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Regulatory sandbox added
Alongside amendments aimed at promoting information technology application and digital transformation and bringing securities and securities market operations into closer alignment with international standards, the latest draft Law Amending and Supplementing a Number of Articles of the Securities Law introduces a legal framework for a regulatory sandbox.
Under the draft, a regulatory sandbox in the securities sector is a mechanism under which a competent state agency permits the pilot application of new technologies and the pilot provision of new products, services and business models within specified limits on scope, participants, geographical area and duration
The operation of a regulatory sandbox must safeguard national defence and security, social order and safety, as well as the safety of the securities market. It must also ensure equality, openness and transparency throughout the pilot process and comply with relevant laws.
An organisation wishing to participate in the sandbox must meet statutory conditions and obtain a certificate. It would also be subject to supervision by the relevant competent state agency.
The competent agency authorising the sandbox, as well as organisations and individuals directly involved in its appraisal, certification, supervision and evaluation, organisations registering to participate and individuals implementing activities under the sandbox mechanism, would be eligible for exemptions from liability in accordance with provisions on liability exemptions for regulatory sandbox activities under the Law on Science, Technology and Innovation.
Organisations and individuals taking part in the sandbox would remain responsible for their participation and would be protected in accordance with the same law.
The proposed sandbox provisions respond to requirements set out in Politburo Resolution 68-NQ/TW dated May 4, 2025, on private-sector development. They are also intended to help implement the objectives, tasks and solutions set out in Politburo Resolution 57-NQ/TW dated December 22, 2024, on breakthroughs in the development of national science, technology, innovation and digital transformation, with a vision to 2045.
As the sandbox would operate in a new and highly innovative area where there is not yet sufficient practical experience to determine a long-term regulatory roadmap, the draft takes a principles-based approach. It sets out general provisions in the Law while assigning the Government to issue detailed regulations within one year after the Law takes effect.
According to the drafters, this approach would provide greater flexibility in implementing and managing the new mechanism.
Administrative procedures simplified
The draft also simplifies administrative procedures related to activities under the management scope of the Ministry of Finance.
For securities depository activities, the draft revises the conditions for registration and removes two requirements currently applicable to commercial banks and foreign bank branches.
These include the requirement to meet the minimum capital adequacy ratio prescribed by banking law and to have recorded profitable business operations in the latest year, as well as the requirement to have premises and equipment serving securities depository and transaction settlement operations.
The draft concurrently removes several conditions for the grant of establishment and operation licences to securities companies and securities investment fund management companies.
These include requirements that individual shareholders and capital-contributing members must not fall into categories prohibited from establishing and managing enterprises in Viet Nam under the Enterprise Law, and that institutional shareholders and capital-contributing members must have legal person status and operate lawfully. The draft also removes the requirement for the latest annual financial statement to have been audited with an unqualified opinion.
Another condition to be abolished is that the Chief Executive Officer must not have been sanctioned for an administrative violation in the securities and securities market sector within six months before the date of dossier submission.
The requirement to submit a draft charter that does not contravene the Securities Law and the Enterprise Law would also be removed.
For branches of foreign securities companies and fund management companies operating in Viet Nam, the draft removes the requirement that the foreign institution have at least five years remaining in its operating term.
It also deletes the word “public” from the condition requiring the foreign institution to be “licensed by the regulatory and supervisory authority in the home country to manage public funds and approved for the establishment of a branch in Viet Nam."
For initial public offerings of shares, the draft abolishes the requirement relating to the percentage of shares to be sold to investors under Article 15.1.d of the Securities Law. The corresponding component of the registration dossier prescribed in Article 18.1.dd would also be removed.- (VLLF)
