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14-02-2011 02:59 PM #1
Senior Member- Ngày tham gia
- Jan 2010
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Securities law to usher in new asset class
Conditions are expected to turn favourable for the growth of Viet Nam's securities market this year, especially due to the amended securities law that will take effect in July.
The law is expected to allow companies to apply a new mode of raising capital that is very similar to convertible bonds.
They can negotiate with investors and accept investment in cash or assets. Unlike convertible bonds, they do not have to have made profits the previous year for this contract. At the expiry of the contract, the company can either convert the invested amount into equity or repay the investor in cash.
The Ministry of Finance has yet to provide guidelines for its implementation.
Industry insiders say the price for conversion should be clearly regulated and it should be made mandatory for companies to get prior approval from shareholders before entering into such a deal, failing which it will be open to by abused by influential shareholders.
For instance, if a company is allowed to enter into a contract without shareholder approval or without spelling out the price, major shareholders can manipulate the price to benefit their cronies.
Deputy Minister of Finance Tran Xuan Ha has promised his ministry will amend various securities regulations this year.
The ministry also plans to reorganise the operations of the Ha Noi and HCM City stock exchanges and the bond market to facilitate investment and attract more foreign funds.
Its Circular 226, to take effect in April, will require securities and fund management companies to make monthly reports on their financial status to the State Securities Commission, which will enable different levels of inspection based on risks and even suspension of operations.
The State Securities Commission is expected soon to report to the ministry on changes to depository regulations, multiple trading accounts held by investors, and the buying and selling of a security within a session.
A large number of companies are expected to list this year, and with increased listing requirements with regard to size and disclosure, the market is set to become more attractive to investors.
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