State Securities Commission of Vietnam maintains stance on the self-determination of foreign ownership of enterprises

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The State Securities Commission of Vietnam maintains the stance on the self-determination of foreign ownership of enterprises.

According to the latest information from the State Securities Commission, in the final draft of aDecree detailing a number of articles in the Law on Securities 2019, the drafting agency still maintains a clause that does not empower enterprises to decide the ownership rate of foreign investors.

According to Mr. Bui Hoang Hai, Director of the Securities Offering Management Department (State Securities Commission), the draft Decree stipulates that the rate of ownership from foreign investors in public companies is unlimited, except for a number of industries that have other treaties and laws. Compared with current regulations in Decree No. 60/2015 / ND-CP, this content removes the phrase "unless otherwise provided in the company's charter". This means the draft new decree will not give public companies the right to decide on the foreign ownership ratio (not exceeding the maximum rate specified in international treaties or specialized laws) as currently.

After the publication of the draft Decree, there were many conflicting opinions from businesses, especially specific businesses such as the banking sector. Enterprises stated the reason is that they want to keep the right to decide foreign limits for plans to cooperate with strategic investors and will "get a better price" when selling to retail investors.

Explaining the reason why the State Securities Commission decided not to change this regulation in the final draft, Mr. Hai said this is firstly aimed at transparency in the market, ensuring the interests of foreign investors investing in Vietnam.

“When foreign investors invest in a business, they will have to research the market situation, have to make a specific plan and submit it to all levels. Then, when the leader makes a decision to invest in a business, the enterprise in Vietnam will submit to the General Meeting of Shareholders to lock the ownership. With this process, foreign investors will evaluate Vietnam's stock market as not transparent.”

Another reason mentioned by the State Securities Commission is to be consistent with the current legal regulations. The Law on Investment stipulates that, except for conditional business lines and industries specified in the treaties, no distinction between foreign and domestic investors, foreign investors will be allowed market access as domestic investors.

In the Enterprise Law, shares are freely transferable, except for the case specified in Clause 3, Article 119 of this Law and the company's charter provides for restrictions on share transfer. Where the company's charter provides for restrictions on share transfer, these provisions will only take effect when it is stated in the shares of the respective shares. Therefore, if empowering businesses to lock foreign limits themselves, it will limit the freedom of transfer of company shareholders.

“The drafting agency removes the phrase"unless otherwise provided in the company's charter"and believes this is consistent with the current regulations. Currently, there are still many different opinions, and these views were expressed in the Conference on the appraisal of the draft Decree of the Ministry of Justice. Up to now, we have not received a final evaluation opinion of the Ministry of Justice, when officially received, we will decide whether to adjust or not,” said Mr. Bui Hoang Hai.