Vietnam to Allow Greater Foreign Holdings in Domestic Companies

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Aug. 21 – The Vietnam Government has lent support to a proposal by the Ministry of Finance and State Securities Commission allowing foreign firms a greater stake holding in listed companies. The draft proposal would amend certain regulations to allow foreigner investors to hold up to 59 percent of the charter capital of domestic companies – an increase of 10 percent on the current cap.

While the additional shares would not grant the foreign owner greater voting rights, it will allow them to increase their financial returns, encouraging greater foreign investment in Vietnam’s domestic companies.

Furthermore, in another proposed change foreign investors may now have the opportunity to purchase between 49 and 100 percent of the charter capital of a securities company. At the moment if foreigners wish to invest in a securities company, they must purchase either 49 or 100 percent of the charter capital – nothing in between.

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According to Nguyen Son, the head of the State Securities Commission’s Market Development Department, one of the main policy initiatives in the near future is to lift the permitted holdings of foreign strategic investors to 60 percent with voting rights (except in certain entities, such as banks).

The draft proposal has been submitted to the Prime Minister for approval.

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