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, covered warrants, and bonds.

All securities of unlisted public companies must be registered at the Vietnam Securities Depository and transacted through securities houses. All 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 businesses, 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 2019 Securities Law, which came into effect on 1 January 2021. In addition, there have been more than 14 legal documents issued, specifying market regulations in detail.

Conditions for a public offer of securities

Under 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, at the time of registration of an offer an issuing company must have at least VND30 billion in paid-up charter capital (for a public offer of shares or bonds) and VND50 billion (for a public offer of fund certificates). Except for certain specific cases, business operation in the year previous to the offer must have been profitable and there cannot be any accumulated losses accrued up to the year of registration of the offer. There must be an issue plan and a plan for utilization of the proceeds earned from the offer. Both plans must be approved by the general meeting of shareholders (for a public offer of shares) or by the board of management, the members’ council or the company owner (for a public offer of bonds).

Restriction on Foreign Participation

Within the first five 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 joint ventures 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 have been 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 business activity in respect of which foreign ownership percentages have been established 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 50%; 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 cap will be applied (unless otherwise provided in an international treaty);
• A maximum of 49% of the charter capital of (i) any securities investment fund management company, and (ii) any public securities investment company. However, this threshold may be lifted in special cases where the foreign investors are organizations satisfying certain conditions as specified in the 2019 Securities Law; 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.