Investors during a trading session on the VNDirect Stock Exchange Floor (Photo: VNA) Hanoi (VNS/VNA) - The new amended draft law onsecurities allowing full foreign ownership at public companies and investmentfunds would help Vietnam’s securities market be included in the Morgan StanleyCapital International (MSCI)’s review list for a potential reclassification toEmerging Markets status.
The draft removed limits on how many voting shares foreigninvestors can buy in public Vietnamese companies. Previous regulations hadcapped foreign ownership at 49 percent.
The State Securities Commission (SSC) has requested publiccomments because this is a specialised law and revision would take time.Agencies, organisations and individuals can submit their comments.
According to MSCI’s recently published Market Rank Report,the Vietnamese market needs to improve on several issues, one of which refersto the foreign ownership limit in Vietnamese companies.
According to MSCI, the stock market is significantly impacted by foreignownership issues.
The report suggests relaxing the limit on foreign ownershipand accelerating the divesting of State capital in State-owned enterprises tofurther broaden the investment scale for foreign investors.
MSCI’s report also evaluates the limits of foreign ownershipin public companies operating in business lines and sectors for which the lawshave specific provisions on the foreign-ownership ratio.
For State owned enterprises conducting public offers ofshares in order to equitise, the foreign ownership ratio must comply with thelaws on equitisation.
Foreign investors are entitled to conduct unrestrictedinvestment in Government bonds, Government guaranteed bonds, local authoritybonds and enterprise bonds, except when the laws or the issuing organisationshave some other provisions.
Foreign investors are entitled to conduct unrestrictedinvestment in certificates of securities investment funds, shares of securitiesinvestment companies, shares without voting rights of public companies,derivative securities, and depository receipts, except when the charter ofissuing organisation has other provisions.
Except for open funds, securities investment funds havingforeign ownership ratios of 51 per cent or more must comply with requirementsand procedures for investment under the regulations on contributing capital,purchasing securities, or capital contribution portions of economicorganisations by foreign investors.
Statistics from the SSC show that the value of foreigninvestors’ investment portfolios reached 34.2 billion USD by the end of July.
As planned, the new amended draft Law on Securities will besubmitted to the Government in the second quarter of 2019 and submitted to theNational Assembly for consideration and approval in the fourth quarter of 2019.
The foreign ownership ratio is the total ownership ratio ofshares, capital contribution portions with voting rights of all foreigninvestors and economic organisations having foreign investors holding 51 percentor more of charter capital in any one public company, securities businessorganisation or securities investment fund.
Foreign investor means an individual having foreignnationality, or an organisation established under foreign laws and doinginvestment and business in Vietnam.-VNS/VNA
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