The 2006 Securities Law, amended for the first time in 2010, was introduced in the context of the small-scaled securities market. The law has created the legal corridor to enable the stock market to grow in the past 11 years but is also gradually exposing shortcomings along with its rapid expansion.
These are requirements for information disclosure, market manipulation, investigative and supervisory authority of the market watchdog, as well as foreign-ownership-related regulations.
Since early last year, market insiders have sought more amendments to meet demand for a more sophisticated securities market. In 2018, the State Securities Commission (SSC) is tasked with building the revised Securities Law, which should be submitted for the National Assembly’s review in the sixth meeting in October.
The updated law is expected to focus on nine targets.
First, it will standardize the conditions, dossiers and procedures for offering and listing each type of securities; and improve the quality of public companies by adjusting the criteria of public companies, thereby enhancing the quality of goods on the stock market.
Second, it clearly defines the organizational structure, operation, functions, tasks and obligations of stock exchanges; and specifies the areas of the stock market, bond market and derivatives market.
Third, it identifies the organizational structure and operation of the Viet Nam Securities Depository Centre; supplements the regulations on clearing and settlement in order to expand professional activities; and strengthens risk management regulation as well as payment support mechanism.
Fourth, the ownership ratio of foreign investors in public companies on the securities market will be clearly defined.
Fifth, the law will ease the way for foreign investors to participate in the Vietnamese securities market.
Sixth, regulations on corporate governance of public companies, securities companies and fund management companies will be standardized to improve the quality of enterprises.
Seventh, the law will review the conditions for granting the establishment and operation licences to securities companies and fund management companies in line with the Law on Enterprise; and define the role and responsibilities of securities companies in ensuring their clients to comply with the law.
Eighth, it enforces the obligation of information disclosure to enhance the clarity and transparency of the stock market.
Ninth, the revised law will define certain powers of the State Securities Commission to enable it to inspect, supervise, monitor and enforce regulations on the market.
According to Vu Thi Chan Phuong, SSC’s vice chairwoman, the update on the securities law at the current time is necessary given that a number of laws (on investment, inspection, civil code and handling of administrative violations) were revised and promulgated which have related to the implementation of the Law on Securities such as the ownership of foreign investors, corporate governance, inspection authority and administrative sanction.
The amendment of the securities law will demonstrate the policies and guidelines of the Government in restructuring financial markets, State-owned enterprises, creating favorable investment environment for all investors and enhance transparency for businesses, Phuong said.
The SSC is collecting consultation from ministries and market players for the revised law.