Vietnam: What to do in case the foreign ownership ratio in a public company exceeds the limit?
Can foreign investors directly invest in securities on the securities market of Vietnam?
According to the provisions of Article 138 of Decree No. 155/2020/ND-CP on this content as follows:
Foreign investors may make investment on the securities market of Vietnam in the following manners:
+ Direct investment and trading on the securities market of Vietnam under the securities and securities market laws;
+ Indirect investment by entrusting a securities investment fund management company or the branch in Vietnam of a foreign fund management company.
- In case of direct investment mentioned in Point a Clause 1 of this Article, the foreign investor must apply for a securities trading code at VSDCC before making investment. In case of indirect investment mentioned in Point b Clause 1 of this Article, the securities investment fund management company or the branch in Vietnam of a foreign fund management company entrusted by the foreign investor shall apply for the securities trading codes in accordance with Point d and Point dd Clause 2 Article 145 of this Decree.
- The foreign investor may open a securities trading account and make investment immediately after the securities trading code is issued in the form of an electronic confirmation.
- The foreign investor may select a representative trader in Vietnam who:
+ is not serving an imprisonment sentence or banned by the court from business operation;
+ has securities-related qualifications, including: certificate of basic training in securities and securities market, certificate of training in securities and securities market laws; and
+ is the sole representative trader in Vietnam of the foreign investor and is authorized by the foreign investor in writing.
- Foreign investors, their representative traders, securities companies, securities investment fund management companies, branches of foreign securities investment fund management companies that provide services for foreign investors shall comply with regulations of law on foreign ownership ratio when making investment on the securities market of Vietnam.
Vietnam: What to do in case the foreign ownership ratio in a public company exceeds the limit?
What are the regulations on the maximum foreign ownership ratio in a public company in Vietnam?
According to the provisions of Clause 1, Article 139 of Decree No. 155/2020/ND-CP, the maximum foreign ownership ratio in a public company in Vietnam is determined as follows:
+ If the business lines of the public company are regulated by a treaty to which Vietnam is a signatory, the treaty shall apply;
+ If the business lines of the public company is regulated by regulations of law which specify foreign ownership ratio, these regulations shall apply;
+ If the business lines of the public company are on the negative list of market access, regulations on foreign ownership ratio of each category shall apply. If foreign ownership ratio limits are not specified, the maximum foreign ownership ratio in the company shall be 50% of charter capital;
+ If the public company does not fall into any of the cases specified in Points a, b, c Clause 1 of this Article, there is no maximum limit for foreign ownership ratio;
+ In case the public company has multiple business lines that are subject to different foreign ownership ratio limits, the foreign ownership ratio must not exceed the lowest limit among them;
+ In case the public company imposes a foreign ownership ratio limit that is lower than that specified in Point a, b, c, d, dd Clause 1 of this Article, it must be approved by the General Meeting of Shareholders and specified in its charter.
What to do in case the foreign ownership ratio in a public company exceeds the limit?
According to the provisions of Clause 5, Article 139 of Decree No. 155/2020/ND-CP on this content as follows:
- In case the foreign ownership ratio in a public company exceeds the limit specified in Clause 1 Article 139 of Decree No. 155/2020/ND-CP, it must ensure that foreign ownership ratio in the company does not increase. Unless otherwise prescribed by relevant laws, shareholders of a public company that are foreign investors and business organizations in which foreign investors hold more than 50% of charter capital may only sell their shares until the foreign ownership ratio in the public company is conformable with Clause 1 Article 139 of Decree No. 155/2020/ND-CP, except receipt of dividends in shares or purchase of shares during the follow-on offering by existing shareholders.
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