Proposed Law on Securities May Restrict Private Offerings

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Sept. 21 – A proposal to make changes to the Law on Securities may restrict activity for private stock offerings as part of efforts to shield shareholders.

According to the revisions, a private offering is banned from occurring within six months of a previous private offering. Private offering investors also will be required to hold on to their shares for a minimum of a year.

The changes will also block private offerings from happening before an initial public offer. “The regulations will reduce risks to existing shareholders and balance the interests of all investors,” said Nguyen Huy Duong, Hoa Binh Securities deputy director.

“Every offering causes dilution,” said Mekong Bank Securities Co analyst Hoang Thach Lam. “The thing we should consider is the cost of the dilution.”

Lam suggests that changes to the securities law should force executive boards to publish details that tackle important business issues like target objects and price to allow shareholders to be better informed.

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