A private placement of shares is recognized as a financial step that enterprises may take when they need to expand their business operations and seek to mobilize capital from external sources instead of relying on loans. In addition, a private placement of shares helps enterprises enhance their position, attract strategic investors for capital contribution, management capabilities or new market opportunities. Therefore, in the current economic context, many enterprises have chosen the private placement method as a way to gradually strengthen their position and scale. However, for the private placement process to proceed smoothly and achieve the ultimate objectives that the enterprise aims for, it is essential for the enterprise to pay attention to several key points outlined below.
1. Understanding the private placement of shares
Private Placement of Securities (including private placement of shares) refers to the offering of securities that does not fall under the category of offering through mass media, and is carried out in one of the following forms: Offering to fewer than 100 investors, excluding professional securities investors; Offering only to professional securities investors.
In cases where the private placement of shares involves foreign individual or institutional investors, the enterprise must complete the procedures required for foreign investors to be approved for capital acquisition. In addition, foreign investors must fully comply with all relevant market access conditions (depending on the business sector), as well as with regulations concerning national defense and land use. Nevertheless, the procedures for conducting a private placement of shares are much simpler than those for a public offering. The enterprise only needs to accurately identify its target investors and the objectives it seeks to achieve. Based on these ultimate goals, the enterprise can then develop a detailed plan for the private placement of shares.
2. Procedures for conducting a private placement of shares
The implementation of a Private Placement of Shares must be based on the plan approved by the company. Accordingly, the procedures for conducting a private placement differ between joint-stock companies that are not yet public companies and public companies, specifically as follows:
For joint-stock companies that are not yet public companies:
Step 1: The company shall decide on the plan for the private placement of shares in accordance with the provisions of the Law on Enterprises 2020;
Step 2: Exercise of pre-emptive rights: Shareholders of the company exercise their right to prioritize the purchase of shares under the provisions of clause 2, Article 124 of the Law on Enterprises 2020, which governs the offering of shares to existing shareholders, except in cases of merger or consolidation;
If the existing shareholders and the transferees of their pre-emptive rights do not purchase all the offered shares, the remaining shares may be sold to other investors under the approved private placement plan, provided that the conditions offered are not more favorable than those offered to existing shareholders, unless otherwise approved by the General Meeting of Shareholders.
Foreign investors who purchase shares offered under this step must carry out the necessary procedures for share acquisition in accordance with the Law on Investment.
It should be noted that, for foreign investors, the purchase of shares through a private placement must take into consideration Vietnam’s market access commitments, in order to determine whether the investor meets the conditions regarding business sectors, ownership ratios, and forms of presence in Vietnam to be eligible for capital ownership.
Step 3: Carrying out the procedures for capital increase with the Business Registration Authority
In cases where the number of shares intended for offering is not fully subscribed by the existing shareholders and the transferees of their pre-emptive rights, the Board of Directors shall have the right to sell the remaining shares to existing shareholders of the company and to other investors, under conditions no more favorable than those offered to existing shareholders, unless otherwise approved by the General Meeting of Shareholders or stipulated differently under securities laws.
In all cases, shares are considered successfully sold once full payment has been made and the information of the purchaser, as prescribed in clause 2, Article 122 of the Law on Enterprises, has been fully recorded in the Shareholder Register. From that point, the purchaser officially becomes a shareholder of the company. After the shares have been fully paid for, the company shall issue and deliver share certificates to the purchasers. In cases where share certificates are not issued, the information of the shareholders shall be entered into the Shareholder Register to certify their ownership of shares in the company.
Private placement of shares by Public Companies
According to clause 1, Article 31 of the Law on Securities 2019 (as guided and supplemented by Decree No. 155/2020/NĐ-CP and related legal documents), the private placement of shares by a public company is not merely a mobilization activity but transaction subject to strict supervision to protect transparency and to control ownership within the public enterprise. Accordingly, the private placement must comply with the following conditions:
There must be a resolution of the General Meeting of Shareholders approving the plan for the offering and the intended use of proceeds from the placement; clearly defining the criteria for investors, the number of shares, the offering price, or the principles for determining the offering price;
The participants in the offering must only include strategic investors and professional securities investors for the offering of shares, convertible bonds, or strategic investors and professional securities investors as prescribed in the case of warrant-linked bond offerings;
The transfer or trading of privately placed shares, privately placed convertible bonds, or privately placed warrant-linked bonds shall be restricted for at least 3 years for strategic investors and at least 1 year for professional securities investors from the date the offering is completed, unless transfers between professional securities investors under certain circumstances, or as performed pursuant to an effective court judgment, arbitral award, or inheritance in accordance with the law;
Each private placement of shares, convertible bonds, or warrant-linked bonds must be separated by at least 6 months from the date of completion of the most recent offering.
3. In-depth recommendations for enterprises conducting a private placement of shares
To ensure that the process of handling matters related to the Private Placement of Shares achieves its intended objectives, we recommend that enterprises pay attention to the following key points:
Clearly define financial and control objectives: Before proceeding with the issuance, the enterprise must clearly identify its capital mobilization purpose — whether it is to expand a project, restructure its finances, or bring in a strategic investor. For each distinct objective, the issuance structure and share terms (such as pricing, voting rights, and lock-up commitments) should be designed accordingly. A common mistake among many enterprises is conducting a placement merely “offer to get money” without fully considering the dilution effects on ownership and control of the enterprise.
Select the right investors – not just those with capital: Investors in a private placement contribute more than just capital; they bring strategic value. Enterprises should prioritize investors who can provide technology, market access, or management capabilities, rather than merely financial contributions. Carefully assessing an investor’s vision, management style, and long-term interests helps avoid conflicts of interest and ensures sustainable cooperation after the issuance.
Manage legal risks and documentation transparency: A private placement may be rendered invalid if the documentation or procedures fail to comply with regulations regarding investor eligibility, timelines, or disclosure requirements.
A Private Placement of Shares is a strategic financial and legal decision. It is not merely a means of mobilizing capital but also a matter of ownership structure, power control, and corporate value positioning. A successful private placement is one in which the enterprise not only receives capital but also enhances its governance capacity and creates a foundation for higher development — both financially and in terms of market reputation.
Time of writing: October 01, 2025
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