Vietnam’s Law on Securities of 2019 was one of several laws amended (“Amended Securities Law”) under the wide-ranging Law No. 56/2024/QH15 passed by the National Assembly on November 29, 2024. The amendments came into force on January 1, 2025, with certain provisions related to professional securities investors and the eligibility criteria for public companies becoming effective on January 1, 2026.

Below are some of the key points of the Amended Securities Law.

Changes to Professional Securities Investors

Professional securities investors (PSIs) are investors who have adequate financial capacity or securities qualifications and can participate in private placements and private funds, among other investment activities. Under the Amended Securities Law, foreign investors, including individuals and organizations, are now automatically classified as PSIs, without having to meet any requirements regarding financial capacity. This loosening of requirements is expected to attract more foreign investment.

However, from January 1, 2026, individual PSIs will only be able to purchase, trade, and transfer privately placed corporate bonds that: (i) have been given credit ratings and are secured by collateral, or (ii) have been given credit ratings and covered by payment guarantees from credit institutions. Meanwhile, institutional PSIs will not be bound by these restrictions relating to privately placed corporate bonds.

Protecting Shareholders in Private Securities Issuance

The Amended Securities Law introduces additional conditions for private issuance of shares, convertible bonds, and warrant-linked bonds by public companies, and revises the required contents in the issuance plans from “criteria and number of investors” to “number of shares, offering price, or principles for determining the offering price.” This change promotes shareholder supervision and protects minority shareholders from overly powerful boards of directors.

Expanded Powers of SSC

The Amended Securities Law grants the State Securities Commission (SSC) new powers to suspend and cancel private placements of securities and adds new circumstances for the SSC to cancel public offerings.

The SSC may suspend a registered private placement of securities for up to 60 days: (i) if the offering documents contain misleading information or omit material information that could impact investment decisions and cause damage to investors, or (ii) if the distribution of the securities does not comply with statutory requirements. The issuer must announce the suspension within 7 business days from the suspension and recall the issued securities upon the investor’s request as well as provide a refund to the investor within 15 days from the investor’s request. If deficiencies leading to the suspension are corrected, the SSC will issue a written notice of withdrawal of the suspension. As a result, such private placement will be allowed to proceed.

The SSC may cancel a registered private placement of securities if (i) the issuer fails to address deficiencies leading to the suspension within the suspension period; (ii) the offering documents or the distribution of the private placement of shares are found to have violated the law while the issued shares are not yet listed or registered for trading on the stock exchange; or (iii) the offering documents or the distribution of the securities upon completion of private placement are found to have breached the law. Cancellation of the private placement does not apply to offered shares, shares converted from convertible bonds, or shares purchased from warrants that have been listed or registered for trading on the stock exchange after the private placement.

Under the Amended Securities Law, the SSC may now cancel a public offering if the offering documents or the distribution of the public offering are found to have violated the law after the public offering, but before completion of procedures to be listed or registered for trading on the stock exchange.

Liability Framework for Public Companies, Shareholders, and Advisors

Previously, issuers, underwriters, auditors, and “certifying organizations” were liable for the legality, accuracy, and sufficiency of securities-related documents and reporting during public offerings or when registering securities for listing or trading. The Amended Securities Law extends this liability to private offerings of securities, public disclosures by public companies or their shareholders, and reporting of secondary trading of securities by investors. Further, advisors involved in these activities may be exposed to greater liability for their failure to adhere to professional standards.

This change pushes public companies, their shareholders, and advisors to be more accountable and enhance the transparency in the securities market. They must ensure that all documents and information related to public disclosures and securities trading do not have misleading information and comprehensively include all material facts that could influence decisions by investors, authorities, and other stakeholders.

Defining “Securities Market Manipulation”

The Amended Securities Law updates the acts of “securities market manipulation” as outlined in the 2015 Penal Code to align the definitions of securities market manipulation under securities law and criminal law, closing any gaps between the two. This change aims to imposes administrative liability for market manipulation that does not reach threshold for criminal liability.

Other Changes

The Amended Securities Law adds additional grounds for the cancellation of public company status, which include a public company (i) failing to publish its audited financial statements or annual shareholder meeting resolutions, for two consecutive years; (ii) failing to register its shares with the Vietnam Securities Depository and Clearing Corporation; or (iii) failing to register its shares for listing.

Privately issued corporate bonds offered before January 1, 2026, will adhere to the 2019 Securities and the 2020 Law on Enterprises until the principal and interest are fully paid. Privately issued corporate bonds disclosed to the stock exchange before January 1, 2026, but not yet distributed will follow the same laws until distribution is complete, after which they will comply with the Amended Securities Law.

A public company repurchasing shares from employees in accordance with an employee stock ownership program does not need to reduce charter capital, but only needs to report the total number of repurchased employee shares at the nearest annual general meeting of shareholders. Accordingly, the Amended Securities Law is implicitly reviving treasury shares as previously outlined in the expired 2006 Securities Law, allowing public companies to hold treasury shares after the effective date of the 2019 Securities Law for this limited case of repurchased employee shares. This amendment is paired with an exception to the 6-month blackout period for issuing new shares after a share repurchase for repurchase of shares from leaving employees according to the employee stock ownership program.

Outlook

The Amended Securities Law aims to significantly strengthen governance, increase robustness, and provide better protection for investors in Vietnam’s securities market. This initiative should help address evolving challenges, upgrade the local market, and ensure alignment with international practice.