Vietnam’s Amended Securities Law: Key Takeaways for Foreign Investors

March 20, 2025 Posted by Vietnam Briefing Written by Arendse Huld Reading Time: 6 minutes

Vietnam has made significant amendments to the 2019 Law on Securities (“Securities Law”) to address regulatory gaps, strengthen market oversight, and improve investor protection. The changes come in response to recent financial scandals and market manipulation cases that have exposed weaknesses in the country’s securities regulations. By tightening rules on stock market manipulation, public offerings, and investor classifications, the amendments aim to create a more transparent and stable investment environment.

The amendment, implemented through Law No. 56/2024/QH15, was passed by the National Assembly in November 2024. Most of the amended provisions take effect on January 1, 2025, with some key clauses affecting individual professional investors coming into force on January 1, 2026.

The amendment aims to close loopholes that have been exploited by companies in recent years and to crack down on securities fraud and stock market manipulation. Cases such as the Faros Construction scandal, where the company inflated its charter capital, and Louis Holdings, which engaged in stock price manipulation, exposed weaknesses in Vietnam’s securities regulations. These high-profile cases have underscored the need for stricter enforcement and clearer regulations.

Key amendments to the Securities Law

New definition of stock market manipulation

One of the most significant updates to the law is the addition of a clear definition of stock market manipulation. The new definition outlines various forms of misconduct, including:

Colluding with others or using personal or third-party accounts to repeatedly trade securities and create artificial supply and demand;
Placing buy and sell orders for the same type of securities on the same trading day or colluding with others to buy and sell securities without actually transferring ownership, or ownership only circulating among group members to create fake stock prices, supply, and demand;
Executing large-volume trades at market open or close to distort stock prices;

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Coordinating or enticing repeated buy-and-sell orders to manipulate supply, demand, and stock prices;
Using mass media to influence security prices after acquiring a position; and
Spreading false information or using deceptive trading tactics to create artificial market conditions and manipulate stock prices.

By explicitly defining these activities, the amendment provides stronger legal grounds for enforcement and helps curb market abuse.

Stricter requirements for IPO registration

To prevent companies from inflating their financial standing, the amendment mandates that companies applying for an initial public offering (IPO) must submit an audited report on contributed charter capital. An amendment to Article 18, which outlines the documents required for an application for registration of public offering, requires companies to submit a “report on the contributed charter capital as of the time of registration for the IPO, audited by an independent auditing organization as prescribed by the Minister of Finance.”

This amendment requires companies to provide accurate financial disclosures and seeks to prevent incidents like the Faros Construction case, in which the chairman of the parent company attempted to mislead investors by falsifying the company’s charter capital through falsified documents.

Expansion of professional investors to include foreign investors

The amendment to Article 11 expands the definition of professional investors to include foreign individuals and organizations that are engaged in business and investment activities in Vietnam. Previously, this status was largely limited to domestic financial institutions and high-net-worth individuals, restricting foreign participation in certain investment opportunities. By granting foreign individuals and organizations professional investor status, the amendment allows them to access investment opportunities that were previously restricted to domestic institutions and high-net-worth individuals, notably the private placement of shares. This change enhances Vietnam’s appeal as an investment destination, potentially increasing foreign capital inflows and market liquidity.

Additionally, the amendment stipulates stricter requirements for individual professional investors engaging in the purchase, trade, and transfer of privately placed corporate bonds from January 1, 2026. Specifically, individual professional investors may only engage in this activity under one of the following two conditions:

The privately placed corporate bonds have a credit rating and are backed by collateral; or
The privately placed corporate bonds have a credit rating and are guaranteed payment by a credit institution.

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These restrictions introduce an additional layer of risk management. By requiring either a credit rating with collateral or a guarantee from a credit institution, the amendment aims to enhance the protection of individual investors and market stability. These requirements ensure that only vetted, lower-risk bonds are accessible to individual investors, reducing the likelihood of financial instability from speculative investments.

Increased authority for the State Securities Commission to cancel public offerings

The State Securities Commission (SSC) has been granted broader powers to cancel public stock offerings if violations are discovered after the offering has been completed. Previously, cancellation was only allowed under limited circumstances, such as failing to meet the shareholder distribution thresholds required for public offerings. However, the amended law under Article 28 now allows the SSC to cancel an offering even after the shares or bonds have been sold, provided it is later discovered that the offering violated securities regulations. This change ensures that fraudulent fundraising activities can be addressed, even after they have been completed, thereby enhancing investor protection and maintaining market integrity.

Under the original law, the SSC could cancel a public offering in the following cases:

If the causes of a suspension (conditions of which are outlined in Clause 1, Article 27 of the Securities Law) are not addressed within the 60-day deadline;
If the quantity of voting shares sold to at least 100 non-major shareholders was below the required ratio (as stipulated in Clause 1, Article 15 of the Securities Law); or
If a follow-on offering fails to raise sufficient capital to carry out the issuer’s project (as stipulated in Clause 2, Article 15 of the Securities Law).

The amended law expands this scope by adding two new provisions:

The SSC can now cancel a public offering of shares even after they have been sold if it is later discovered that the offering violated the provisions of Clause 1, Article 27, which outlines the circumstances under which the SSC can suspend public offerings; and
The same applies to public offerings of bonds and secured warrants, where violations of Clause 1, Article 27 are discovered after the offering has concluded.

Stricter requirements for maintaining public company status

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Under the previous law, a joint-stock company was considered a public company if it had at least VND 30 billion (US$1.2 million) in contributed charter capital and at least 10 percent of voting shares held by at least 100 non-major shareholders. The amended law now requires companies to have both VND 30 billion in charter capital and VND 30 billion in equity capital, making the requirements more stringent. This change ensures that only financially stable companies maintain their public company status, helping to improve corporate governance and reduce risks for investors.

Stricter requirements for individuals and organizations in securities filings

A new article, Article 11a, has been added to reinforce the legal responsibility of those handling financial records and reports, ensuring they are accurate, transparent, and compliant with regulations.

Legal accountability

Under this new provision, companies and individuals involved in the preparation of records and reports related to securities and securities market activities must ensure that the information contained is truthful, legal, accurate, and complete. These companies and individuals will be held legally liable for any false, misleading, or incomplete disclosures. In addition, companies and individuals responsible for confirming the records and documents will also be held legally liable for their contents. This change is intended to prevent fraudulent reporting, addressing some of the fraud cases seen in recent years.

Additionally, authorities reviewing and approving these filings will not be held accountable for violations that occurred before or after their assessment, shifting the burden of compliance onto the organizations submitting the reports. This ensures that financial statements and disclosures are thoroughly vetted at their source, reducing the risk of manipulation or misinformation reaching investors.

Tighter consulting and auditing standards

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The amendment also tightens consulting and auditing standards. Dossier consulting firms are required to conduct rigorous due diligence before signing off on reports based on the information, data, and documents provided and will be held legally liable within the scope of their responsibilities. Meanwhile, auditors must follow independent auditing laws and professional standards and comply with standards on assurance service contracts. They are also responsible for giving opinions on the summary of financial information.

By imposing stricter compliance measures, this new provision aims to boost investor confidence and enhance the credibility of Vietnam’s financial markets. It also reflects efforts to improve transparency, reduce corporate misconduct, and align Vietnam’s securities regulations with international best practices.

Significance of the Securities Law’s amendments

These amendments represent a significant shift in Vietnam’s approach to securities regulation, with a focus on improving market transparency, investor protection, and corporate governance. By clearly defining stock market manipulation, introducing stricter IPO and public company requirements, and expanding the SSC’s authority, Vietnam is taking important steps to address financial fraud and enhance market integrity. The inclusion of foreign investors as professional investors also signals the country’s intent to attract more international capital while maintaining regulatory safeguards.

These reforms are hoped to boost investor confidence and strengthen Vietnam’s position as an emerging financial hub in Southeast Asia. With enhanced enforcement mechanisms and clearer regulations, the country’s stock market is likely to become more transparent, efficient, and resilient against fraudulent activities.