ISSUANCE OF SHARES UNDER THE EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

Conditions for Implementing an ESOP Program

Pursuant to Article 64 of Decree 155/2020/NĐ-CP, a company must satisfy the following conditions:

• An ESOP issuance plan must be approved by the General Meeting of Shareholders (“GMS”).

• The total number of shares issued under ESOP within any 12-month period must not exceed 5% of the company’s outstanding shares.

• The eligibility criteria, list of participating employees, principles for determining the number of shares allocated to each participant, and implementation timeline must be approved by the GMS or authorized to the Board of Directors.

• In the case of issuing bonus shares to employees, the company must have sufficient equity capital to increase charter capital, specifically:

(i) Equity sources used for issuing bonus shares shall be determined based on the most recent audited financial statements and may include: share premium; development investment fund; undistributed after-tax profits; and other funds (if any) permitted by law to supplement charter capital;

(ii) Where a public company is a parent company issuing bonus shares from share premium, development investment fund, or other funds, the funding source shall be determined based on the parent company’s financial statements;

(iii) Where bonus shares are issued from undistributed after-tax profits, the profit amount used shall not exceed the undistributed after-tax profit stated in the audited consolidated financial statements. If the profit amount used exceeds the undistributed after-tax profit in the parent company’s separate financial statements, the company may only proceed after transferring profits from subsidiaries to the parent company.

The total value of the above equity sources must not be lower than the total increase in charter capital approved by the GMS.

• The issuing organization must open a blocked account to receive proceeds from employee share purchases, except in the case of issuing bonus shares.

• The issuance must comply with regulations on foreign ownership limits where shares are issued to foreign employees.

• Issued shares must be subject to a minimum transfer restriction of one (01) year from the end date of the issuance.

• For credit institutions or insurance enterprises, approval must be obtained from the State Bank of Vietnam (for credit institutions) or the Ministry of Finance (for insurance enterprises) regarding the charter capital increase.

Procedures for Issuing ESOP Shares

Pursuant to Articles 65 and 69 of Decree 155/2020/NĐ-CP, the procedures are as follows:

Step 1: Submission of Issuance Report to the State Securities Commission (SSC)

The public company shall submit the following documents to the State Securities Commission (“SSC”):

• Share issuance report (Form No. 17 attached to Decree 155/2020/NĐ-CP);

• Resolution of the GMS approving the ESOP issuance plan, clearly stating the number of shares, issuance price or pricing principles, or authorization for the Board of Directors to determine the price;
  Note: Interested parties shall not participate in voting.

• Resolution of the GMS or Board of Directors (if authorized) approving employee eligibility criteria, list of participants, allocation principles, and implementation schedule;
  Note: Interested parties shall not participate in voting.

• The most recent audited financial statements (for bonus share issuance);

• Relevant resolutions and bank confirmations regarding profit transfers from subsidiaries (if applicable);

• Bank confirmation of the opening of a blocked account (except for bonus share issuance);

• Resolution approving compliance with foreign ownership limits (if applicable);

• Approval documents from competent authorities for credit institutions or insurance enterprises (if applicable).

Step 2: SSC Review

Within 7 working days from receipt of a complete and valid dossier, the SSC shall notify the company in writing and publish such information on its website. In case of refusal, the SSC must provide written reasons.

Step 3: Disclosure of Issuance Notice

Within 7 working days from the SSC’s confirmation, the company must disclose the Issuance Notice (Form No. 18 of Circular 118/2020/TT-BTC) on its website and the stock exchange’s website at least 7 working days before the end of the issuance period.

The issuance period must not exceed 45 days from the SSC’s confirmation date.

Step 4: Reporting Issuance Results

Within 15 days from the end of the issuance, the company must submit an issuance result report (Form No. 29 of Circular 118/2020/TT-BTC) to the SSC and publicly disclose the results. The dossier must include:

(i) A list of participating employees specifying the number of shares purchased or allocated; and

(ii) Bank confirmation of proceeds collected (except for bonus share issuance).

Step 5: SSC Confirmation

Within 3 working days from receipt of a complete and valid issuance result report, the SSC shall notify the company, the stock exchange, the Vietnam Securities Depository and Clearing Corporation, and publish such notice on its website.

Step 6: Unblocking of Funds

After receiving the SSC’s confirmation, the company may request the release of funds from the blocked account, except in the case of issuing bonus shares to employees.