Vietnam: Notes on guaranteed stocks

Guaranteed stocks

Vietnam’s stock market has experienced significant development. However, the conditions to issue stocks are relatively complicated, especially for businesses that have little experience in issuing stocks on their own. Therefore, for the issuance of stocks to take place professionally and smoothly as well as to minimize risks, stock issuers look to other businesses to guarantee their issuance.

In this article, BLawyers Vietnam presents an overview and notes on the guaranteed stock issue.

1. What are guaranteed stocks?

A guaranteed stock is a commitment by the guarantor to the issuer of stocks to repurchase all or part of the issuer’s stocks to resell or buy the remaining stocks that have not been fully distributed or to make maximum effort to distribute the stocks to be issued. Thus, it can be understood that the stocks guarantor will carry out all procedures related to the number of stocks that have been guaranteed to the public on behalf of the stock’s issuer, and the guarantors will seek profits from the guarantee service fee or the difference in the resale of the number of stocks guaranteed.

It should be noted that enterprises permitted to underwrite stocks must be legally established stocks companies under the conditions prescribed by the law on stocks.

2. Steps to take to guarantee stocks

Guaranteed stocks will generally be done according to the following process:

(i) Step 1: Analysis and evaluation of issuance capacity

The guarantor will evaluate issues related to the ability of stocks to be guaranteed, such as financial statements, the operating situation of the enterprise, issues related to the reputation and legality of the stock-issuing enterprise, and the product market of the issuing enterprise, including domestic and foreign markets.

(ii) Step 2: Preparation of registration dossier for public offering of securities

The guarantor will prepare dossiers for registration procedures for the public offering of stocks as prescribed in Article 18 of the Securities Law 2019.

(iii) Step 3: Distribution of Securities

Stocks are distributed to the market and the distribution must comply with the provisions in stock laws.

The distribution of securities may only be carried out after the issuer has ensured that the securities buyer has access to the Prospectus in the registration dossier for the public offering of securities published at the locations stated in the Prospectus Announcement.

(iv) Step 4: Stabilization and regulation of the market

This is the time to stabilize and regulate the market through the acquisition of guaranteed shares by the guarantor at the expected price in order to prevent investors from buying at a lower price.

3. Notes when issuing stocks to be guaranteed

Stock companies need to understand some basic regulations on this type of service as follows:

(i) If securities companies underwrite the public offering of securities by way of buying part or all of the securities of issuers, they shall only be allowed to underwrite if the total issuance of securities is not greater than equity and is not over 15 times more than the difference between the value of short-term assets and short-term liabilities according to the latest quarterly financial statements.

(ii) A securities company is not allowed to underwrite the issue of its securities by entering into a firm commitment or becoming a principal underwriter in the following cases:

  • Securities company operating independently or joining with its subsidiaries or related persons owns at least 10% of the charter capital of an issuer, has control over an issuer, or has the right to appoint the General Director (Director) of the issuer;
  • At least 30% of the charter capital of a securities company and at least 30% of the charter capital of the issuer are held by the same individual or entity;
  • Issuer that is independent or joins with its subsidiaries or related persons, owns at least 20% of the charter capital of a securities company, or has control over a securities company, or has the right to appoint the General Director (Director) of the securities company;
  • Any member of the Governing Board, General Director (Director), and related persons of a securities company is also a member of the Governing Board or the General Director (Director) of another issuer;
  • Any member of the Governing Board, General Director (Director), and related persons of an issuer is also a member of the Governing Board or the General Director (Director) of a securities company;
  • A securities company and an issuer have the same legal representative.

(iii) Any securities company underwriting securities must open standalone accounts at commercial banks to receive money to buy securities from investors.

To summarize, guaranteed stocks help issuers to mitigate risks associated with the issuance of securities, while also allowing guarantors to generate profits. However, all parties involved should be aware of legal risks to avoid unnecessary losses.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at We would love to hear from you.

Date: 12 Mar 2024

Writer: BLawyers Vietnam


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