Being delisted can be a major challenge for a company, but it can also be an opportunity to restructure and strengthen operations. This article provides a comprehensive guide on the recovery strategy after delisting.

1. Restructuring the Company

1.1. Definition and Scope of Restructuring

Restructuring is the process of reorganizing a company’s operations, structure, and resources to improve operational efficiency and competitiveness. The goal is to address weaknesses and limitations that cause inefficiencies in business operations while creating conditions for the company to restart with better performance, a clearer mission, and a broader vision.

The restructuring process may involve key aspects of the company such as organizational structure, management, human resources, operations, processes, and other resources. It may also be focused on one or more specific business areas (such as finance, human resources, sales, production…) to improve performance in those areas.

1.2. Common Forms of Restructuring

• Restructuring operational structure: This involves adjusting strategic goals, business sectors, product types, and geographic operations. When the business environment fluctuates, the company needs to promptly grasp the situation to adapt. Adjusting short-term and long-term strategic goals, sectors, products, or geographical operations can help the company overcome difficult periods and reduce negative impacts from the market.
• Restructuring organizational structure: This involves reorganizing the functions, tasks, and authorities of departments, management levels, and positions. For example, when cost-cutting measures are needed to carry out business activities, the company can restructure by reducing hierarchy, downsizing staff, redesigning job positions, and changing reporting relationships.
• Financial restructuring can be done in various ways. For instance, the company may change the equity model, alter cross-ownership structures, change debt management processes, and adjust owner capital holdings accordingly. This adjustment will help maintain the company’s profitability and expand the market. Financial restructuring is often complex and requires a high level of expertise. Therefore, companies often seek support from reputable legal and financial service providers to carry it out.

1.3. Restructuring Implementation Process

The restructuring process must be conducted systematically:

Step 1. Assess the company’s current situation

• It is important to clearly understand where inefficiencies and weaknesses lie, and which departments are underperforming. From there, a comprehensive and structured restructuring plan can be developed.
• Conducting an assessment of the current situation helps understand the company’s strengths, weaknesses, opportunities, and challenges.
• The scope of the restructuring should review all gaps in the operational structure. Depending on each company, this scope will be considered whether to restructure in a few areas or across the entire organization.

Step 2. Define the goals of the restructuring

• The objectives and reasons for the restructuring process need to be clearly defined (e.g., improving performance, reducing costs, enhancing competitiveness, adapting to changes in the business environment, restructuring debt, or changing the business model).
• Analyze and evaluate feasible restructuring options (e.g., changing the organizational structure, reducing personnel, restructuring debt, mergers/acquisitions of business units, or changing the business model).

Step 3. Develop a detailed plan

• Once the restructuring method is chosen, the company needs to develop a detailed plan (scope, resources, costs, etc.) to carry out the restructuring process.
• The company may consult with restructuring experts to help develop a more effective and feasible detailed plan.

Step 4. Determine the approach method

• Consider the available methods to achieve restructuring goals (e.g., joint ventures, strategic partnerships, mergers and acquisitions, technology transfer, etc.).
• Develop solutions, strategies, tactics, and an implementation plan in a phased manner. This will provide the company with clarity on how to proceed with the restructuring.

Step 5. Implement the plan

• Carry out the planned activities.
• Establish a restructuring steering committee to oversee and manage the implementation of the restructuring plan.
• Assign tasks to relevant departments and individuals.
• Continuously assess effectiveness, check for improvements, and make necessary adjustments where needed.

Step 6. Operate the new system and conduct periodic evaluations

• Ensure the new system is properly implemented and operates smoothly.
• Ensure that employees are fully trained to use the new system.
• Perform comprehensive checks of the new system to ensure stability, performance, and security.
• Set up monitoring mechanisms to track the system’s operation and assess performance.

2. Towards Re-Listing

2.1. Conditions for Re-Listing

To be eligible for re-listing, a company must meet the following conditions: (Article 109, 122 of Decree 155/2020)

Addressing violations that led to delisting:

• The company must resolve the issues or violations that caused the previous delisting.
• For example: violations related to information disclosure, corporate governance, or financial issues.

Charter capital and market capitalization:

• The joint-stock company must have a minimum charter capital of 30 billion VND.
• The market capitalization must reach at least 30 billion VND based on the most recent stock price criteria.

Trading duration and approval:

• Approved by the General Meeting of Shareholders.
• Must have been traded on Upcom for at least 2 years (except in special cases like public offerings or privatized companies).

Business performance:

• The latest ROE must be at least 5%.
• The company must have been profitable for the last 2 consecutive years before registering.
• No overdue debts exceeding 1 year or accumulated losses.

• Public shareholding ratio: At least 15% of the voting shares (or 10% if the charter capital is ≥ 1,000 billion VND) must be held by at least 100 non-majority shareholders.
• Commitment from leadership and major shareholders: Maintain 100% of shares for the first 6 months after re-listing, and 50% for the following 6 months.
• Compliance with the law: The company and its representatives must not have been sanctioned for violations in the last 2 years related to securities activities.
• Listing consultancy: There must be a securities company providing consultancy for the listing dossier (except in cases where the listing entity is a securities company).

2.2. Re-Listing Process and Procedures 

The re-listing process includes the following steps: (Article 122 of Decree 155/2020)

• Preparing the listing application (Clause 2, Article 110 of Decree 155/2020):
  • Listing registration form as per Form No. 28;
  • The shareholder register was created 1 month prior, along with the list of major shareholders, strategic shareholders, insiders, and related persons;
  • Shareholder commitment according to legal requirements;
  • Listing consultancy agreement, except when the listing entity is a securities company;
  • Business registration certificate, establishment and operation license, or equivalent legal documents;
  • Financial statements for the last 2 years before the listing registration of the listing entity.
  • The decision from the General Meeting of Shareholders approving the listing.
  • Listing prospectus as per Form No. 29.
• Submitting the re-listing application to the Stock Exchange:
  The Stock Exchange, after approving the listing, must send a copy of the listing application to the State Securities Commission (SSC). (Clause 4, Article 110 of Decree 155/2020)
• Completing the re-listing process (Article 111 of Decree 155/2020):
  • The Stock Exchange issues a decision to approve the listing; if rejected, a written response must be provided with clear reasons.
  • Deadline: 30 days from the date of receiving a complete and valid listing application.
  • Within 90 days from the approval date, the listing entity must begin trading the securities.

3. Conclusion and Recommendations

The recovery process after delisting requires effort and perseverance from the company. Companies need to:

Build a comprehensive and feasible recovery strategy

• To regain investor and market trust, the company must clearly define recovery goals, analyze the causes of delisting, and establish a specific action plan.
• This strategy should align with the current situation and long-term potential of the company

Implement restructuring systematically

• The company must review its financial structure, business operations, and internal organization to optimize resources.
• Restructuring may involve handling overdue debts, cutting unnecessary costs, or redefining the business model to improve operational efficiency.

Focus on improving corporate governance

• The company needs to enhance governance quality by establishing transparent, clear policies in compliance with legal regulations.
• At the same time, effective participation of the Board of Directors, Supervisory Board, and other management departments is crucial.

Maintain transparency in operations and information

• Transparency is key to rebuilding trust with shareholders and investors.
• The company must fully comply with information disclosure obligations, providing timely and accurate updates on financial status, business operations, and strategic plans.

Note: The company should consult legal experts and financial partners from HMLF to devise the most suitable recovery strategy based on the actual situation.

Harley Miller Law Firm “HMLF”

• Address: 14th floor, HM Town Building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
• Phone: +84 937215585
• Website: hmlf.vn
• Email: [email protected]