New Minimum Capital Requirement May Soon Be Instituted for Companies Looking to List in Vietnam

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Nov. 18 – Vietnam’s State Securities Commission is looking to increase the minimum capital requirement for companies wanting to list on the nations bourses.

In a new draft currently being prepared by the stock regulator, any company that wishes to be listed on the Ho Chi Minh Stock Exchange will need to have a minimum registered capital of US$6.16 million or significantly less, US$1.54 million, if they wish to list on the Hanoi Stock Exchange.

Currently, a company must have a chartered capital of US$4.11 million to list on the HCMC bourse or US$514,000 to list on the Hanoi exchange.

The new measures are necessary to constrain poor-quality companies from listing to reduce risks for investors, according to Nguyen Hoang Hai, secretary general of the Vietnam Association of Finance Investors.

The new conditions would also promote the country’s stock market investment environment, he added.

Some expressed worry, though, that a number of companies already listed on the bourses may not be able to comply with the new requirements.

Companies listed on the HCMC and Hanoi exchanges should not be forced to move to lower-quality bourses in case they fail to satisfy the new conditions, or they will rush to issue additional shares, flooding the market said stock expert Pham Kinh Luan. Instead, he suggested that the regulators set a time frame that gives companies enough time to meet the new capital requirements.

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