Increased Stake of Foreign Individuals and Organisations

The Prime Minister has recently issued the Decision 238/2005/QD-TTg on the stake foreign individuals and organisations can hold when they join the Vietnamese stock market. Accordingly, foreign organisations and individuals can hold maximally 49 per cent (the previous figure was 30 per cent) of total stocks, investment fund certificates, listed or registered with a listing organisation or the Securities Trading Centre. There is no limit for the holding of bonds of issuing organisations.

Foreign securities trading organisations are allowed to contribute capital, buy shares or contribute capital to set up securities companies or management portfolio management companies with a maximum stake of 49 per cent. The previous figure was put only 30 per cent.

 

For the Decision 238 to take effect in the market, Tran Xuan Ha, chairman of the State Securities Commission, said that over the past years, the commissions had sent its delegations to work with enterprises, guiding them to develop plans to join the stock market and prepare documents for the registration and listing. These include the Vietnam Milk Joint stock Company (Vinamilk), the Ho Chi Minh City Infrastructure Investment Joint venture Company, the Ho Chi Minh City Insurance Company, the Vietnam National Re-insurance Company. The Ministry of Finance has provided the State Securities Commission a list of 23 enterprises, capable of joining the stock market soon. The enterprises were selected among 253 enterprises, which have been allowed by the Decision 528/QD-TTg of the Prime Minister.

 

The State Securities Commission has assigned securities trading centres to manage transaction codes of foreign investors, cap of foreign investors’ stakes via their transaction systems. At the same time, the centres have built warning norms for transactions, co-operating with banks in managing capital inflow and outflow according to a mechanism for foreign exchange management. At the same time, centres have been guided to open transaction accounts for investors as stipulated.

The lifting of the cap on foreign investors’ stake in the stock market to a new bar is a bold decision of the Vietnamese Government to attract more foreign investment. This is also a step for the Vietnamese stock market to integrate into the international capital market, thus promoting the country’s accession to the World Trade Organisation (WTO). The decision has produced a passive effect on transactions in the market.