November 20, 2019 12:03

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Amending the Securities Law: Adding confidence to investors

19:50 | 17/10/2019

VCN  - After many rounds of comments, the draft Securities Law (amended) has been finalised and is expected to be approved by the National Assembly at the upcoming 8th meeting. Many have said that up to now, this bill has been in line with international practices and close to the reality of Vietnam's stock market.

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With the Securities Law (amended), the confidence of investors will be increased, especially foreign investors. Source: Internet.

Create a stable investment environment

After a long time, the current Securities Law has taken effect and shows signs of "late" compared to the time, the Securities Law (amended) is expected to have a significant impact on the organisation of the stock market and create more confidence for investors, especially foreign investors.

Commenting on the draft Securities Law (amended), Lawyer Choi Ji Ung, Director of ASEAN Law Firm, said with continuous development, complicated developments and extensive participation from foreign investors in the Vietnamese stock market in recent years, the amendment and enactment of the new Securities Law are not delayed. Studying draft Law, Choi Ji Ung said that the drafting agency has absorbed and legalised many international practices, principles and recommendations from international organisations such as: Organization for Economic Cooperation and Development (OECD), International Organization of Securities Commissions (IOSCO).

“This draft law has many breakthroughs, approaching the practical requirements and international practices. In particular, it is worth noting that the regulations closely link the public offer of securities with listing and registration for trading on stock exchanges (especially IPOs). This will be a breakthrough to improve transparency of the market. The second is to raise the minimum chartered capital to VND 30 billion from the current VND 10 billion for cases such as IPOs, public offering of bonds, public companies. Based on the actual development of economic scale of companies in Vietnam, this adjustment is necessary and in line with the trend of international practice,” said the director of ASEAN Law Firm, Ltd.

Besides, a series of other amendments unifying the scope of adjustment and content provisions of the Enterprise Law, the Securities Law (amended) promise to bring many breakthroughs and a more stable investment environment for investors in Vietnam’s stock market. According to Nguyen Thanh Ky, Vice Chairman and General Secretary of the Securities Business Association (VASB), the draft law has supplemented the condition that credit rating results must be issued to bond issuers (this regulation) has been applied in many countries such as Japan, South Korea, Thailand, Malaysia). In addition, the draft also supplements regulations on auditing organisations and practicing auditors that are approved to provide services to public-interest units in the field of securities; detailed requirements in information disclosure and administration of public companies. All of these new points aim to improve the transparency of the market in accordance with international practices, ensuring benefits for investors.

“If the bill is passed, there will need to be more specific and detailed regulations on the principles of foreign investors' participation in the market, securities companies and foreign-invested securities fund management companies. This will help promote, create trust and attract foreign investment in Vietnam stock market,” Nguyen Thanh Ky said.

Add a tool to keep the market open and transparent

In the amended Securities Law, after hearing many opinions and assumptions, the State Securities Commission is still under the Ministry of Finance, however, the authority of this agency will increase. The National Assembly's Economic Committee said that under this plan, the State Securities Commission relatively ensures the independence, comprehensive management and supervision of the market, in accordance with the principles of IOSCO and recommendations of the IOSCO. The Financial Sector Assessment Program (FSAP) and regulations of countries, whose securities regulatory agencies are within the Ministry of Finance (such as Malaysia, Bangladesh, Portugal) and remain stable, do not tamper with organisational structure.

Before this content, Lawyer Nguyen Thanh Ha, Chairman of SBLAW Law Firm said only when the State Securities Commission is more active and more self-determined in pursuing the same violations on the stock market will the new can prevent securities crimes and create a transparent and healthy stock market.

“To combat securities breaches and securities crimes, the State Securities Commission should be expanded as a management body, bringing together professional bodies who have deep knowledge in this problem. Accordingly, expanding the authority of the State Securities Commission will facilitate the quicker review, provision of evidence and conclusions on violations in the stock market. If we enhance the role of the Committee in combating securities violations, there will certainly be no profiteering acts by making securities prices or short selling acts,” Nguyen Thanh Ha said.

Regarding market supervision, the Draft Law provides 3-level supervision instead of two (stock exchanges and the State Securities Commission) compared to the current Securities Law. Specifically, the draft law adds one level to the securities companies. According to Ung, this provision is stated in Article 90 of the Draft Law, under which a securities company has the obligations: firstly to set up internal control systems, risk management and supervision, conflict preventing of interest within the company and in related party transactions; the second is to manage money and securities separately of each investor and money and securities of securities companies.

Lawyer Chiu Ji Ung said that with an additional level of supervision, regulators will have more tools to keep the market open and transparent. However, there should be regulations on authority, supervision function, coordination mechanism between securities companies and exchanges, State Securities Commission, Ministry of Finance to avoid abuse of regulations, obstructing transactions, damage to investors or unnecessary disputes between securities companies and investors.

By Bao Minh/ Huu Tuc