The circular gives information on who can buy shares (strategic investors, local and foreign investors, employees, trade unions), how shares can be offered (public auction and direct negotiation) and how deposits can be made in foreign currencies. It also contains sample documents.

19 Nov 2021



On 17 May 2021, the Ministry of Finance (MoF) released a new Circular No. 32/2021/TT-BTC (Circular 32), superseding Circular No. 40/2018/TT-BTC (Circular 40). Circular 32 came into effect on 1 July 2021.

In general, Circular 32 provides instructions on the initial public offering of shares, management and use of proceeds from equitisation involving the transformation of state-owned enterprises (SOEs) and single-member limited liability companies with 100% of their charter capital wholly held by SOEs into joint-stock companies. It provides detailed regulations on the price of shares' offering, methods of an initial public offering of shares and matters relating to the proceeds from equitisation of the SOEs.

In this update, we set out some notable points for your information.


1. Eligible Parties to Purchase Shares upon Equitisation of SOEs

Circular 32 lists the following eligible parties:

  • Local and foreign investors, including the equitised enterprise's employees and managers;

  • Strategic investors who are legal entities with adequate financial capability and a profitable business for the last two years before subscribing to shares with no accumulated loss. In addition, a strategic investor needs to make a written commitment on various matters regarding the business operation of the equitised enterprise.

  • Employees under labour contracts and managers of the equitised enterprise on the date of the valuation; and  

  • The equitised enterprise's trade unions.

Similar to Circular 40, Circular 32 is also based on and refers to Decree 126/2017/ND-CP. However, Circular 32 further clarifies the criteria and conditions relating to eligible parties with the reference to Decree 140/2020/ND-CP, which amends and supplements Decree 126/2017/ND-CP.


 2. Methods of Initial Share Offering

Circular 32 redefines and supplements the auction forms available to strategic investors and clarifies other ways of selling shares. The auction methods are applied as follows:

a. The auction method is applied as:

  • Public auction: this includes the shares that employees and trade unions refused to purchase, or strategic investors failed to subscribe to according to the approved equitisation plan; and

  • Auction to strategic investors: in case there are at least two qualified strategic investors subscribing for shares and the number of subscribed shares is larger than the expected shares for strategic investors under the approved equitisation plan;

b.  Direct negotiation method is applied in case of:

  • Selling to strategic investors if there is only one strategic investor subscribed for the shares or the number of subscribed shares is smaller than or equal to the expected shares to be sold under the approved equitisation plan;

  • Selling the remaining shares which have not been sold at a public auction (including any shares refused by successful bidders); and

  • Selling to the employees and trade unions.

c. Shares underwriting method may be applied during the initial offering; and

d. Book-building shall be applied in accordance with Circular No. 21/2019/TT-BTC issued by the MoF.

Additionally, some remarkable adjustments are set out throughout the regulations for implementing methods of the initial share offering. For instance, the minimum period required to disclose the enterprise information before holding the auction is increased from 20 working days to one month. Furthermore, the deadline for submission of the listing dossier to carry out listing in accordance with the Law on Securities for the method of public auction to the public is removed while specific guidance for selling shares under agreements to employees, managers and trade unions for the direct negotiation method is added.


3. Deposit in Foreign Currency

This is a new regulation and facilitates foreign investors as they are entitled to make deposits in foreign currencies via bank transfer. The exchange rate to calculate the foreign currency deposit is the buying rate of the commercial bank where the organisation conducting the auction or the equitised enterprise (in the case of an auction among strategic investors) opens a foreign currency account and on the date of the foreign investors' placement of deposits in accordance with the regulations on the auction of shares.

Unlike a deposit in Vietnamese Dong, deposits in foreign currencies cannot be set off against the total amount payable by the foreign investors for share purchase. An exception is made for the case where the time limit for payment has passed under applicable laws, and the investors fail to pay or fail to pay in full the payable amount for share purchase.

Accordingly, once the foreign investors have fulfilled the payment obligations for share purchase in Vietnamese Dongs into the bank account of the auction organisation or into the bank account of proceeds from the equitisation of the equitised enterprise (in the case of the auction between strategic investors) in accordance with the regulations on the auction of shares, the foreign currency deposits will be returned to the foreign investors within three working days from the date of payment. Otherwise, the deposits will be converted into Vietnamese Dongs to pay for unpaid shares.


4. Attachments

Circular 32 contains more samples and forms than the former circular. The most notable of which are the sample regulations on the auction of shares to the public, and sample regulations on auction of shares among strategic investors.


For more information, please contact:

Mark Oakley / Managing Partner


Phuong Huynh / Senior Associate


Ly Nguyen / Associate

© 2021 ACS Legal Vietnam Company Limited – All rights reserved

This legal update is not an advice and should not be treated as such.

Download pdf: Initial Offering of Shares, Management and Use of Proceeds from SOE Equitisation

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