Vietnam Lifts Foreign Ownership Cap on Public Companies

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analysis-680565_640New doors are being opened to foreign investors with the lifting of the foreign equity ownership cap on public companies on September 1, when Decree No. 60/2015/ND-CP comes into effect. The Decree provides guidance on the implementation of a number of articles of the Law on Securities.

Starting from September 1, foreign investors are permitted to buy shares and own charter capital without any cap if:

  • their organization has been operating in the banking, insurance or securities sectors for at least two consecutive years before contributing capital to establish the organization or purchasing shares and contributed capital; and
  • agencies specialized in banking, securities, and insurance overseas have signed either bilateral or multilateral agreements on information exchange, management, inspection and supervision of securities activities and securities market with the State Securities Commission.

Organizations which do not meet the above requirements and individuals may only own under 51 percent charter capital of a securities trading organization.

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Most public companies are no longer subject to any foreign equity caps unless they are:

  • operating in a sector with a foreign equity limit specified in an international agreement with Vietnam;
  • operating in a sector that is subject to legal restrictions on its foreign ownership ratio;
  • operating in multiple industries with differing regulations regarding foreign equity cap.

Under Decree No.60, foreign investors are permitted to invest in stocks of securities investment companies or non-voting shares of public companies with no restrictions. However, the maximum total shareholding level of foreign investors still may not exceed 30 percent of the charter capital of Vietnamese commercial banks.

The foreign ownership ratio is defined as the equity held by foreign investors or by any organizations established in Vietnam, of which 51 percent of its charter capital is owned by foreign investors.

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As with the new Law on Enterprises and Law on Investment, which took effect this July, this long-awaited Decree is another key step in Vietnam’s opening up to foreign investors.

In June alone, the Vietnam Securities Depository (VSD) issued trading codes for 81 foreign investors, including 15 organizations and 66 foreign individual investors.

While Vietnam is still classified as a frontier market, this easing of foreign ownership restrictions will help build its case for an upgrade in its classification to an emerging market. When it was announced that MSCI would consider Qatar and the UAE as emerging markets in 2013, their benchmark equity gauges jumped at least 38 percent in the following twelve months.


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