Experts oppose to private placement of start-ups

The regulation on the private placement shares of a start-up company is sparking opposing public opinions as the regulation can pose potential risks and create overlaps with other laws.

Experts oppose to private placement of start-ups

The amended draft law on securities, expected to be approved by the National Assembly meeting in May, regulates the private placement shares of a start-up company is directly detailed and monitored by the Government.

Private placement is the sale of an issue of debt or equity securities to a single buyer or to a limited number of buyers without a public offering.

According to the Ministry of Finance, the drafting agency of the new law, the regulation aims to create a legal basis for start-up enterprises to conduct private placement, facilitating the creation of a capital channel for start-ups, allowing them to access capital right from the very first stages, ensuring equality between businesses.

But many experts expressed their objection or urged for more careful consideration when including the regulation in the new law.

Vu Bang, former Chairman of the State Securities Commission suggested clarifying the scope and scale of start-up enterprises subjected to the regulation to avoid overlapping with the provisions of Law on Support for Small- and Medium-sized Enterprises.

“It is very risky to allow a start-up to list on the stock market when it is not ready because in most of cases, only the State or the angel funds could sponsor the firms when they first introduce their business idea,” Bang said.

 

“In developed countries, if the start-up can prove their effectiveness, the venture capital funds will provide finance support in the second stage, and after that, if the business grows well, it will be approved for listing.”

He added that start-ups, especially technology-based enterprises, needed huge capital with many unique ideas and many countries support them by opening up a secondary market for them to trade, Viet Nam can also consider this idea.

Meanwhile, according to Le Xuan Nghia, a member of the Prime Minister's Economic Advisory Group, countries seeing start-ups flourish such as Finland, Israel or South Korea allow the firms to list shares on the stock market.

“However, they have a firm scientific and technical base, advanced education and training system,” Nghia said.

“Meanwhile, we still have many limitations. A large number of business leaders in our country still lack legal knowledge, corporate culture as well as social knowledge.

“Therefore, it is very risky for these enterprises to participate in the stock market, at this time, we should only let them join the secondary market,” Nghia said.

In Ireland, the Government often holds a stake of about 70 per cent of capital in start-up enterprises. But when the Government wants to withdraw capital from these firms, they must prepare procedures for the businesses to list on the stock market and must strictly comply with the standards of the stock exchange, Nghia said. — VNS

 
 

Other News

.
Mobile World tries different development models, closes some chains
Mobile World tries different development models, closes some chains
BUSINESSicon  01/08/2020 

The Gioi Di Dong (Mobile World) has seen its key brands such as The Gioi Di Dong, Dien May Xanh and Bach Hoa Xanh growing rapidly, but has also had to shut down ineffective business chains.

Startups in HR receive millions in funding despite Covid-19
Startups in HR receive millions in funding despite Covid-19
BUSINESSicon  01/08/2020 

Nearly all businesses are experiencing hardships because of Covid-19. However, this hasn't happened with startups in the HR industry. They are still receiving millions of dollars worth of funding.

Vietnam to pilot night-time economic activities in 10 major cities
Vietnam to pilot night-time economic activities in 10 major cities
BUSINESSicon  31/07/2020 

The Government has approved a project on night-time economy development in Vietnam which will allow major cities and tourist attractions to pilot night-time services until 6 a.m.

Border trade rules to be tightened
Border trade rules to be tightened
BUSINESSicon  01/08/2020 

Tran Quoc Toan, Deputy Director-General of the Import-Export Department, Ministry of Industry of Trade, talks on Vietnam’s decision to gradually eliminate all temporary import and re-export activities through Vietnam-China sub-border gates.

Businesses endeavour to retain employees
Businesses endeavour to retain employees
BUSINESSicon  31/07/2020 

More than 7.8 million workers lost their jobs in the first half of 2020, putting severe pressure on labour authorities to tackle social security issues.

Booming gold market risky for individual investors: experts
Booming gold market risky for individual investors: experts
BUSINESSicon  31/07/2020 

The recent surge of gold prices may cause risks for individual buyers, experts and analysts have warned.

Vietnam to post world’s fifth-highest economic growth: WB
Vietnam to post world’s fifth-highest economic growth: WB
BUSINESSicon  31/07/2020 

Vietnam is projected to be the fifth highest-growing economy in the world this year and the country has a unique opportunity to increase its footprint in the global economy in both trade and investment, 

Pharma firms uphold fair price mechanisms
Pharma firms uphold fair price mechanisms
BUSINESSicon  31/07/2020 

Amid Vietnam’s upcoming new rules on drug tenders, multinational pharma giants are advocating price negotiation for an open business environment and predictable policies, in order to make sustainable future investments.

Vietnamese goods face tough road to foreign markets due to trade remedies
Vietnamese goods face tough road to foreign markets due to trade remedies
BUSINESSicon  31/07/2020 

With an array of free trade agreements (FTAs) inked and coming into force, countries around the world have also increased technical barriers to protect their domestic industries,

Block 114 – bright spot in offshore exploration
Block 114 – bright spot in offshore exploration
BUSINESSicon  31/07/2020 

Block 114 is located in Song Hong Basin, offshore Vietnam’s northern continental shelf, about 65km from Quang Tri province, and 86km from Da Nang city in the central region.

Vietnam gains $6.5 billion trade surplus in 7 months
Vietnam gains $6.5 billion trade surplus in 7 months
BUSINESSicon  31/07/2020 

Vietnam achieved a trade surplus of $6.5 billion in the first seven months of this year, including $1 billion in July, according to the General Statistics Office (GSO).

M&A activity expected to set new records in post-COVID period
M&A activity expected to set new records in post-COVID period
BUSINESSicon  31/07/2020 

Analysts believe that new records in the number and value of M&A deals will be set in the post-Covid-19 period.

Vietnam preparing international labour resources
Vietnam preparing international labour resources
BUSINESSicon  30/07/2020 

Vietnam’s labour sector is strongly integrating globally. 

Foreign investors pledge some US$19 billion into Vietnam
Foreign investors pledge some US$19 billion into Vietnam
BUSINESSicon  30/07/2020 

Despite the impact of the Covid-19 pandemic, new foreign investment approvals in Vietnam reached some US$18.8 billion between January and July, inching down by a mild 6.9% year-on-year.

Japanese praise Vietnam's investment environment
Japanese praise Vietnam's investment environment
BUSINESSicon  31/07/2020 

Japanese businesses in Vietnam say the country is a safe and successful destination for investors.

Banks forecast lower profit and credit growth rates
Banks forecast lower profit and credit growth rates
BUSINESSicon  30/07/2020 

Domestic activities have returned to normal, but Vietnam’s major partner economies are still affected by the Covid-19 pandemic.

Chinese lending apps leave Vietnam quietly
Chinese lending apps leave Vietnam quietly
BUSINESSicon  30/07/2020 

Vietnam’s fintechs have discovered that some Chinese apps which have lent money at exorbitant fees have been leaving Vietnam quietly.

Firms to re-enter COVID-19 prevention mode
Firms to re-enter COVID-19 prevention mode
BUSINESSicon  30/07/2020 

As soon as the first cases of SARS-CoV-2 were confirmed in Da Nang and Quang Ngai, many firms have re-implemented pandemic prevention measures starting early this week.

Pepper export turnover hits $385 million by mid-July
Pepper export turnover hits $385 million by mid-July
BUSINESSicon  29/07/2020 

Vietnam exported over 182,000 tonnes of pepper worth 385 million USD as of mid-July, according to the General Department of Customs.

ASEAN membership fuels Vietnam’s trade with regional markets
ASEAN membership fuels Vietnam’s trade with regional markets
BUSINESSicon  29/07/2020 

Vietnam’s participation in ASEAN 25 years ago has helped the country enjoy strong growth in trade with other member nations.

 
 
 
Leave your comment on an article

OR QUICK LOGIN