Decree 155 is coming soon, large public companies must publish information in English

The draft content of the amendment to Decree 155 guiding the Securities Law 2019 and the Circular amending 4 Circulars is expected to be announced in the first week of March 2024 to seek opinions from market members.

This is the information updated by Ms. Ta Thanh Binh, Director of the Market Development Department of the State Securities Commission at the Forum for an innovative and effective season of Shareholders' Meetings organized by the State Securities Commission on the morning of March 1 with the participation of many representatives of public companies and listed enterprises.

Amending legal documents to remove restrictions on “pre-funding”

Speaking at the Forum, Ms. Ta Thanh Binh said that preparations to meet the criteria for upgrading the stock market were one of the key issues at the Stock Market Development Conference held on February 28. This is also one of the important tasks that the Government has set for the securities industry.

Time is running out, from the perspective of a management agency, the State Securities Commission is urgently serving this task. One of the major barriers that makes the Vietnamese stock market less attractive than other markets in the region is the requirement that foreign investors must deposit 100% before making transactions on the Vietnamese stock market and are not allowed to borrow margin according to the provisions of banking law.

To resolve the issue related to the above pre-transaction margin requirement, Ms. Binh said that the State Securities Commission is carefully reviewing the solutions, setting out conditions that only securities companies that meet the requirements can allow foreign investors to place purchase orders without having 100% of the money. Regarding this content, there are two documents that need to be amended: Decree 155/2020/ND-CP guiding the Securities Law with contents related to the issue of service provision conditions of securities companies and Circular 120/2020/TT-BTC on listed stock transactions.

“Basically, up to now, the State Securities Commission has received consensus from securities companies on amending the above two documents,” said the Director of the Market Development Department of the State Securities Commission.

There will be a deadline to review business lines and announce foreign "room".

According to Ms. Binh, what foreign investors are interested in is whether there is still a lot of ability to buy stocks in the Vietnamese market. Foreign investors, especially large investment funds, are very interested in their ability to disburse into stocks of large enterprises. Regulations related to limiting the ownership ratio of foreign investors are actually not unique to Vietnam.

Many stock markets around the world have barriers to foreign investors, especially in business sectors that will impact national security or are subject to state management control. However, a current limitation is that regulations on foreign investors' ownership limits are scattered in many different documents. Meanwhile, businesses often tend to register to do business in multiple sectors, even though they do not actually operate in that sector.

Businesses are confused about determining the maximum rate. Foreign investors have no place to access this information in the most official, fastest and most comprehensive way.

Therefore, a content also in the draft amendment to Decree 155 is to add a time limit for performing the procedure of notifying the maximum foreign ownership ratio. Enterprises need to review the industries they are implementing to determine the maximum foreign ownership ratio. Many industries are registered for business but are not implemented while that industry is restricted to limit foreign ownership.

Talking to representatives of listed companies, Ms. Binh said that companies should try to minimize the situation where the general meeting of shareholders limits the room level below the maximum allowed level. Although this is the right of shareholders and companies, from the perspective of protecting investors' rights, it is necessary to avoid the situation where the company itself limits the access of foreign investors.

Disclosure of information in English according to the roadmap

Among the criteria for upgrading, quantitative criteria, such as market capitalization or value of listed organizations, have met the requirements, and market liquidity has basically been met. Ms. Binh emphasized that it is important to continue improving qualitative factors, especially the quality of listed companies and corporate governance activities, as well as market transparency.

According to the draft, the mandatory disclosure in English and Vietnamese will be applied according to a roadmap. For large public companies, periodic disclosure in English will be applied from January 1, 2025, and information disclosure including both periodic and extraordinary disclosure in English from January 1, 2026. Then, it will be implemented across the market from January 1, 2028, for all types of information.

The State Securities Commission is drafting a Circular amending 4 Circulars to address the above contents. Updating the progress of implementation, the State Securities Commission has reported to the Minister of Finance on the main amendments and the Minister of Finance has approved the amendment roadmap.

“It is expected that the draft related to the amendment of Decree 155 will be published in March and we will try to issue the amended Decree before August 2024. The Circular amending the 4 Circulars that have been submitted to the Minister of Finance has been approved,” said Ms. Binh. According to the Director of the Market Development Department of the State Securities Commission, the SSC is in the process of synthesizing opinions from other units under the Ministry of Finance, and is expected to publish the draft to collect opinions from market members in accordance with the legal document drafting process, possibly in the first week of March.

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