The State Securities Commission (SSC) has just submitted to the Ministry of Finance a draft circular to guide the implementation of the Prime Minister’s Decision No. 55/2009/QD-TTg of April 15, 2009, on foreign investors’ participation in the securities market.
According to securities experts, though Decision No. 55 sets a foreign holding cap of 49 per cent of charter capital of public joint-stock companies, it still fails to provide detailed guidance for cases in which foreign-invested enterprises are transformed into joint-stock companies. In these cases, Decision No. 55 does not force foreign investors to reduce their holding rate to below 49 per cent. However, foreign investors are disallowed to buy more shares as their holding rate is still higher than 49 per cent.
As proposed by the SSC, foreign-invested enterprises that are transformed into joint-stock companies would be subject to no foreign ownership cap but will be governed by specific regulations and subject to the charter capital holding rate cap specified for foreign investors in different sectors as classified by the Prime Minister. The volume of shares restricted from transfer (for entitlement to investment incentives), if any, would be taken into a depository account subject to transfer limitations. When issuing additional shares to increase their charter capital, enterprises would be no longer subject to the foreign ownership cap.
The draft paper is expected to facilitate the listing of foreign-invested enterprises and the development of the securities market, thus attracting foreign indirect investment. Until now, although Decision No. 55 has been enacted for over one year, none of foreign-invested enterprises governed by the decision is listed on Vietnamese securities market.-