Foreign Room – would enterpise no longer have its right?

CHANGE TO FOREIGN ROOM LAW – SHAREHOLDERS OF A PUBLIC COMPANY CAN NO LONGER DECIDE ON FOREIGN ROOM IN THEIR OWN COMPANY?

02 Feb 2021

The Vietnam State Securities Commission (“SSC”) last week asked for public comments on a draft decree providing guidance on the 2019 Securities Law, which shall be effective on 1 Jan 2021.
Among other issues, there is one interesting change of law proposed by SSC. Currently shareholders of a company can decide the foreign ownership room in its company. SSC is now proposing such right shall no longer be and foreign investors shall be free to acquire and trade shares of such company upto the limit set by the Government. SSC argues it is necessary to expand the share sale markets of and thus in favor of minority shareholders.
Business owners may see it as infringement to their constitutional right of free will decision to choose their business partners and to make their own decisions about their company and businesses. This change may prevent a company to leverage the foreign ownership room to issue shares to new foreign investors at better prices and also make a company’s ESOP plan void to attract and retain foreign talents if the company’s foreign ownership room is up.

What do you think? write to us at contact@vietpremierlaw.vn