Capital Markets

Vietnamese capital markets are divided into two categories: the primary market, where newly issued securities are bought and sold; and the secondary market, where securities are bought or sold after initial sale in the primary market.

The secondary market in Vietnam was first launched on 28 July 2000. Currently, there are two trading centers including the Ho Chi Minh City Stock Exchange (“HOSE”), which was the first to open in July 2000, and the Hanoi Stock Exchange (“HNX”), which opened in March 2005. The types of securities that are traded on the two exchanges are limited to ordinary shares, fund certificates and bonds.

All securities of unlisted public companies must be registered at the Vietnam Securities Depository and transacted through securities houses. The registered public companies are responsible for making disclosures as required by law.

The State Securities Commission (“SSC”), established in November 1996, is the primary supervisory body over the capital markets and their participants. The SSC is the body that licenses securities business, approves public offers of securities and takeovers, oversees management of the markets and market players and investigates breaches of, and enforces, the securities laws.

The key legal framework for the securities market operation is the 2006 Securities Law as revised in 2010. In addition, more than 40 effective legal documents have been issued, specifying market regulations in details.

Conditions for a public offer of securities

Under the securities law, issuing companies must comply with certain requirements in order to launch a public offer of securities. The requirements differ subject to the types of securities. Particularly, an issuing company must have at the time of registration of the offer at least VND10 billion in paid-up charter capital (for public offer of shares or bonds) and VND50 billion (for public offer of fund certificates). Business operation in the year previous to the offer must have been profitable. And there cannot be any accumulated losses calculated up to the year of registration of the offer. There must also be an issue plan and a plan for utilization of the proceeds earned from the offer, passed by the general meeting of shareholders (for public offer of shares) or by the board of management or the members’ council or the company owner (for public offer of bonds).

Restriction on Foreign Participation

Within the first 5 years from the date of Vietnam’s accession to the WTO, the applicable legal form for foreign securities service suppliers to establish a commercial presence was limited to representative offices and JVs with foreign participation capped at less than 49%. From January 2012 (five years from the date of accession), securities service suppliers with 100% foreign-invested capital were permitted. 

Foreign investors purchasing or selling securities on the securities market of Vietnam are permitted to hold:

  • 100% of the total number of shares in a public company, except for the following cases:
  • If the public company engages in a business activity in respect of which foreign ownership has been agreed in an international treaty to which Vietnam is a party, then the agreed foreign ownership thresholds will be applied;
  • If the public company engages in economic sectors and/or business lines which are subject to a foreign ownership cap as specified in the Investment Law or relevant specific sector laws, such foreign ownership cap will be applied;
  • If the public company engages in sectors and/or business lines subject to conditions applicable to foreign investors but there is no specific law regulating the foreign ownership cap for such sectors and/or business lines, then the maximum ratio of foreign ownership is 49%; and
  • If the public company engages in multiple business sectors, where the foreign ownership cap may vary according to each different activity, then the most restrictive will be applied (unless otherwise provided in an international treaty);
  • A maximum 49% of the total number of investment fund certificates of any one public securities investment fund;
  • A maximum 49% of the charter capital of any one public securities investment company; and
  • Regarding bonds, the issuing organization may regulate the limits on percentage ownership of circulating bonds of such issuing organization.

Foreign investors wishing to invest in securities must first obtain a securities trading code from the Vietnam Securities Depository and open an indirect investment capital account at an appropriately authorized bank in Vietnam.

An investor may trade through a securities company, authorized transaction representative or local fund manager, depending on the investor’s desired level of supervision of their investments.

Related Chapters

Introduction to Vietnam

Culture and religion in Vietnam

Economy of Vietnam

The Government

Judiciary

Legal System

Regulatory Framework

Banking & Finance

Land & Housing

Labour Law

Taxes

Intellectual Property

Selected Sector Regulations

Dispute Resolution



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