As from 1 January 2007, Vietnam's securities market is governed by a new Law on Securities. This Law regulates activities being public offers of securities, listing and trading securities, conducting business and investing in securities, securities services and the securities market.
A public offer of securities is an offer for sale of securities via one of the following methods:
(i) Via the mass media, including the internet;
(ii) An offer for sale of securities to one hundred (100) or more investors excluding institutional securities investors; or
(iii) An offer for sale to a number of undefined investors.
Securities offered to the public in the territory of Vietnam must be denominated in Vietnamese dong. An issuing company conducting a public offer of securities must register with the State Securities Commission (SSC)
Securities can be listed on the Stock Exchange or Securities Trading Center if certain conditions are met. In general, the requirements for listing on the Stock Exchange are higher than those for the Securities Trading Center. A company listing securities on the Stock Exchange or Securities Trading Center must register with such Stock Exchange or Securities Trading Center, respectively.
The conditions for listing shares on the Stock Exchange are, among others, (i) the shareholding company must, at the time of registration for listing, have a minimum amount of paid-up charter capital of 80 billion Vietnamese dong calculated at the value recorded in the accounting books, (ii) business operations in the two consecutive years immediately preceding the year of registration for listing must have been profitable, and there must not be accumulated losses calculated up to the year of registration for listing, and (iii) at least 100 shareholders must own at least 20% of the voting shares in the company. The conditions for listing shares on the Securities Trading Center are among others (i) the shareholding company must, at the time of registration for listing, have a minimum amount of paid-up charter capital of 10 billion Vietnamese dong calculated at the value recorded in the accounting books, (ii) business operations in the year immediately preceding the year of registration for listing must have been profitable, there must not be debts which have been overdue for more than one year, and all financial obligations to the State must have been discharged, and (iii) at least 100 shareholders must own voting shares in the company.
The law also sets certain conditions for listing bonds on the Stock Exchange and the Securities Trading Center, namely the amount of paid up capital at the time of registration for listing bond, profitable business operations, and fulfillment of all financial obligations to the State.
A securities company or a fund management company with foreign owned capital in Vietnam shall be permitted to be established in the form of a joint venture (with Vietnamese entities) or 100% foreign owned company. The State Securities Commission issues a license for establishment and operation of a securities company or a fund management company with foreign owned capital. A foreign securities trading company may purchase shares of an existing Vietnamese securities company or an existing Vietnamese fund management company. The foreign shareholding cap applicable to a joint venture or a purchase of shares of an existing company is 49%.
A foreign securities company or a foreign fund management company may also establish its branch or representative office in Vietnam upon obtaining a license from the State Securities Commission. Unlike a branch, a representative office shall not be permitted to conduct securities business activities.
The main condition for establishment of a securities company or a fund management company with foreign owned capital, or a branch of a foreign securities company or a foreign fund management company, is the legal capital (i.e. the minimum capital). The required legal capital for each type of business of a securities company with foreign owned capital or a branch of a foreign securities company in Vietnam shall be as follows:
(i) Brokerage: 25 billion Vietnamese dong;
(ii) Self-trading: 100 billion Vietnamese dong;
(iii) Underwriting: 165 billion Vietnamese dong; and
(iv) Securities investment consultancy: 10 billion Vietnamese dong.
The required legal capital of a fund management company with foreign owned capital and of a branch of a foreign fund management company in Vietnam shall be 25 billion Vietnamese dong.
Securities investment funds shall comprise public funds and members funds. A public fund is a securities investment fund which makes a public offer of the fund certificates. A members fund is a securities investment fund with no more than 30 capital contributing members all of which must be legal entities.
The establishment of a public fund must be registered with the State Securities Commission. The establishment of a members fund by a fund management company must be reported to the State Securities Commission.
Securities investment companies shall be organized in the form of shareholding companies, comprising the following types:
(i) A public securities investment company which conducts public offers of shares; or
(ii) A securities investment company which conducts private placement of shares.
The State Securities Commission shall issue licenses for the establishment and operation of a securities investment companies. Such licenses shall act concurrently as business registration certificates.
