illustration image. Source: Internet

Many shortcomings and limitations

The Ministry of Finance is seeking opinions on a draft law to amend and supplement provisions of seven laws, including the Law on Securities. According to the Ministry of Finance, while the Law on Securities has established a comprehensive legal framework for securities activities, it lacks specific provisions regarding the responsibilities of organizations and individuals involved in preparing, submitting, and reviewing documents. This has led to a situation where many organizations and individuals do not fully understand their responsibilities, affecting the quality of information provided to investors and hindering the regulatory authorities' ability to process documents efficiently.

Furthermore, regarding market manipulation, the drafting agency noted that through market surveillance, it has been observed that some investors or groups of investors engage in transactions for only one or a few days, with the intention of influencing the closing or opening price of a particular security. Therefore, it is necessary to codify regulations on manipulative behavior in Decree 156/2020/ND-CP to align with actual practices in the Vietnamese securities market. Additionally, the current law does not have explicit provisions prohibiting insiders of public companies, public securities investment companies, and public funds, as well as related parties, from disclosing information about planned transactions in public shares or fund certificates to the State Securities Commission and stock exchanges prior to the transaction, making it difficult to prevent and address such violations.

The Ministry of Finance also pointed out that regarding regulations related to the conditions for private placement of shares, convertible bonds, and warrants of public companies, although existing laws have provisions on conditions, procedures, and document requirements, the control and supervision by existing shareholders are still limited, affecting the rights of minority shareholders.

Many regulations have been added

To address these shortcomings, the draft amendment to the Law on Securities focuses on three main policy areas, including a set of policies aimed at enhancing transparency and efficiency in securities issuance and offering activities. To implement this policy group, the draft law focuses on amending and supplementing provisions related to standardizing the conditions for securities offering suitable for each type of security; amending and supplementing provisions on public offerings of securities; amending and supplementing provisions on private placements of shares of public companies; amending and supplementing provisions on public companies in the Law on Securities...

Accordingly, the draft adds Article 9a to the Law on Securities of 2019 on the responsibilities of organizations and individuals related to documents and reports, as follows: supplementing provisions on the responsibility of organizations and individuals who submit documents or participate in the preparation of documents and reports to be responsible for the legality, accuracy, truthfulness, and completeness of the documents and reports; specifically stipulating the responsibilities of agencies, organizations that receive documents, consulting organizations, audit organizations, approved auditors, valuation businesses, valuers, underwriting organizations, and other organizations or individuals who sign confirmations, etc., related to documents and reports in securities activities and the securities market.

The draft also amends and supplements Article 11 of the Law on Securities of 2019 on professional securities investors as follows: for companies with a charter capital of over VND100 billion, they must have a minimum operating period of 2 years. For individuals, the regulation is supplemented to require participation in securities investment for a minimum of 2 years, with a minimum trading frequency of 10 times per quarter in the most recent 4 quarters; and a minimum income of VND1 billion per year in the most recent 2 years. At the same time, an additional provision is added that professional securities investors include foreign organizations and individuals.

Notably, the draft also amends and supplements clauses 3 and 6a after clause 6 of Article 12 of the Law on Securities of 2019 on prohibited acts in securities activities and the securities market. Accordingly, the regulation on market manipulation from Decree 156/2020/ND-CP is codified, including specific acts such as: buying or selling a controlling volume of securities at the market opening or closing time to create a new closing or opening price for that security on the market; placing buy and sell orders for the same type of securities on the same trading day or colluding with each other to buy and sell securities without leading to actual transfer... At the same time, prohibited acts related to transactions of insiders of public companies, public funds, and related parties in failing to disclose information about the planned transaction of public shares or fund certificates are added.