In wide-ranging corporate reforms, Vietnam has proposed to remove the 49 per cent foreign ownership cap in listed companies as part of the new securities law framework.
The new law also proposes that companies could go ahead with listing after the completion of the initial public offering process. This change is significant given that listing and IPO are different processes in Vietnam. Under the current regulations, businesses have to list within one year after the IPO.
“The period of one year will no longer exist. IPO and listing will become only one process. We are amending the law to be similar to international practice,” said Vu Thi Chan Phuong, vice president of the State Securities Commission.
The new law is expected to be approved by the end of 2019. Securities firm SSI said it might take effect in 2020.
The significant changes are an effort by the finance ministry to upgrade Vietnamese stocks to the MSCI Emerging Markets Index and attract greater overseas capital, the brokerage house said.
Currently, companies in the so-called “non-conditional businesses” can raise their foreign ownership up to 100 per cent only with approval from shareholders, while the general limit regulated by law is 49 per cent.
In some conditional sectors such as banking and aviation, the limit is currently lower at 30 per cent. The new proposal is not applicable in these industries, but activists are lobbying the government to lift the foreign shareholding cap in such sectors to as much as 50 per cent.
A spate of local firms have secured the nod from shareholders to free up the 49 per cent limit, including Vietnam’s biggest dairy company Vinamilk. The firm is also the second biggest business on the stock exchange. Other top listed companies in unrestricted sectors include Vingroup, Masan Group and brewer Sabeco.
Sabeco has also sold 53.6 per cent to Thaibev, with plans to dispose further shares up to 90 per cent of the brewer. The former state-owned company is cited as an example of the prolonged delay between IPO and listing. It was privatised in 2008 but only got listed only since 2016.