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Writer's pictureVu Quang Minh Anh

What is a listed company? Things to know about listed companies

Listed enterprises are one of the basic concepts in economic and financial content. Let's find out information about listed companies in Vietnam.


1. Listed company

A listed company is a public company where shares can be traded on stock exchanges. This is considered the highest form of development for a company. Because after becoming a listed company, it will be subject to strict management from state agencies.


Conditions to Become a listed company / listed Enterprise

According to Clause 1, Article 15 of the Securities Law 2019, the requirements for the initial public offering of shares by a joint stock company include:

- The amount of charter capital contributed when offering registration is from VND 30 billion or more calculated according to the value recorded in the accounting books.

- Business activities of 02 consecutive years before the year of registration of the offering must be profitable and at the same time have no accumulated losses by the year of registration of the offering.

- Having a plan for issuance and a plan for using capital obtained from the offering of shares approved by the General Meeting of Shareholders;

- At least 15% of the issuer's voting shares must be sold to at least 100 investors who are not significant shareholders unless the issuer's charter capital is from VND 1,000 billion or more, the minimum ratio is 10% of the number of voting shares of the issuer.

- Major shareholders before the time of the initial public offering of shares of the issuer, must commit to jointly hold at least 20% of the charter capital of the issuer for at least 01 year from the end of the tranche offer for sale

- The issuer is not being examined for penal liability or has been convicted of one of the crimes of infringing upon the economic management order but has not yet been cleared of the criminal record.

- A securities company is consulting the application for registration of a public offering of shares unless the issuer is a securities company.

- Committing and having to list or register for trading of shares on the securities trading system after the end of the offering.

- The issuer opens an escrow account to receive money to buy shares of the offering.

Các doanh nghiệp niêm yết được coi là động lực phát triển chính của một nền kinh tế bền vững
Listed companies/enterprises are considered the main development engine of a sustainable economy

Characteristics of listed companies

The establishment of a listed company brings many benefits and facilitates the development of a business. Here are a few characteristics of a listed company:

  • Create solid confidence for investors. The company converges the factors of financial potential, the efficiency of production and business activities, organizational structure and operation,... Investors believe that they will put capital in to help the company develop.

  • Increase the liquidity of stocks because they are directly traded on the large market. The company attracts more capital from outside investors.

  • Long-term development potential If the company operates stably, it will have long-term capital from stock price growth.

What is "listing"?

Clause 24, Article 4 of the Securities Law 2019 stipulates that "Listing of securities is the putting of securities eligible for listing into trading on the trading system for listed securities."


2. Business listing process and criteria

Procedure for registering to list shares

Step 1: Apply for listing on the Stock Exchange

Organizations registering to list securities must submit a listing registration dossier to the Stock Exchange or Dossier for registration of securities listing usually includes:


- Certificate of securities listing registration according to the form prescribed by the Exchange;


- Decision approving the listing of securities by the company's highest authority (general meeting of shareholders, board of directors, board of members...) depending on the type of company and the type of securities listed under provisions of law.


- The register of securities owners of the organization registering for listing shall be made within a specified period before the time of applying for listing registration;


-The prospectus of the listed organization must follow the prescribed form and meet the following requirements: Having all necessary, honest, and transparent information to help investors and securities companies make an assessment correct about the financial situation, business performance, and prospects of the listing organization; The financial figures in the Prospectus must be consistent with those of the audited financial statements in the application for listing permission; Having the signatures of the Chairman of the Board of Directors, the Head of the Supervisory Board, the Director (General Director), the Chief Accountant of the organization applying for listing. In case of a representative signing on behalf of the company, a power of attorney is required.


For the listing of shares of a joint-stock company, it is necessary to commit shareholders who are members of the Board of Directors, Supervisory Board, Director or General Director, Deputy Director or Deputy General Director, and The chief accountant holds a percentage of his/her ownership for the prescribed period from the date of listing. - Listing consulting contract (if any); -Certificate of the securities depository organization that the certification of the listing registration organization has registered for a centralized depository. Depending on the nature of each type of securities and the regulations of each Exchange, the transaction registration dossier may be more or less than the above documents.


Step 2: The Stock Exchange conducts a preliminary examination of the dossier


This initial inspection step is not based on reality but on documents in the listing registration dossier provided by the listing registration organization. The purpose of the preliminary appraisal is to shorten the time for the formal appraisal. Although this due diligence is not done formally, deciding whether to approve or deny the listing is crucial. Most listed organizations that do not meet the conditions set by the Stock Exchange will be disqualified immediately upon preliminary assessment before submitting the official listing application.


During the preliminary appraisal, the exchange usually focuses on the following issues:


- Terms of establishment of the company, subsidiaries, and branches (if any). Internal organization, personnel details on board of directors, board of directors, control and workforce; Holding securities, participating in profit sharing, interests of the board of directors, board of directors and major shareholders in any business activities related to the company;


- Debt issues (receivables, payables), unfinished litigation and its impact on the company (if any);


- The company's production and business capacity, investment and the impact of income policy, income distribution in the future;


- Regularly organize information disclosure on all aspects of the company's operations, especially financial information such as production and business results, profitability, capital structure, block holding structure volume of securities over the years, and liquidity level of securities;


The preliminary appraisal process of the SSC's dossier includes the following steps:


-First: The Stock Exchange checks the documents submitted by the listing company;


-Second: The Stock Exchange asks questions to the listing company about the submitted documents;


-Third: The listed company answers questions from the Stock Exchange about the procedures from step 1 to step 3 and repeats until the details are entirely clarified;


-Fourth: The Stock Exchange learns more about the company applying for listing and can visit the company to check the documents and collect more necessary information for the official listing appraisal;


-Fifth: Stock Exchange staff discuss the results of the verification, including the results when researching the company;


-Sixth: The Stock Exchange makes the final decision and announces this decision to the listed company.


Step 3: Apply for official listing on the Stock Exchange


After receiving the notification of the results of the preliminary examination of the application for listing from the Stock Exchange with the decision to approve the application, the listing company must apply together with the application for official listing to the Stock Exchange. In addition to the documents in the previous preliminary assessment, the application for official listing should include the following documents:


- An application for listing according to the form prescribed by the Exchange, clearly stating the reason for the listing;


- A business registration certificate issued by a competent state agency;


- Charter of organization and operation of the company has been approved;


- Sample of listed securities certificates, par value, privileges and privileges, quantity of each type of securities to be listed;


-Some other documents according to the specific requirements of each Stock Exchange.


Along with applying for official listing permission, the listing company will sign a listing contract with the Stock Exchange that stipulates the obligations of the listed company. Each exchange has its listing contract template, but in general, it has the following contents:


-Ensure the periodic disclosure of information;


-Ensure the publication of financial statements following international accounting standards and principles on a regular and periodic basis;


- Provide the Stock Exchange with information periodically to help them perform well their function of maintaining an orderly market;


- Prevent the company from conducting unfair business.


Step 4: The Stock Exchange conducts a listing inspection


When receiving an application for listing and signing a listing contract with a listing registrar, the Stock Exchange shall check the legality and accuracy of the information and check and compare with the conditions for listing of securities on the Stock Exchange based on reports and evaluation documents, compared with reality.


The key contents that the Stock Exchange pays attention to inspecting include:


- Profitability and stability of the company;


- Organization and management of the company;


-The public interest and the guarantee of the company's interests;


Step 5: The Stock Exchange approves the listing


When deeming that the listed company has fully met the conditions for listing of securities, the Board of Directors of the Stock Exchange will approve such securities to be listed for official trading on the Stock Exchange.


Step 6: Open listing


After being approved for listing, the Stock Exchange will specify the time to list and invite the chairman of the board of directors, the board of members, the general director, and the chief executive officer of the listed company to set the delivery date for the first transaction on the Stock Exchange for securities that have been approved for listing. This is to help the leaders of listed companies appear before the public and accept the legal responsibility of the listed company.


Phải trải qua những yêu cầu hết sức nghiêm ngặt, cổ phiếu của các doanh nghiệp niêm yết mới có thể "lên sàn"
Having to go through rigorous requirements, listed company shares can be "listed."

3. Why should businesses list shares?

Companies list shares on the stock exchange to collect capital from the public and allow investors to own a percentage of the company's money. This has many benefits for both the company and the investors:

  • Raising capital: By listing shares on a stock exchange, a company can raise capital from the public by selling shares to investors. This gives the company more capital to expand its business, invest in new projects, research and develop products, pay off debt, or other purposes.

  • Increase liquidity: Listing shares on the stock market creates publicity and transparency in the company's value, attracting many interested investors. This increases the company's ability to buy and sell shares in the market, creating liquidity and flexibility for the company's shares.

  • Creating shareholder value: As the company grows and grows, the stock's value can increase, generating profits for the company's shareholders. This spurred investors' interest and investment, helping the company grow and expand its business.

  • Increase the opportunity to raise capital later: After the company has listed shares, it becomes easier to raise capital by issuing more shares or bonds. When a company needs additional capital to carry out new projects, or to restructure its finances, listing shares will help the company attract new capital more efficiently.

  • Building credibility and reputation: Listing shares on the stock market requires the company to comply with the rules and regulations of the securities regulator. This creates transparency, trust, and credibility for the company in the eyes of investors, customers, partners, and consumers.

Niêm yết cổ phiếu lên các sàn chứng khoán là một bước phát triển đặc biệt của các doanh nghiệp niêm yết
Listing shares on stock exchanges is a special development step for listed companies

Besides, businesses may also face a few challenges when listing as follows:

- Listing costs are quite expensive: for securities to be listed, businesses have to spend a lot of expenses such as meetings, hiring consultants, auditing, preparing documents, and advertising. ..

- Pressure on business leaders on production and business results: listed organizations are always under pressure from society's supervision to improve production and business efficiency to maintain business performance. and increase stock prices on the stock market and business leaders will be under tremendous pressure.

- The right to control may be threatened: when listed, securities trading causes the structure of shareholders to change, leading to changes and instability in the management of the business and may threaten to control of significant shareholders.

- Bearing many obligations to disclose information and other constraints: when listing securities, enterprises must disclose information such as the number of securities held by key players, information about the financial situation, revenue, cost, orientation, and development strategy... this requires financial and human resources. On the other hand, this very disclosure is sometimes also detrimental to the business when competitors get the information.

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