cooperate with the auction organizations to return the deposits to the investors who do not win the auctions and do not violate the auction regulations. The investors violating the auction regulations shall not receive their deposits.

4. Within 05 working days from the deadline for the money submission of the investors, the auction organizations shall have the responsibilities to transfer the income generated from the sale of block shares together with receivable debt and the list of investors who already submitted the money to the debt buyers, sellers.

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If the debt buyers, sellers have not registered for shares at the Vietnam Securities Depository, the procedures for ownership right transfer between the debt buyers, sellers and the investors after the investors complete the money submission for the share purchase shall comply with the provisions of the Law on Enterprises, regulations of the joint-stock companies.

The debt buyers, sellers shall have the responsibilities to cooperate with the joint-stock companies in completing the procedures for the transfer of ownership right of the share together with the receivable debt to the investors, sned the information on the specific procedures and the time for completing the transfer of the ownership right of the share together with the receivable debt to the investors when conduct the auctions.

5. Within a maximum of 15 days from the date on which the auctions conclude, the debt buyers, sellers must report the auction results regarding the block shares together with the receivable debt to the representative agencies of the owners and the Ministry of Finance (Corporate Finance Department).

6. Based on the value of the debt and the value of the shares when determine the starting price as specified in Article 4 of this Circular, the debt buyers, sellers shall decide to allocate of income generated from the auction of block shares together with the receivable debt to the block shares and the debt in a manner that the amount allocated must not be lower than the starting price of the auctions of block shares and the receivable debt.

7. If the auctions of block shares together with the receivable debt are unsuccessful, the Board of Members, the Chairmen of the debt buyers, sellers shall decide to adopt other methods specified in Clause 2 Article 29a of Decree No. 91/2015/ND-CP (receives amendments at Clause 13 Article 1 Decree No. 32/2018/ND-CP).

Chapter III

IMPLEMENTATION

Article 11. Responsibilities of debt buyers, sellers

The debt buyers, sellers shall have the responsibilities to:

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2. compile files, publicize information and send the auction dossiers of the block shares together with receivable debt according to this Circular.

3. sign the record determining the auction results and publicize the auction results as specified in Clause 1, Clause 2 Article 10 of this Circular.

Article 12. Responsibilities of the auction organizations

The auction organizations shall have the responsibilities to:

1. decide to form the auction council and adopt the regulations on the auction of block shares together with receivable debt.

2. cooperate with the debt buyers, sellers in publicizing the information and repor the results of the auction of block shares together with receivable debt as specified in this Circular.

3. conduct the auctions according to this Circular and relevant law provisions.

Article 13. Responsibilities of enterprises having contributed capital and receivable debt of debt buyers, sellers

The enterprises having contributed capital and receivable debt of the debt buyers, sellers shall have the responsibilities to:

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2. cooeprate with the debt buyers, sellers/the auction organizations to make the transfer of ownership right regarding the contributed capital and the creditor rights of the receivable debt to the winning bidders of the block shares together with the receivable debt.

Article 14. Responsibilities of investors

1. The investors participating in the sale of shares shall have the responsibilities to comply with the regulations on the auctions of block share together with receivable debt and regulations specified in this Circular.

2. If the investors receive the transfer of capital together with the receivable debt of the public corporations and become the major shareholders, the investors shall report according to securities laws.

Article 15. Implementation clause

1. This Circular comes into force from January 10, 2019.

2. The debt buyers, sellers, the auction organizations and organizations and individuals involved in the auctions of block shares together with receivable debt of the debt buyers, sellers shall have the responsibilities to comply with this Circular.

3. Difficulties that arise during the implementation of this Circular should be reported to the Ministry of Finance for consideration and solutions.

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PP. MINSTER
DEPUTY MINISTER




Huynh Quang Hai