Dnh Law Vietnam Client Alert 090225

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Client Alert May 15, 2009

Decision No. 55/2009/QD-TTg by the Prime Minister caps foreign holding at 49% in local public companies and locally incorporated securities or fund management companies 越南總理第 55/2009/QD-TTg 號決定，外國投資業者持公衆 公司，証券公司，基金管理公司之股權上限為 49%

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Client Alert

Decision No. 55/2009/QD-TTg of the Prime Minister dated 14 April 2009 sets the foreign ownership limit at 49% in unlisted public companies, as well as securities and fund management companies. News reports put shares of 1,400 to 3,000 unlisted public companies have been traded on the unofficial OTC market which has to a large extend been unregulated. The Hanoi Securities Trading Center (HaSTC) which was established back in 1998 and opened for trading in 2005 has been making the move to become the official OTC market in Vietnam. HaSTC is to be converted to Hanoi Stock Exchange as a one-member limited liability company with a charter capital of 1 trillion VND held by the State under the Prime Minister’s Decision No. 01/2009/QD-TTg dated 2 January 2009. The new (HNX) Stock Exchange is expected to be debuted 24 June 2009, at which time there will be a new trading floor for shares of unlisted public companies (UPCOM) in addition to those listed shares of mainly medium and small shareholding companies and government bonds. Currently there are about 166 companies listed on main exchange HoSE, and 196 listed on HaSTC. Prior to this Decision, foreign holdings had been limited in general to 49% of the listed shares, and 30% in unlisted domestic companies, except in certain specific business sectors such as banking which is limited to 30%. The current Decision now sets the foreign holding limit at 49% for both listed shares and unlisted shares of a public company. The current Decision does not address the 30% cap on foreign holding in unlisted domestic companies which are not public companies. A public company is a joint stock company which has either (i) made a public offer of its shares; (ii) been listed on either of the HaSTC or HoSE; or (iii) more than 100 shareholders (excluding those of professional investors), and 10 billion VND in paid-up charter capital. Scope of the Decision The limitation applies to all foreign entities (including the securities firms and investment funds) and individuals whether or not they have a presence in Vietnam. For those locally incorporated companies (including the securities and fund companies) with foreign party(ies) holding more than 49% are considered as foreign companies subject to the cap when trading shares of a public company. Foreign Capital Contribution Cap on Setting up a Securities Firm or Fund Management Company The Decision also stipulates that, only foreign securities trading organizations and insurance trading organizations are permitted to make capital contribution or purchasing shares to form a securities or fund management company in Vietnam. Eligible foreign parties’ holding in such ventures is also capped at 49%. Conclusion Foreigners are now allowed to hold a max. 49% on all three markets: UPCoM, HoSE, and the new HNX (except for certain specific business sectors such as banks capped at 30%). This Decision takes effect on 1 June 2009, and replaces Decision No. 238/2005/QD-TTg of the Prime Minister dated 20 September 2005. Improving the liquidity of those shares traded on the OTC market by increasing the foreign holding limit to 49% and the soon to be inaugurated Hanoi Stock Exchange (HNX) were among the key reasons for this Decision.

越南政府總理 2009 年 4 月 14 日簽署之第 55/2009/QDTTg 號決定，除法律另有規定，外國投資業者持有“大 衆股份有限公司”(công ty cổ phần đại chúng），証券公 司，基金管理公司的股權上限為 49%。 越南《証券法》規定，“大衆股份有限公司”（công ty cổ phần đại chúng）包括：  已公開發行股票之股份有限公司；  股票在 HaSTC 或 HoSE 上市之股份有限公 司； 或  有超過 100 個公衆持股人（不包括專業投資 人），且公司註冊資本超過 100 億越盾(paid-up capital) 之股份有限公司 本決定之適用 外國投資業者包括外國公司（包括証券，基金）及個 人。在越南設立之公司，外方持股超過 49%，亦視爲 外國公司。 依越南法律設立之本地公司（包括証券，基金），若外 國人持股超過 49%,將視爲外國公司，受此決定之規 定。 外方出資設立証券公司，基金管理公司 次決定並規定在越南設立之証券公司，基金管理公司， 外方持股不可超過註冊資本的 49%。外方出資人僅限 於証券公司，保險公司。 結論 此決定于 2009 年 6 月 1 日起開始實施，並取代總理 2005 年 9 月 20 日第 238/2005/QD-TTg 號決定。 河内証交中心 (HaSTC) 將于 2009 年 6 月 24 日起改 爲河内証券交易所。屆時將啓用交易非上市大衆股份有 限公司之股權交易 (UPCoM trading floor)。 

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Client Alert

For further information, please contact:

John Yue 岳強律師 Ho Chi Minh City, Vietnam 越南胡志明市 +84 91 864 9890 [email protected]

Pham Trung Hau Ho Chi Minh City, Vietnam +84 91 360 3729 [email protected]

This publication is issued periodically to keep DNH LAW clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The contents contained in this publication do not constitute legal opinion and should not be regarded as a substitute for legal advice. Copyright 2009 DNH LAW. All Rights Reserved.

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