Legal overhaul urged for foreign firms to list shares in Vietnam

Encouraging FDI firms to list locally would help supervise their performance as the companies would be managed by not only local authorities but also investors, shareholders, and the local stock exchanges.

Legal overhaul urged for foreign firms to list shares in Vietnam

A large number of foreign firms wish to be listed on Vietnam’s stock exchanges.

It is becoming an urgent need to scrutinize the legal framework related to the listing of foreign-invested firms in Vietnam’s securities market as the lagging regulations have held the firms back from their listing plans.

Though the government issued Decree No.38/2003/ND-CP ordering several foreign direct investment (FDI) firms to shift from the limited liability company to the joint-stock company model and Decision No.238/2005-TTg setting a target participation rate for FDI firms in the Vietnamese securities market, there have been less than 10 FDI firms listed on the local stock exchanges during the past 16 years.

According to lawyer Tran Minh Hai, director of law company Basico, a large number of foreign companies wish to list shares on Vietnam’s stock exchanges, but they have decided otherwise due to the lack of specific regulations on listing.

It was the case of South Korea’s Seoul Metal Vietnam, for example. Following its listing on the over-the-counter (OTC) platform in 2017, Samsung’s contractor has showed its interest in listing on the Ho Chi Minh Stock Exchange, but a lack of regulations has made the company postpone its plan until now.

Besides the lack of detailed guidance, experts said Vietnam’s laws on foreign ownership may have deterred overseas investors from joining the market.

Even after Decree No.60/2015/ND-CP on implementing the Law on Securities scrapped this limit in 2015, few FDI firms float their shares. Some speculated that although the general cap has been lifted, the 49% limit on conditional sectors may have hindered foreign corporations.

According to experts, the regulatory delay hurts the firms’ chances of raising capital in the Southeast Asian country, while also negatively affecting the budding image of Vietnam’s market as an open and welcoming destination for foreign investors.

Close supervision

 

It was believed if the government changes the legal framework on FDI businesses’ stock listing, many more foreign investors will join the local stock market both by investing in Vietnamese companies or listing their own businesses.
That will be good for Vietnam as foreign investors have been choosing Vietnam not only to set up production bases, but also to list their shares. The investors’ decision shows the attractiveness of the Vietnamese stock market besides helping the country retain the investors’ profits to re-invest in the country.

Moreover, according to Hai from Basico, paving the way for FDI firms to list locally would help supervise their performance as the companies would be managed by not only local authorities but also investors, shareholders, and the local stock exchanges.

However, to better manage the listed FDI firms, experts said that the government should carefully review FDI firms’ commitments before licensing them to be listed on the local stock exchanges. Specifically, local policymakers should clarify requirements such as the operation timeline in Vietnam; the levels of growth in output, revenue, and annual profit; and the rate of technology transfer, among others. This would help a lot in selecting strong FDI firms to participate in the Vietnamese securities market.

To more effectively supervise FDI firms’ listing activities, policymakers should also issue regulations about the timeline big shareholders are not allowed to sell their acquired stocks as some are concerned that FDI firms only list their stocks to divest from Vietnam more easily if they need to.

Tran Dinh Dung, head of the Underwriting and Financial Advisory Department at Saigon-Hanoi Securities, said that the State Securities Commission, the local stock market watchdog, needs some more detailed rules on whether the founders of FDI firms can divest from their companies, as this is related to the matter of capital outflow from Vietnam. Hanoitimes

Anh Hong

Billions of shares pending for HoSE listing

Billions of shares pending for HoSE listing

The Ho Chi Minh Stock Exchange (HoSE) is preparing to receive billions of shares after companies delayed listing plans due to poor trading conditions.

Firms rush to buy back shares following global trend

Firms rush to buy back shares following global trend

Following a global trend of share buybacks, many Vietnamese businesses are now repurchasing their own stocks to stablise prices.

 
 

Other News

.
Index results spark reforms in Vietnamese metropolises
Index results spark reforms in Vietnamese metropolises
BUSINESSicon  01/05/2021 

Despite strong efforts, major cities like Hanoi and Ho Chi Minh City are still lagging behind in the 2020 Provincial Competitiveness Index, triggering concerns over the efficacy of their reforms.

VIETNAM BUSINESS NEWS APRIL 30
VIETNAM BUSINESS NEWS APRIL 30
BUSINESSicon  30/04/2021 

Central province debuts first Ngoc Linh ginseng plant

Association calls for national gold exchange
Association calls for national gold exchange
BUSINESSicon  30/04/2021 

The Vietnam Gold Trading Association (VGTA) has proposed the establishment of a national gold exchange in Hanoi or Ho Chi Minh City.

Restaurant chains fall into crisis amid pandemic
Restaurant chains fall into crisis amid pandemic
FEATUREicon  30/04/2021 

The Tokyo Deli Restaurant on Nguy Nhu Kon Tum Street in Hanoi closed its doors two months ago for the Tet holiday, but it has now decided to never open again. The long Covid-19 pandemic has hit many restaurants hard.

Amid 'land fever', Can Gio district prohibits civil servants from working as land brokers
Amid 'land fever', Can Gio district prohibits civil servants from working as land brokers
FEATUREicon  30/04/2021 

Land prices in the HCM City suburban district of Can Gio have been soaring following the news that Can Gio will become an inner city district, or a city in the future. The local authorities have prohibited civil servants from acting as land brokers.

Vietnam’s potential to drive agri-food recovery ranks second highest in the region
Vietnam’s potential to drive agri-food recovery ranks second highest in the region
BUSINESSicon  01/05/2021 

As a key pillar of the national economy, Vietnam’s agri-food sector remained resilient during the COVID-19 pandemic and has great potential to drive economic recovery, ranking second in the region.

Multinational supply chain evades small industry
Multinational supply chain evades small industry
BUSINESSicon  29/04/2021 

Foreign investments in Vietnam have the ability to change the economics of many of the country’s support industries, who are continually struggling to be part of the larger supply network.

Four-month FDI totals $12.25 billion
Four-month FDI totals $12.25 billion
BUSINESSicon  29/04/2021 

In the first four months to April 20, foreign investors pumped 12.25 billion USD in Vietnam, equal to 99.3 percent of the amount recorded in the same period last year.

Untapped potential in branded luxury living
Untapped potential in branded luxury living
BUSINESSicon  01/05/2021 

The recent assessment of ranking Vietnam as one of the 10 fastest-growing markets for branded residences worldwide poses questions for the infant market’s actual capacity.

Hanoi developments induce delay fluster
Hanoi developments induce delay fluster
BUSINESSicon  30/04/2021 

Tens of millions of dollars poured into infrastructure together with new planning projects have added vibrancy to Hanoi’s real estate market, 

Construction firms face bankruptcy as steel prices soar
Construction firms face bankruptcy as steel prices soar
BUSINESSicon  29/04/2021 

Local construction firms face the risk of bankruptcy as the price of steel has soared 40 percent recently.

Vietnam looks to promote issuance of Gov’t bonds on int’l market
Vietnam looks to promote issuance of Gov’t bonds on int’l market
BUSINESSicon  29/04/2021 

Experts and economists have proposed to expand the issuance of Government bonds to the international market, 

Billionaire Pham Nhat Vuong builds 'entertainment city', considers billion-dollar deal in the US
Billionaire Pham Nhat Vuong builds 'entertainment city', considers billion-dollar deal in the US
BUSINESSicon  29/04/2021 

Billionaire Pham Nhat Vuong's company has recorded impressive business results despite the Covid-19 pandemic. 

Flower and ornamental plant production on the rise
Flower and ornamental plant production on the rise
BUSINESSicon  28/04/2021 

Flower and ornamental plant production has dramatically developed in recent years, bringing high economic value.

Contract enforcement, bankruptcy filings stall because of lack of regulations
Contract enforcement, bankruptcy filings stall because of lack of regulations
FEATUREicon  29/04/2021 

Vietnam’s judicial agencies seemingly cannot catch up with business environment reform. Two judicial indicators – contract enforcement and business bankruptcy – have not seen considerable improvement.

ST25 is a generic rice variety, not a brand: NOIP
ST25 is a generic rice variety, not a brand: NOIP
FEATUREicon  28/04/2021 

The National Office of Intellectual Property (NOIP) says the ST25 rice variety has been granted a Protective Certificate No 21.VN.2020 under Decision No 45/QD-TT-VPBH dated March 6, 2020 by the director of the Department of Crop Production.

49% of Vietnamese delete shopping apps on mobile devices
49% of Vietnamese delete shopping apps on mobile devices
BUSINESSicon  28/04/2021 

The increase in app deletions shows that Vietnamese e-commerce platforms need to improve the quality of services in order to retain customers.

Listed companies look to tap real estate segment
Listed companies look to tap real estate segment
BUSINESSicon  27/04/2021 

A series of listed businesses on the stock market have announced plans to expand and tap real estate investment.

More farming products sold on e-commerce sites
More farming products sold on e-commerce sites
BUSINESSicon  27/04/2021 

The e-commerce sites of Vietnam Post and Viettel Post saw 33 more suppliers of agricultural products and regional specialities open new booths in the first 10 days of April.

Recruitment demand soars in textile & garment, IT sectors
Recruitment demand soars in textile & garment, IT sectors
BUSINESSicon  27/04/2021 

The effectiveness of free trade agreements, especially the EU– Vietnam Free Trade Agreement, has helped to increase export orders for textile and garment enterprises in Vietnam, 

 
 
 
Leave your comment on an article

OR QUICK LOGIN