Currently, there are two securities trading centers for listed companies in the country namely the Ho Chi Minh City Stock Exchange (“HOSE”), which was the first to open in July 2000, and the Hanoi Stock Exchange (“HNX”), which was opened in March 2005. The types of securities that are currently traded on the two exchanges are limited to ordinary/common shares, fund certificates, covered warrants, and bonds only.

Only JSCs can become a public company and a listed company. A public company means a company which has successfully completed an initial public offering (IPO) after meeting certain statutory conditions such as minimum capital and number of investors, etc. Thereafter, a public company may list its shares at HOSE or HNX (to become a listed company) if it meets the listing conditions of a particular exchange. All securities of unlisted public companies must be registered at the Vietnam Securities Depository and transacted through securities firms. All public companies are responsible for making disclosures as required by law.

The State Securities Commission (“SSC”) under the Ministry of Finance, established in November 1996, is the primary supervisory body over the capital markets and their participants. The SSC is the body that licenses securities firms, approves IPOs, oversees the financial markets and market players, and enforces the securities laws.

The key legislation for the securities market operation is the Law on Securities of 2019 (“2019 Securities Law”), which came into effect on 1 January 2021, and its guiding legislation.

Conditions for A Public Offer of Securities

Under securities law, issuing companies must comply with certain requirements for 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 before the offer must have been profitable and no accumulated losses accrued up to the year of registration of the offer. In addition, an issuer must have a plan for issuance and another 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 bonds of a JSC) or by the board of management, the members’ council (i.e., the corporate body which is comprised of the members/shareholders of a LLC) or the company owner (for a public offer of bonds of a LLC).

Restrictions on Foreign Ownership 

Within the first five years from the date of Vietnam’s accession to the WTO, foreign securities firms were allowed to establish a commercial presence which include representative offices and JVs with foreign ownership of up to 49%. From January 2012 (five years after the date of accession to the WTO), foreign securities firms with 100% foreign-invested capital have been permitted.

Foreign investors trading securities on the securities markets 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 has been specified in an international treaty to which Vietnam is a party, then the specified 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 a specific sector law, 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 caps may vary according to each different sectors, then the most restrictive cap will be applied.
• 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 a foreign investor satisfies certain conditions as specified in the 2019 Securities Law (e.g., being a professional firm and where there is a cooperation agreement between the regulator of the investor and the SSC, etc.).
• Regarding bonds, the issuing organization may specify the limits on percentage ownership of foreign investors (if any).

Foreign investors wishing to invest in securities via trading in the stock exchanges 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. In addition, a foreign investor may trade through a securities firm, representative or local fund manager, depending on the investor’s desire.