Based on various reliable sources Vietnam’s Prime Minister would be about to sign the latest draft regulations increasing the foreign ownership limits (“FOL”) in the Vietnam securities space.
The proposed regulations enable an increase of the FOL of listed companies in Vietnam to 60% of the total voting shares of each listed company. However each listed company would have to individually apply to Vietnam’s State Securities Commission (the “SSC”) to raise its FOL to any specific increased FOL it may select (from above 49% which is the current cap, up to 60%). This is subject to the specific FOL applicable to the business sector of the listed company at stake. This means for instance that listed banks will not be able to increase their FOL under these regulations.
The application for increase of FOL of a listed company will require shareholders’ approval, and then approvals by Vietnam’s SSC and the PM/various ministries depending on the business sector of the listed company. It is therefore not yet an automatic FOL increase across the board in all listed companies in Vietnam.
Once the proposed decision of the Vietnam Prime Minister is signed, Vietnam’s Ministry of Finance/SSC will have to passé implementing regulations as to the procedural steps for each increase of FOL by a listed company. Draft implementing regulations are apparently also in a close to final form.
The draft regulations also cap FOLs in unlisted public companies at 49 % of the voting shares of that entity (currently cap is at 49% of the total shares) and remove the cap for non-voting shares (preference shares).
Additionally the proposed regulations provide that foreigners can hold up to 100% of the investment fund certificates of investment funds other than public investment. In respect of the latter the FOL remain at 49%.
The draft regulations also confirm the position already stated in a decree of last year (in line with the WTO commitments of Vietnam) that qualified foreign investors can hold 100% of a securities business in Vietnam.
As always things can change until one can see the signed version of the regulations but it appears that this draft is the result of a number of drafts that have been circulated and substantially debated, and would be final.
For any questions or additional information:
– Partner, Managing Director Vietnam, Jerome Buzenet
– Partner, Hoang Phong Anh