Note on the maximum foreign ownership ratio of the stock market in Vietnam

Foreign ownership in the stock market is already regulated by Government Decree No. 155/2020/ND-CP of December 31, 2020, which details the implementation of a number of articles of the Securities Law. The State Securities Commission has recently issued guidelines and notices on the application of the aforementioned regulations for public companies, organizations and individuals.

Define the maximum ownership ratio in a specific case in Vietnam

In terms of determining the maximum foreign ownership ratio, SOEs determine the maximum state ownership ratio for each industry as well as the foreign ownership rate based on the registered business sectors. Article 139 of Decree 155/2020/ND-CP specifies the maximum rate of state participation in the company.

On the National Investment Portal (https://vietnaminvest.gov.vn), the maximum state ownership ratio for each industry is determined based on international commitments, regulated by the government, and access requirements market for foreign investors.

If a SOE declares a maximum state equity ratio of 0%, it must specify the sector (or area of ​​industry activity) in which foreign investors have not yet been consulted.

In case the maximum state participation rate is announced at > 0%, the registered business sectors are not detailed or the scope is broad, the company must clarify the details of the business sectors. recorded activity excluding operations. Foreign investors have not been approached.

In the event that a public company decides that the maximum foreign ownership ratio is lower than the rate permitted by law, the specific ratio must be approved by the general meeting of shareholders and specified in the company’s articles of association.

Based on this, the State Securities Commission notes that state-owned enterprises should clarify the scope of each line of business, report to the nearest general meeting of shareholders to modify and detail the lines of registered activities (if applicable), specifically approve the maximum ratio of state ownership (in the event that the decision is less than that authorized by straight) in accordance with the expected announcement of the maximum state ownership ratio.

The deadline for implementing notification procedures in Vietnam

With regard to the time limit for a public company to carry out the procedures for notification of the maximum state participation rate, in accordance with the provisions of Article 141 of Decree 155/2020/ND-CP, the public company is responsible for determining the business investment sector and the maximum rate of foreign participation in the company as prescribed in Clause 1, Article 139 of Decree 155/2020/ND-CP; and at the same time meet the deadline for the execution of the procedures for notification of the maximum state participation rate as follows: Within 07 working days from the date on which the State Securities Commission confirms the realization of the registration of a public company.

In case a public company has not yet notified the maximum foreign ownership ratio as prescribed in Decree 155/2020/ND-CP, the company must carry out the procedures for notifying the maximum foreign ownership ratio. Before filing the application for listing, transfer of listing, listing, offer for sale or issue of securities, the shareholders of a public company offer shares to the public .

The SOE must complete the procedures for notifying the change in the foreign ownership rate within 30 days from the date of occurrence of one of the following events: (i) Change in the companies’ investment or lines of activity leading to a change in the rate of ownership in the company; (ii) There is a change in the legal regulations on foreign ownership in the areas of investment and business that the company operates; (iii) The company charter stipulates to modify the maximum foreign ownership ratio.

Based on the above provisions, the State Securities Commission notes that state-owned enterprises actively carry out the procedures for announcing the maximum state ownership ratio, and organizations and individuals comply with the regulation on the maximum state ownership ratio in the stock market.

Sallie R. Loera