Revised securities law to strengthen market discipline, transparency

Revised securities law to strengthen market discipline, transparency

If executed well, the new law could improve management and oversight efficiency, ensuring that the stock market operates fairly, transparently, safely and sustainably.

Investors at a trading office of a securities firm. — VNA/VNS Photo

Recent amendments to the Securities Law are set to create a more favourable environment for listed enterprises, facilitating their growth and enhancing market stability. 

Passed by the National Assembly in November 2024, Law No. 56/2024/QH15 reflects the Government’s strategic priorities: elevating market professionalism, bolstering supervision against fraud and streamlining administrative procedures across the securities sector.

Among the most notable changes is a stricter requirement on shareholders’ equity for public companies. Under the new rules, a public company must maintain a minimum owner equity of VNĐ30 billion (US$1.1 million). 

Previously, a firm could qualify as a public company even if its equity was significantly impaired (for example, after losses). Now, even companies that once had a charter capital of VNĐ30 billion but had seen their equity erode to VNĐ10 billion would not meet the standard.

The law also tightens conditions tied to free float. If a company fails to maintain at least 10 per cent of its shares held by no fewer than 100 minority shareholders, the State Securities Commission (SSC) will require the company to notify its status and grant a 12-month grace period to rectify the situation. Otherwise, delisting may be considered.  

State-owned firms that fail to comply won’t be automatically delisted but will remain under stricter scrutiny. 

On the governance front, the revisions limit the overlap of board mandates: a member of the board of a public company may serve on no more than five other boards (public or private), capping concurrent board roles at a total of six. 

The aim is to ensure more focused oversight and reduce role conflicts.  

Transparency rules have become more demanding. Issuers must now disclose the use of all funds raised, not just those earmarked for project purposes, so that the broader use of capital is publicly traceable.

One of the more significant changes is the shortened timeframe for mobilising securities into tradable status. Approval-to-listing time is reduced from 90 days to 30 days. If a security fails to list within that 30-day window, it may face delisting. 

Crucially, the amendments support the participation of foreign-invested enterprises (FDIs) in IPOs and listings under the same regulatory regime as domestic firms, expanding the pool of potential issuers and enhancing market depth. 

If executed well, the new law could improve management and oversight efficiency, ensuring that the stock market operates fairly, transparently, safely and sustainably. 

Additionally, it aims to support Việt Nam in not only achieving an upgrade to FTSE standards but also in maintaining that status in the long term. 

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