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New rules issued on public takeovers
Public acquisition activities between domestic listed companies is booming, forcing market regulators to issue new rules on public takeovers.
The latest instruction, issued by the State Securities Commission last week, requires listed firms to implement bids through a negotiation system at stock exchanges, while unlisted firms will have to execute takeovers through the Viet Nam Securities Depository Centre.
Under the new rules, bid participants must also meet minimum tax and bidding fees.
Public takeovers are commonplace in the global market although locally they have only started to appear since the bid between Hung Vuong and An Giang Fisheries Import-Export Company last year.
Nguyen Thanh Huong from Saigon Securities Inc said that public takeovers were difficult as bids were highly dependent on the seller.
She believed that bidding between Hung Vuong Company and the fisheries company had been obstructed by a shortage of legal documents. When the deal was reached, no instruction on public acquisition bid had been issued.
To Hai from Viet Capital Securities put the biggest challenge down to differences between corporate culture and administrative systems. Narrow-sighted approaches to business strategy would restrain merger and acquisition (M&A) activities in the domestic stock exchange, Hai said.
But an anonymous official from the State Securities Commission was quoted as saying: "The instruction on public acquisition bids is part of the regulators' attempt to give more power to domestic enterprises for M&A activities." The official added that the instruction would help ensure shareholders' benefit from transparent bid implementation.
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