You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

March 21, 2025

Vietnam’s Amended Securities Law: What You Need to Know

Subscribe to Updates

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.

Related Professionals

Practices

Banking and Finance

Capital Markets

Location

RELATED INSIGHTS​ 

October 24, 2024
On September 27, 2024, the Securities and Exchange Commission of Thailand (SEC) issued a circular clarifying reporting obligations in relation to listed company securities held by the company’s directors, executives, auditors, or persons related to them (“Key Persons”). The circular aimed to address growing concerns over transparency in shareholding, particularly when shares are used as loan collateral by company executives without sufficient public disclosure, which can lead to sudden share loss and executive departures, destabilizing the company. This circular is likely a stopgap measure, and a full overhaul of the reporting regulations may be needed. The current reporting obligations came into effect on March 16, 2024, and were designed to simplify reporting procedures while still maintaining transparency in the capital markets. The rules allow the Key Persons to consolidate multiple transactions and report them only when certain thresholds are crossed — such as when the total transaction value reaches THB 3 million or when six months have passed since the last report. The rules were intended to reduce the number of minor reports and limit penalties for missed deadlines. However, recent scandals have raised concerns about the reporting rules, particularly issues related to the enforcement of share collateral on executives’ or directors’ loans where the listed company may face a change of direction and management due to such forced sales. To ease these concerns, the SEC issued the new circular to reiterate the rules and lay out three key situations triggering a reporting duty: Force-Selling Due to Default: If shares are forcibly sold due to a loan default, this must be reported, and the transaction should be recorded with the Thailand Securities Depository (TSD). Transfer of Shares to Custodians: Under current rules, the transfer of shares to/from a custodian holding them on behalf of a beneficial owner does not
Read More
October 20, 2024
Following the U.S. Securities and Exchange Commission’s approval of spot Bitcoin ETFs, Thailand’s Securities and Exchange Commission (SEC) is reassessing regulations on the investments of mutual funds and private funds (collectively “Funds”). The SEC has launched a public consultation on new draft notifications introducing  the new asset classes that can be held by Funds, and aims to bring these rules into effect on January 1, 2025. The highlights of these changes are set out below. Eligible New Asset Classes The new asset classes that can be held by Funds can be categorized into two types—investment tokens and crypto assets—and the determination will focus on substance over form. Investment tokens: If the substance involves raising funds, regardless of what the assets are called, and they are legally issued and offered or approved by home regulators that are members of the International Organization of Securities Commissions (IOSCO), Funds can invest in these types of assets as transferable securities within the permitted ratio. Crypto assets: The eligible crypto assets which Funds are entitled to hold focus on crypto ETFs or offshore funds investing in crypto assets, and they are subject to investment limits. Funds can hold crypto assets directly, but only temporarily, and only for the purpose of purchasing, selling, or exchanging the crypto assets, not speculative purposes. The notifications state that Funds may hold Bitcoin/Ethereum for no longer than five business days and USDT/USDC for no more than one month. Investment Limits Typically, the rules segregate investment limits into listed and non-listed digital assets, and the limits depend on the sophistication of the investors in the Funds. In general, UI Funds (mutual funds offered to institutional investors or ultra-high net worth investors) can invest in these new asset classes without any limitations, although net exposure to other crypto assets  –  which
Read More
September 24, 2024
In recent years, Thailand has witnessed significant developments in its personal finance sector, particularly in alternative lending options. This article explores two key concepts in the Thai financial landscape: nano finance and personal loans. These alternative lending models, regulated by the Bank of Thailand (BOT), aim to provide more accessible financial services to individuals and small entrepreneurs who might have limited access to traditional funding sources. Nano Finance: Empowering Small Entrepreneurs The nano finance scheme under the BOT’s supervision is designed to provide funding to small entrepreneurs who might have limited access to traditional financial resources. One of the key features of this scheme is the ability of licensed nano finance providers to use alternative data in assessing loan applicants’ ability to repay (information-based lending). To implement this approach, nano finance providers must have an internal policy on credit approval that supports: Identifying scope and processes for utilizing alternative factors or technologies in determining debt repayment capacity, credit line limits for each loan applicant and total credit limits, and acceptable debt repayment targets; Having resources and personnel with sufficient knowledge, capability, experience, and expertise to operate efficiently and effectively, as well as clear checks and balances; Establishing guidelines for selecting and analyzing factors or financial models to evaluate or predict loan applicants’ ability and willingness to repay; Having an internal sandbox to test key success factors of the selected factors or models; and Having a process for monitoring and reviewing the application of the selected factors or models in assessing debt repayment capability. This approach allows nano finance providers to make more informed lending decisions based on a broader range of data, potentially increasing access to finance for small entrepreneurs who may not have traditional credit histories or collateral. Personal Loans The personal loan scheme under BOT supervision aims
Read More
September 20, 2024
On September 12, 2024, the Bank of Thailand (BOT) Notification Re: Virtual Bank Supervision Criteria took effect. According to this notification, virtual banks must adhere to standards for traditional commercial banks, along with additional requirements tailored to address virtual banks’ digital nature and corporate structure. Specific Requirements The concepts of supervision remain unchanged from the consultation paper titled “Criteria for Supervising Virtual Banks”. Some of the key additional provisions and details on supervision criteria relate to the following: Financial business groups: The notification identifies virtual banks as financial businesses, subject to the BOT’s regulations on financial business group supervision. If a virtual bank is a part of another financial institution’s financial business group, the virtual bank must be under a solo consolidated group. After the “initial phase” (see below), other financial institutions and companies within the financial business group are prohibited from extending credit to or engaging in transactions similar to lending activities with the virtual bank. Capital fund requirements: If other financial institutions’ investment in a virtual bank increases the capital fund in the financial system beyond a safe level and this poses a risk to other financial institutions, the BOT may order the relevant financial institution to maintain capital funds as the BOT deems appropriate. Service channels and outsourcing: Virtual banks must provide services solely through digital channels, except when necessary. For example, with the BOT’s approval, a virtual bank may use other commercial bank electronic branches via an ATM pool system, use a banking agent to serve customer needs for cash, or occasionally provide on-site services. Initial Phase The “initial phase” runs from the date that the virtual bank commences its operations until it receives the BOT’s approval to become fully operational. During this period, certain BOT supervisory requirements are relaxed as follows: Governance: Virtual banks in the initial phase may request
Read More