Amendment of Securities Law: should create equal mechanism for different types of enterprises regarding listing conditions

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The stock market has made a great step forward compared to the beginning of the operation.

By the end of September 2019, there were more than 2,100 enterprises of all economic sectors listed and registered for trading on Vietnam's stock market, with a total market capitalization of over VND5.6 quadrillion. This is a huge achievement after Vietnam's stock market went into operationnearly two decades ago. But in terms of listing conditions, there seems to be a distinction between types of businesses. What do you think about this issue?

Listing securities is the process of identifying securities which meet all criteria to be traded on the stock exchange. In principle, all securities that meet the conditions have the same opportunity to trade onstock exchanges.

When reviewing the conditions for listing securities onthe stock exchange in Vietnam, Decree 58/2012/ND-CP guiding the Securities Law and the amended Securities Law cites that enterprises need at least two years (for Ho Chi Minh Stock Exchange), or one year (for Hanoi Stock Exchange) operating as a joint stock company by the time of listing registration. However, this provision is except for "equitized State enterprises associated with listing".

Accordingly, it can be seen that when equitized SOEs meet the conditions on capital and profit, they will be entitled to list immediately without having to wait for the minimum operating time of at least one year as a joint stock company.

Therefore, I think that the group of enterprises with private capital seems to be "at a disadvantage" in terms of listing conditions compared to state-owned enterprises after equitisation.

However, there are still hundreds of equitized SOEs that have not yet listed, according to the list published at the end of 2018 by the Ministry of Finance. Specifically, as of November 15, 2018, there were still 667 State-owned enterprises which were equitised but not yet registered for trading and listing shares on the stock market. There are many reasons given by businesses for delays. Many businesses have also been sanctioned for failing to register transactions as prescribed. What do you think about this?

As I mentioned, a business that listed on a stock exchange must meet the eligibility criteria. There is no exception for State-owned enterprises.

In particular, ineffective SOEsare anundeniable fact. There are many SOEs which have been in the state of inefficient business operations, losses, accumulated losses on high chartered capital, large debts, or in the process of resolving the consequences of violationsby functional agencies, failing to organize the General Meeting of Shareholders to ask for opinions on the plan to list and to audit financial statements,failing to carry out procedures for listing, transaction registration.

Thus, I think that it is not really appropriate to set targets and set deadlines for SOEs to be listed.

In order to avoid the above situation and to ensure fairness for businesses of all components, does the securities law need to amend or abolish the limitation on operating time in the form of a joint stock companyin the listing standards for non-state enterprises?

By 2019, the domestic private sector is generating about 42% of GDP and 30% of the state budget revenue. The private sector is also attracting about 85% of the country's labor force.

So it can be said that the private sector in Vietnam is growing and holding an important position in the development of the whole economy.

In fact, many enterprises in the private sector have a high growth rate, equity scale and ratio of after-tax profit to equity.

In my opinion, the most important thing to consider is the history and quality of business operations. We are also allowing state-owned enterprises to be listed immediately after equitisation, which means that there is no time-weighting factor butexcludingprivate enterprises on this issue is unequal treatment.

In terms of encouraging transparency in the economy and increasing the supply of goods for the stock market, I think that allowing private-owned enterprises to be listed after fully satisfying listing conditions in accordance with the current law, with the "time of operation" in the form of a joint stock company as state-owned enterprises after equitisation, is completely worth consideration.

Thank you, Sir!