Government proposes relaxing IPO conditions

Government proposes relaxing IPO conditions

The government has proposed easing some conditions for initial public offerings, when amending the Law on Securities.

Photo: tinnhanhchungkhoan.vn

Minister of Finance Ngo Van Tuan, on October 17, presented to the National Assembly a draft law amending and supplementing several articles of the Law on Securities.

The three-article draft aims to streamline administrative procedures, facilitate business operations, and support technological advances and the introduction of new securities models and products.

Regarding conditions for initial public offerings (IPOs), the government proposes removing the minimum percentage of shares that must be sold to investors. Under current regulations, joint-stock companies conducting an IPO must sell at least 15 per cent of their voting shares to a minimum of 100 investors who are not major shareholders. This threshold falls to 10 per cent for issuers with charter capital of VND1 trillion ($40 million) or more.

The draft also proposes removing the requirement for businesses to commit to selling a specified percentage of shares in their registration documents. In addition, issuers may no longer be required to report on the use of capital raised from their most recent audited offering within the two years preceding their application.

The draft introduces a legal framework for a controlled testing mechanism in the securities sector. A proposed Article 6 would establish general principles for the mechanism, with the government responsible for issuing detailed regulations.

National Assembly (NA) Vice Chairman Nguyen Hong Dien said the proposed amendments were reasonable in their efforts to remove obstacles, ease business conditions, and simplify administrative procedures. However, he cautioned that relaxing capital mobilisation requirements must not compromise market safety or investor protection.

Dien also raised concerns over assessing shareholder dispersion only after an offering is completed, warning that this could expose investors to financial risks if an IPO is cancelled.

He cited the example of a company receiving payment for shares but attracting only 90 investors by the end of the offering, potentially resulting in delayed refunds, misappropriation of funds, or disputes over repayment obligations.

The NA is expected to discuss the draft law in a plenary session on October 28 and vote on its approval on November 13. If passed, the law will take effect on March 1, 2027.

According to the State Securities Commission of Vietnam, only 11 foreign-invested enterprises (FIEs) have listed their shares or registered them for trading since the country's stock market was established. By the end of 2025, their combined charter capital amounted to approximately VND12.6 trillion ($504 million), accounting for just 0.15 per cent of the market total, while their total assets reached nearly VND44.7 trillion ($1.78 billion), or about 0.48 per cent.

Although several additional FIEs have registered as public companies since 2017, no more enterprises have completed a listing or registered their shares for trading.

VIR