Can FDI enterprises invest in securities in Vietnam?

Can FDI enterprises invest in securities in Vietnam?

Pursuant to Clause 1, Clause 2, Clause 3, Article 138 of Decree 155/2020/ND-CP on securities investment by foreign investors, as follows:

1. Foreign investors may make investment on the securities market of Vietnam in the following manners:

a) Direct investment and trading on the securities market of Vietnam under the securities and securities market laws;

b) Indirect investment by entrusting a securities investment fund management company or the branch in Vietnam of a foreign fund management company.

2. 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.

3. 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.

Thus, if the company only buys stocks and bonds, there is no need to apply for a corresponding establishment license in Vietnam. However, they must comply with regulations for economic organizations with foreign capital when participating in the stock market such as having to register a securities trading code with the VVSDCC in advance when investing.

What is foreign ownership ratio in the securities market of Vietnam?

In Article 139 of Decree 155/2020/ND-CP stipulating foreign ownership ratio in the securities market of Vietnam:

1. Maximum foreign ownership ratio in a public company:

a) If the business lines of the public company are regulated by a treaty to which Vietnam is a signatory, the treaty shall apply;

b) If the business lines of the public company is regulated by regulations of law which specify foreign ownership ratio, these regulations shall apply;

c) 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;

d) 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;

d) 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;

e) 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 GMS and specified in its charter.

2. If the equitized enterprise is listed or registered on the securities market, its foreign ownership ratio shall comply with equitization laws. In case foreign ownership ratio is not provided for by equitization laws, regulations of Clause 1 of this Article shall apply.

3. Foreign investors may invest without limits into debt instruments of the Government, government-backed bonds, municipal bonds, corporate bonds, fund certificates, shares of investment companies, derivative securities, DRs and secured warrants, unless otherwise prescribed by relevant laws.

4. In case of issuance of shares, convertible bonds, warrant-linked bonds, ETF certificates, secured warrant, DRs, the issuer shall ensure that foreign ownership ratio is conformable with Clause 1 and Clause 2 of this Article after issuance, conversion of bonds into shares, upon the expiration of the time limit for purchase of shares, upon conversion of fund certificates into shares, execution of warrants, transfer of shares to the issuer of DRs.

5. In case the foreign ownership ratio in a public company exceeds the limit specified in Clause 1 of this Article, 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 of this Article, except receipt of dividends in shares or purchase of shares during the follow-on offering by existing shareholders.

According to this Article, when you are the owner of a foreign company that wants to invest and do business in Vietnam, the foreign ownership ratio in the securities market of Vietnam is determined as prescribed above.

Best Regards!