Under Circular 74, both foreign & local investors to be considered domestic investors for the purposes of trading unrestricted stocks – Applying Decree 60 opening the FOL for non-restricted has run into a major hurdles. Triggered by the current definition of what is a foreign owned company. Currently, the SSC manages stock trading by classifying investors as domestic or foreign investor (via their trading code), then listed companies are also classified based on their foreign owned ratio. The existing definition of what is a foreign owned company under the new law on foreign investment provides that any institution which is more than 51% foreign owned is viewed as a foreign investor.
In order to tackle this, the new draft amending Circular 74 supplements Article 14 regulating securities trading in public company, listed company, and public funds. Accordingly, stock market trading of companies/ funds must follow all requirements as for local investor.
HSC comment – This effectively means all investors both local and foreign will be treated equally for the purposes of stock market trading and should ease concerns of brokers such as SSI whose foreign room may soon exceed the 51% hurdle that their classification as a foreign owned company won’t have any effect on their business operations. In terms of restricting what stocks they might buy or sell for examples.
These submissions are extracted from reports accomplished by Ho Chi Minh City Securities Corporation (HSC)’s Research Division team led by Fiachra Mac Cana, Managing Director, Head of Research
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