Vietnam’s Securities Law Amendments Effective 2025: Key Changes and Business Implications

Effective Date and Overview: Vietnam’s National Assembly passed Law No. 56/2024/QH15 on November 29, 2024, introducing significant amendments to the Securities Law (2019) and related laws. Most provisions take effect on January 1, 2025, with certain measures (notably on professional investors and bond issuance conditions) deferred until January 1, 2026. These reforms aim to enhance market transparency, strengthen governance, and protect investors in Vietnam’s capital markets. Below we summarize the key changes – from a clearer definition of market manipulation to stricter listing standards and stronger enforcement – and analyze their practical implications for foreign investors and multinational companies.

New Definition of Stock Market Manipulation

One major update is a comprehensive definition of stock market manipulation, aligning Vietnam’s rules with international practices. Previously, the Securities Law 2019 broadly prohibited market manipulation but lacked detail. The amended law now explicitly enumerates six manipulative behaviors that are illegal. These include, for example, using multiple accounts or colluding with others to trade a security back-and-forth and create artificial demand, as well as placing simultaneous buy and sell orders (wash trades) without real ownership change to simulate market activity. Other prohibited tactics encompass pumping prices by large-volume trades at market open/close, conspiring to influence prices via continuous orders, spreading rumors after taking a position, and any scheme combining trades with false or misleading information to distort supply, demand, or price.

Implications: This clearer delineation of manipulation acts serves as a warning that authorities will aggressively target market abuse. Foreign institutional traders and funds should review their trading strategies and train staff to avoid any practices that could be construed as manipulative under these detailed rules. Enhanced surveillance and clear rules will help foster a fairer market, but they also mean compliance is crucial – inadvertent participation in manipulative schemes (even unknowingly through local partners) could trigger regulatory action. Multinational firms investing in Vietnamese securities should therefore implement robust compliance monitoring to ensure all trading activity adheres to the new standards.

Stricter IPO and Public Company Requirements

The amendments introduce stricter requirements for initial public offerings (IPOs) and for companies maintaining public company status. These changes are intended to raise the quality and accountability of listed firms.

• Enhanced IPO Documentation: Companies launching an IPO in Vietnam must now include additional audited documentation in their registration. In particular, the offering application must include a “Report on Paid-up Charter Capital” audited by an independent auditing firm. This new requirement compels issuers to verify their fully paid charter capital through an external audit, adding credibility to the IPO process. Prospective issuers (including foreign-invested enterprises planning a Vietnamese listing) should budget time and resources for this audited report, as it will be a prerequisite for regulatory approval. This change improves transparency for investors but may lengthen IPO preparation due to the audit step.

• Higher Public Company Thresholds: To qualify (and remain) as a public company, firms must meet heightened financial criteria. In addition to the prior requirements – paid-up charter capital of at least VND 30 billion and at least 10% of voting shares held by 100+ minority shareholders – the amended law adds a new condition: public companies must also have at least VND 30 billion in equity capital. This means companies with heavy accumulated losses (and thus low equity) could fail to qualify even if their charter capital meets the threshold. The equity capital requirement (an “eligibility of public companies” provision) takes effect on January 1, 2026, giving current public firms time to adjust their balance sheets. Foreign investors should be mindful that some smaller listed companies might need to recapitalize or face loss of public company status when the new threshold kicks in.

• Audited Capital Confirmation: Echoing the IPO rule, any company applying for public company status must now submit an independent auditor’s report confirming its paid-up charter capital. This double-check adds assurance that companies aren’t inflating capital figures when joining the market. For foreign-owned companies seeking to go public, engaging a licensed local auditor to verify capital will be an essential step.

• Public Company Deregistration Triggers: The law now clearly specifies four scenarios that will strip a company of its public company status if they occur. These include failing to meet any of the public company conditions (such as the new capital thresholds), failing to disclose audited annual financial statements for two consecutive years, failing to disclose annual general meeting resolutions for two years, or failing to register and list shares within one year after an offering or SSC registration. These stricter criteria force public companies to maintain ongoing compliance or face automatic delisting. For investors, this means higher quality and transparency among public companies, but also a risk that if an investee company lapses in reporting or compliance, its shares could become illiquid if public status is lost. Foreign shareholders may need to play a more active governance role (e.g. insisting on timely financial audits and AGM disclosures) to ensure their Vietnamese investee companies remain in good standing under these rules.

Implications: Collectively, the above changes raise the bar for going and staying public in Vietnam. Multinational businesses aiming to list a Vietnamese subsidiary should ensure the company’s financials and governance practices meet these higher standards (adequate equity, rigorous financial reporting, etc.). While these measures might reduce the pool of eligible public companies in the short term, they are likely to bolster investor confidence in the listed sector’s integrity. Foreign investors can expect more reliable financial information (due to required audits) and fewer under-capitalized issuers in the market. However, investors should also conduct ongoing due diligence – verifying that public companies continue to fulfill reporting obligations – to avoid surprises such as a sudden loss of public company status affecting their holdings.

Expanded Access for Foreign Professional Investors

Vietnam’s amended law makes a notable change to investor categorization that opens more avenues for foreign capital. Foreign investors (individuals and organizations) are now explicitly recognized as “professional securities investors” (PSIs) when participating in Vietnam’s market. Under the Securities Law, professional investors are those with certified financial capacity or expertise, and they are allowed to partake in certain investments (like private placements or unlisted corporate bonds) that retail investors cannot. By automatically classifying foreign investors as professional investors, the law aims to attract more foreign investment into Vietnam’s securities market. Practically, this means overseas investors no longer need to pass local financial tests to qualify – their foreign status, combined with active investment in Vietnam, is sufficient for PSI treatment.

For foreign institutions, this expanded recognition eases access to investment opportunities that were previously limited. For instance, private corporate bond issuances in Vietnam can only be sold to professional investors; now foreign funds or companies can participate in these offerings more freely. It also signals that regulators welcome international investors by leveling the playing field with domestic institutions.

However, alongside this expansion, the law introduces stricter rules to protect individual professional investors (both domestic and foreign) in the bond market. Effective January 1, 2026, individual professional investors will only be allowed to buy or trade privately issued corporate bonds if the bonds meet certain safeguards: (a) the bonds carry a credit rating and are backed by collateral, or (b) the bonds have a credit rating and are guaranteed by a credit institution. These conditions do not apply to institutional investors, but they aim to prevent high-risk bonds from being sold to individual buyers. From a foreign investor’s perspective, this reform will concentrate individual investments into higher-quality (rated and secured) bond products, potentially improving confidence but also limiting the range of bond options available to affluent individual investors. Issuers, on the other hand, will need to obtain credit ratings and collateral or bank guarantees if they hope to tap the individual investor segment, which could drive some to seek financing through banks instead.

Implications: The automatic PSI status for foreigners is a positive development for cross-border investors – it simplifies compliance and potentially broadens the deal flow accessible to foreign funds (e.g. private equity or venture investments that involve share private placements, or secondary trades of unlisted securities). Multinationals can more easily invest in Vietnamese companies without navigating retail investor limits. At the same time, foreign individual investors should be aware of the upcoming 2026 restrictions in the bond market: if they plan to purchase Vietnamese corporate bonds privately, they will be limited to rated and secured issuances. In practice, well-advised foreign investors may already prefer such higher-quality bonds, but the law will effectively shut out lower-rated or unrated bond deals from individual portfolios. Businesses raising capital in Vietnam (especially via bonds) should prepare for these requirements by engaging credit rating agencies and arranging collateral or guarantees to keep access to a broad investor base. Overall, this reform strikes a balance between making Vietnam more accessible to foreign capital and upholding investor protection, which should ultimately benefit market stability.

Increased Enforcement Powers of the State Securities Commission

The amendments significantly bolster the enforcement authority of the State Securities Commission (SSC), reflecting a determination to crack down on violations in the market. Notably, the SSC is now empowered to suspend or cancel securities offerings under certain conditions – a power that can directly impact issuers and investors:

• Cancellation of Offerings for Non-Compliance: The SSC may cancel a public securities offering after its completion if it finds that the issuer violated key offering conditions and the securities were never duly listed or registered for trading post-offering. In practice, this means if a company conducts a public offering (e.g. an IPO or a public bond issue) but fails to list the securities on the stock exchange as required – and it’s discovered that the offering process breached regulations (such as misstatements or unlawful distribution) – the SSC can void the offering. This power closes a loophole where companies might complete fundraising yet delay listing; now there is a clear consequence (offering cancellation) if irregularities are found in such cases.

• Suspension and Cancellation of Bond Issuances: In the wake of past scandals in the private bond market, the law gives SSC tools to intervene in corporate bond offerings more forcefully. The SSC can suspend an ongoing private bond offering for up to 60 days if evidence emerges of legal violations in the offering documents or distribution process. If the issuer fails to rectify the issues within the suspension period, or if violations (like false disclosures or improper sales practices) are confirmed after the offering concludes, the SSC now has the right to cancel the bond issuance retroactively. An important exception is that once bonds have been converted into shares and those shares are listed on an exchange (in the case of convertible bonds or warrant-linked bonds), the SSC cannot cancel them even if earlier violations are later discovered. This exception protects investors’ expectations in listed securities, but otherwise the message is clear: the regulator can unwind bond sales that flout the rules.

These enforcement enhancements were partly prompted by high-profile cases (such as the 2022 cancellation of several bond issues linked to the Tân Hoàng Minh Group for fraud and misinformation). By codifying SSC’s authority to suspend or cancel offerings, the law deters misconduct and enables quicker regulatory response to protect investors.

Implications: Foreign companies and investors should welcome the more assertive regulatory oversight, as it contributes to a healthier market in the long run. However, for businesses planning to issue securities in Vietnam – whether shares or bonds – the stakes for compliance are now even higher. Thorough due diligence and truthful disclosure in offering documents are absolutely critical, since any material falsehood could lead to an offering being halted or voided by the SSC. Multinational corporations raising capital (or their underwriters) should ensure all regulatory filings are accurate and complete, and that post-offering obligations (like listing within prescribed timelines) are fulfilled to avoid cancellation risk. Investors, for their part, gain some reassurance that the SSC can act against faulty offerings, potentially reducing fraud risk. Yet they should also be cognizant that an SSC-ordered cancellation could complicate their investment – e.g. funds might need to be refunded – so selecting reputable issuers and verifying compliance is still paramount. Overall, the SSC’s expanded powers underscore Vietnam’s commitment to enforcement, which should deter malpractice and improve market integrity, benefiting serious investors and issuers.