Foreign Ownership Ratio Disclosure Requirements for Listed Companies in Vietnam

The foreign ownership ratio in listed companies is a crucial factor that not only reflects the attractiveness of Vietnam’s stock market but also influences corporate governance structures and the ability to attract investment. Publicly disclosing this ratio enhances information transparency, builds confidence for both domestic and foreign investors, and meets the regulatory requirements of the relevant authorities. As Vietnam’s economy continues its global integration, monitoring and disclosing foreign ownership ratios become even more essential, contributing to the sustainable development of the stock market. In the article below, Viet An Law will provide you with legal issues related to the foreign ownership ratio disclosure requirements for listed companies in Vietnam.

What is the foreign ownership ratio? Determining the maximum foreign ownership ratio in a listed company

What is the foreign ownership ratio?

According to Clause 38, Article 3 of Decree 155/2020/ND-CP, the foreign ownership ratio is defined as the total percentage of shares or contributed capital, calculated based on the charter capital, held by all foreign investors and economic organizations where foreign investors own more than 50% of the charter capital in a public company, securities company, securities investment fund management company, or fund.

Determining the maximum foreign ownership ratio in listed companies

According to Clause 2, Article 139 of Decree 155/2020/ND-CP, for equitized companies listing or registering for trading on the stock market, the foreign ownership ratio must comply with the regulations on equitization. If the equitization laws do not specify, it shall be implemented according to the regulations. Specifically as follows:

• For companies operating in business sectors where an international treaty to which Vietnam is a member sets out provisions on foreign ownership, these international treaty provisions shall apply.
• For companies operating in business sectors where related laws stipulate foreign ownership, the provisions of those specific laws shall apply.
• For companies operating in business sectors listed in the list of sectors and trades in which foreign investors are subject to market access restrictions, the foreign ownership regulations specified in that list shall apply. If the market access conditions for a particular sector on this list do not explicitly state the foreign investor’s capital contribution ratio in an economic organization, the maximum foreign ownership ratio for the company is 50% of its charter capital.
• For companies not falling under the above-mentioned cases, the foreign ownership ratio is unrestricted.
• If a company operates in multiple business sectors with differing foreign ownership regulations, the foreign ownership ratio must not exceed the lowest limit among the sectors that have specific foreign ownership regulations.
• If the maximum foreign ownership ratio is announced at 0%, the public company must clearly state the business sector (or scope of business within the sector) that foreign investors are not permitted to access.
• If the maximum foreign ownership ratio is announced at greater than 0%, and the registered business sectors are not detailed or are broad, the company must clarify and specify that the registered business sectors do not include activities that foreign investors are not permitted to access.
• If a company decides on a maximum foreign ownership ratio lower than the legally prescribed ratio, this specific ratio must be approved by the General Meeting of Shareholders and stipulated in the company’s Charter.

Notes:

• Foreign investors may invest without restriction in Government debt instruments, Government-guaranteed bonds, local government bonds, corporate bonds, fund certificates, shares of securities investment companies, derivatives, depositary receipts, and covered warrants, unless otherwise specified by relevant laws.
• In cases of issuing shares, convertible bonds, bonds with warrants, exchange-traded fund certificates, covered warrants, or depositary receipts, the issuer must ensure the foreign ownership ratio after the issuance, conversion of bonds into shares, or at the time of share purchase, or upon exchanging fund certificates for shares, exercising warrants, or transferring shares to the depositary receipt issuer.

Responsibility for registering securities trading codes

According to Clause 1, Article 141 of Decree 155/2020/ND-CP, regarding the responsibility to announce the maximum foreign ownership ratio for public companies, the public company is responsible for identifying its business sectors and completing the procedure to announce its maximum foreign ownership ratio within 07 working days from the date the State Securities Commission of Vietnam confirms the completion of its public company registration.

Additionally, the company must follow the procedure to announce changes to the maximum foreign ownership ratio within 30 days from the occurrence of any of the following events:

• A change in the business sectors that leads to a change in the maximum foreign ownership ratio at the company.
• A change in the legal regulations on foreign ownership concerning the business sectors in which the company operates.
• A change in the company’s charter that stipulates a change in the maximum foreign ownership ratio.

Foreign ownership ratio notification dossier

According to Clause 1, Article 142 of Decree 155/2020/ND-CP, the dossier for notifying the foreign ownership ratio includes:

• A notification form for the maximum foreign ownership ratio at the company, made according to a set form.
• The Enterprise Registration Certificate, Establishment and Operation License, or equivalent legal documents, and the Certificate of Business Registration Content Change, which includes details on the registered business lines.
• For equitized enterprises, an additional document from the competent authority approving the equitization plan must be provided, which includes information on the company’s foreign ownership ratio (if any).
• The company’s Charter and the Resolution of the General Meeting of Shareholders approving the maximum foreign ownership ratio in the public company.

Maximum foreign ownership ratio notification form

According to Form No. 38 of the Appendix issued with Decree 155/2020/ND-CP, Viet An Law provides clients with a maximum foreign ownership ratio notification form.

Procedures for foreign ownership ratio disclosure requirements for listed companies in Vietnam

According to Article 142 of Decree 155/2020/ND-CP, the procedures for foreign ownership ratio disclosure requirements for listed companies are as follows:

• Step 1: The organization submits the dossier notifying the maximum foreign ownership ratio in the public company to the State Securities Commission of Vietnam, as per regulations.
• Step 2: Within 07 working days from the date of receiving a complete and valid dossier, the State Securities Commission of Vietnam will issue a written notification confirming the receipt of the complete dossier regarding the maximum foreign ownership ratio, or any changes thereto, in the public company. This notification is simultaneously sent to the Vietnam Securities Depository and Clearing Corporation.
• Step 3: Within 02 working days from the date of receiving the written notification from the State Securities Commission of Vietnam, as stipulated in Clause 3, Article 142 of Decree 155/2020/ND-CP, the Vietnam Securities Depository and Clearing Corporation will update and adjust the maximum foreign ownership ratio for the public company on its system.

This concludes Viet An Law’s consultation on foreign ownership ratio disclosure requirements for listed companies in Vietnam. If you have any related questions or require in-depth legal advice, please contact Viet An Law for the best consultation and support!