VGP – The Ministry of Finance on August 19, 2015 issued Circular No. 123/2015/TT-BTC guiding foreign investment activities in Vietnamese stock markets.
Question: What are the regulations on foreign investment activities in the Vietnamese stock markets?
1. Simplification of procedures for securities transaction registration for foreign investors
The first key amendment in Circular 123 is the simplifying of procedures for registering securities transaction codes in Viet Nam.
English documents or English translations which have been notarized and authenticated in a foreign law do not need to be translated into Vietnamese. Accordingly, the compulsory provisions on legalizing these documents have also been abolished. Other documents in a foreign language shall be translated into Vietnamese by the depository member or translation organization operating lawfully in Viet Nam.
Circular 123 has also reduced the period for issuing foreign investor securities transaction codes to one working day rather than the 3-5 working days as per the current regulations. Within one working day of receipt of the information declared by the depository members, the Viet Nam Securities Depository shall issue and give an electronic certification on securities transaction codes for foreign investors through depository members on the system for an online securities transaction code. Foreign investors shall implement procedures for opening securities trading accounts and making investments immediately after the Viet Nam Securities Depository’s issuance of securities transaction codes in the form of electronic certification.
Foreign ownership percentage in Vietnamese stock markets
According to Circular 123, public companies are responsible for determining by themselves the lines of business investment and maximum foreign ownership percentage therein. In the case of the foreign ownership ratio exceeding the cap allowed by law, public companies and concerned individuals or organizations shall ensure there is no increase in foreign ownership in their companies. The list of conditional business investment lines and foreign ownership percentage of each line of business investment shall comply with the International Treaty, the Law on Investment, the Law on Enterprises and other related regulations.
For public companies unrestricted on foreign ownership ratio as stipulated in Decree 60/2015/ND-CP of the Government, if they want to restrict foreign ownership in practice, they shall specify the foreign ownership ratio in their company charter.
Procedures for reporting foreign ownership percentage in public companies
A public company whose activities lead to the altering of the foreign ownership ratio shall fulfill the obligation to report and disclose information as required by law. The application dossier to report foreign ownership percentage shall be sent to the State Securities Commission (SSC) including written notice of the maximum foreign ownership ratio in the company together with valid copies of their Establishment and Operation License, Business Registration Certificate, Enterprise Registration Certificate and additional documents.
After SSC’s confirmation on the Public Company’s report submission on foreign ownership ratio, the Company shall inform the Stock Exchange (as a company listed and having registered for trading) and Viet Nam Securities Depository of foreign ownership percentage therein. Foreign investors are eligible to trade securities in line with the maximum foreign ownership ratio shortly after the Public Company officially announces it.
4. Procedures for approving foreign institution ownership of 51% or more of the charter capital of a securities trading organization
Foreign organizations meet the legal requirements and want to own 51% or more of the charter capital of a securities trading organization, shall send their proposal submission through such organizations for SSC approval. After SSC consideration and approval of a foreign institution owning 51% of the charter capital in a securities trading organization, the foreign institution shall not make a request for approval from the SSC in cases where its transactions after its ownership percentage in the securities trading organization, including any public offer for sale or purchase under Circular 123.
Circular 123 shall take effect from October 1, 2015./.
Source: VGP News - news.chinhphu.vn