People watch transactions at a stock trading floor. The Ministry of Finance is drafting a circular to regulate the sale of shares lots offered by equitising state-owned enterprises. — Photo baocongthuong.com.vn

In recent years, the Government has encouraged SOEs to equitise, meaning many of these companies are entering the stock market. As they enter the market, they must auction off their stock packages in large share lots.

Before the draft is finalised, some of its current content was made public in order to garner a response and constructive feedback from investors and traders in Viet Nam's stock markets.

Firstly, the circular would govern any SOE either unlisted on the stock market, or unregistered for trading on the Unlisted Public Company Market (UPCOM).

The draft circular will likely require investors interested in an SOE's share lot to purchase the entire package in the form of a public placement during the auction. Just how SOEs, one-member companies and management agencies, such as ministries and provincial people's committees, will ensure the transparency and fairness of these auctions has not been enumerated.

The management of share lot auctions would likely fall on the HCM City Stock Exchange and the Ha Noi Stock Exchange. They would be responsible for setting and managing certain basics like the number of lots offered in an auction, the number of shares in each lot, the initial price of the offered share lot, qualifications for the investor and solutions to settle problems that might arise.

The initial price of a share lot, according to the Ministry's recent round of proposals, should be calculated off share prices set by an independent organisation or company. The costs involved in setting share prices would be covered by the Fund for Business Development, launched in 2002 to support the equitisation process of SOEs.

SOEs entering the market will have to decide how big they want their share lots to be. Besides taking into account market conditions, proposals have said that an SOE be limited to offering only one lot per auction and that each lot is at least 5 per cent of the enterprise's chartered capital.

If an SOE decides it wants to sells its shares at a value lower than the independently set price, or sell off its stakes in financial institutions or commercial banks, both sellers and buyers must stay in accordance with regulations set out in Decision 51/2014/QD-TTg issued on September 15.

If an auction somehow ends in a stalemate between two potential buyers, it is proposed that the draft circular would require that a private auction occur between those investors to conclude the matter. — VNS