The circular will become valid on 1 October of this year.

You will recall our last update on the removal of the foreign ownership cap on public companies (listed or unlisted). This circular provides guidance on how this is to be carried out.

The circular governs all investments by foreign investors in Vietnam’s securities market (including investments in securities company and securities investment funds). The circular contains detailed procedures and strict reporting requirements that must be met in this regard.

Here are some of the key points.

a. To invest in Vietnam’s securities market, a foreign investor must obtain a securities transaction code.

b. A foreign investor must open an “indirect” investment account at a custodial bank in Vietnam. Only one account may be opened by each investor. All remittance of funds to buy/sell shares, all relevant payments, all remittance of profits must be carried out using this bank account.

c. The circular contains rigourous reporting requirements on all relevant parties regarding transactions involving foreign investors (including reporting by public companies on the percentage of foreign shareholding in their companies) and if requested by the authorities the information on deals must be disclosed whether they are subject of confidentiality obligations or not.

d. Public companies carrying out activities, on which the law does not impose any foreign ownership cap, may impose a cap on foreign ownership in their charter.

e. The circular also contains detailed guidance on how foreign investors can purchase 51% or more interest in securities companies (whether private or public and whether listed or unlisted) and the formalities to obtain approval for such purchase.

Circular 123/2015/TT-BTC dated 19 August 2015 (valid 1 October 2015)

DNLegal, 25 August 2015 (