Changes in Securities Law and guidance documents mulled

Friday, June 20, 2008
State Securities Commission (SSC) on June 17 organised a seminar to overview the Law on Securities after one-year of implementation. Given public comment that the Law and guidance documents still have some problems needed to be amended.

Information disclosure

Law on Securities and relevant documents have not yet had detailed guidance on operation of share retail of public companies, share sale and listing of foreign entities on the Vietnamese stock market. Meanwhile, in fact, there were some 100% foreign invested companies (with the workforce of less than 100 employees) selling shares to employees and then the share volume was still traded on the informal stock market. Investors in such case will have to face many risks and not be protected whereas the foreign firms do not have responsibilities like domestic firms under current regulations.

We are questioned about legal proceedings relating to foreign enterprises who want to sell shares in Vietnam but it is only answered that Vietnamese laws have not ruled yet, according to Nguyen Vu Quang Trung, deputy general director Hanoi Securities Trading Centre (HASTC).

As estimated, share sales will be tightened up, which also will be enclosed with transaction listing and registration. Decree No 14/2007/ND-CP will be amended that issuers must list and register securities transactions on the formal stock market in parallel with share sakes. This will make changes in so far operations of the informal stock market.

Especially, in order to mass issue and sales of shares with unclear purposes, SSC proposed the finance ministry that securities offering applications must be added approved investment projects and the plan of using capital raised from the public for those projects.

In addition, it is proposed that the regulations on information disclosure should be more particular, including rules on financial institutions and individuals forced to announce information.

For example in Singapore, as an individual that has economic relationship with an enterprise (like one of that firm's director board) also has to announce full information to avoid insider transactions, Trung said.

Represented for PWC Auditing firm, Nguyen Thi Lan again concerned the professional and the trust of audited fiscal reports. She also gave a particular example that her company refused to provide comprehensive auditing service for a corporate, however then that corporate by some way still had an auditing appraisal for its financial report and met full terms to list on the stock market.

Nguyen Vu Quang Trung spoke, the corporate value appraisal needs to be independent because it now depends heavily on enterprises and consultants.

Right time to apply derivative tools

Regarding stock brokerages, the Law on Securities must provides more details on the brokers' position as intermediary finance institutions, Le Hong Khoi�general director of Trang An Securities Joint Stock Co gave his point of view at the seminar.

Securities companies must launch other specifications such as helping investors by lending activity through account depository. So far small investors suffered the most risks because of not protected by financial tools that become popular in the world.

Law on Securities also should expand mentoring over derivative share offerings and the trading market for the kind of share as well as products of new investment funds [fund certificates], Trung proposed again. (Lao Dong)