Below is a summary of major changes contemplated in the securities law by the National Assembly. This is taken from a larger article that will be published later by our firm managing partner.

A private joint stock company will become a public company if it has a paid-up charter capital of VND 30 billion or more, and at least 10% of its voting shares is owned by 100 or more investors who are not major shareholders in such company; or it has successfully conducted an initial public offering in accordance with the Draft Law. In general, the Draft Law increases the criteria on capital size and the shareholding structure of public companies.

The Government will release further guidance and regulations for any foreign ownership limitation or condition, procedures for investment and participation of foreign investors / organizations with foreign owned capital.

The Draft Law separates the public offering into initial public offering (“IPO”) and subsequent public offering and sets out different conditions for each case.

Private placement of securities is an offering of securities to less than 100 investors not including professional securities investors. The types of investors that can participate in a private placement of a public company will only include (a) strategic investor and (b) professional securities investors.

After redemption of shares, the public company is required to cancel its redeemed shares and decrease its charter capital accordingly.

Securities companies and fund management companies will be required to obtain an operation license from the SSC first, and then obtain an enterprise registration certificate from the local Department of Planning and Investment in accordance with the Law On Enterprises.

Under the Draft Law, maximum fines of VND 3 billion for institutional investors and VND 1.5 billion for individual investors are considered strong enough to deter investors from breaking the law.