In a significant move to bolster the integrity and transparency of the securities market, a series of comprehensive amendments and additions have been made to the Securities Law. These changes, which take into effect from January 1, 2025, aim to enhance regulatory oversight, define market manipulation, and protect investors' rights. Here's a detailed look at the key updates:
Defining Market Manipulation
One of the most critical updates is the addition of Clause 49 to Article 4, which clearly defines market manipulation. This includes actions such as:
Strengthening Regulatory Oversight
The amendments to Article 9 enhance the roles of the Vietnam Stock Exchange and its subsidiaries in managing, inspecting, and supervising securities operations.
Clarifying Foreign Investor
Article 11 has been updated to define foreign investors as individuals with foreign nationality or organizations established under foreign laws investing in Vietnam.
Participation of Investors in the Private Bond Market
Organizational professional securities investors are permitted to buy, trade, and transfer private corporate bonds. Individual professional securities investors are allowed to buy, trade, and transfer private corporate bonds that have a credit rating and are secured by assets, or have a credit rating and are guaranteed by a financial institution.
Ensuring Accurate Reporting
A new Article 11a establishes the responsibilities of organizations and individuals in preparing and verifying securities-related reports.
Organizations and individuals preparing securities reports must ensure legality, accuracy, truthfulness, and completeness. Verifiers are also legally responsible. Information must be clear and comprehensive.
Authorities only assess the validity of provided documents and are not responsible for violations before or after submission. Valid reports must include all required papers and fully declared content.
Consulting organizations and professionals must be honest, cautious, and comply with laws. They are responsible for verifying information and ensuring careful analysis. They are legally accountable within their consulting scope.
Approved auditing organizations and auditors must follow independent auditing laws and standards. They are responsible for their opinions on the truthfulness and reasonableness of audited data and must comply with assurance service standards.
Public Offering Requirements
Article 15 sets minimum thresholds for public offerings aimed at project funding. At least 70% of shares must be sold to investors, with plans to cover any shortfall. Article 18 requires audited reports on charter capital for initial public offerings.
Suspension and Cancellation of Private Placements
New Articles 31a and 31b give the State Securities Commission the authority to suspend or cancel private placements under conditions like misinformation or legal violations. Suspensions can last up to 60 days, and companies must announce suspensions and refund investors if requested. Cancellations occur if issues are not resolved within the suspension period or if violations are found post-offering.
Public Company Criteria
Article 32 updates the criteria for public companies, including having a charter capital of at least 30 billion VND and at least 10% of voting shares held by 100 non-major shareholders. The Minister of Finance will detail the registration process for public companies.
Audit Requirements
Article 33 mandates independent audits for financial statements and capital contributions for companies registering as public companies.
Share Buybacks and Capital Increases
Article 36 specifies that companies must report buybacks of employee shares at the nearest annual general meeting and are not required to reduce charter capital for these buybacks. Article 37 states that public companies cannot increase charter capital within six months of completing a share buyback, except for specific cases like employee share buybacks or correcting trading errors.
Delisting Conditions
Article 38 outlines conditions under which a public company may lose its public status, including failing to meet public company criteria, not disclosing audited financial reports or annual general meeting resolutions for two consecutive years, and not registering shares with the Vietnam Securities Depository or listing on the stock exchange within one year of becoming a public company. Companies must report to the State Securities Commission within 15 days of failing to meet criteria and may have their public status revoked if not compliant within a year.
Clearing and Settlement
Article 55 allows the Vietnam Securities Depository to establish subsidiaries to perform some of its functions. Article 56 states that clearing and settlement of securities transactions, including derivatives, must be conducted through the Vietnam Securities Depository or its subsidiaries. Article 63 reinforces that clearing and settlement activities must be performed by the Vietnam Securities Depository or its subsidiaries.
Miscellaneous Amendments
Various clauses are repealed or amended to streamline and update the securities law framework. This includes repealing Article 23, Clause 3 of Article 48, and Clauses 4 and 5 of Article 135, and adding the phrase "and its subsidiaries" to certain clauses to reflect the expanded role of the Vietnam Securities Depository and its subsidiaries.
These amendments represent a significant step forward in enhancing market transparency, protecting investors, and ensuring the integrity of the securities market in Vietnam. By clearly defining market manipulation, strengthening regulatory oversight, and ensuring accurate reporting, these changes aim to create a more robust and trustworthy market environment.
