Securities companies afraid of becoming ‘foreign owned’

Securities companies and investment fund management companies attending a workshop on a decree about securities investments, held in HCMC last week, expressed concern about lifting the foreign ownership ratio ceiling to 100 percent, though this is allowed by law.  

Deputy CEO of HSC Securities Trinh Hoang Giang said he wondered if securities companies still could be treated as Vietnamese legal entities if they lifted the room ceiling. 

Giang said he was afraid that the companies would bear some disadvantages in issues related to tax and credit policies if they become ‘100% foreign-owned companies’.

He also fears that the companies would bear limitations in matters relating to property ownership, and the right to lend and borrow money. 

If so, securities companies would suffer because they have margin lending and many of them have to borrow money to provide the service.

Under current laws, foreign investors and foreign enterprises are not allowed to borrow money to make investments in Vietnamese stocks.

“As such, foreign owned securities companies would bear some disadvantages,” he said.

In reply, Nguyen Thanh Long, deputy chair of the State Securities Commission (SSC), said under the Investment Law, the institutions with more than 51 percent of foreign capital would have to comply with regulations set up for foreign investors. 

As for securities companies, since the foreign ownership proportions can fluctuate, they would still be treated as Vietnamese companies. However, this will only be applied in the stock market.

This means all the regulations for Vietnamese companies will only be valid in the stock market. However, as for the regulations on tax, credit and laborers, securities companies will have to comply with the previous provisions.

Long went on to say that SSC has discussed the issues many times with the General Department of Taxation, but they have had no answer.

In fact, not only securities companies, but enterprises in other business fields also hesitate to lift the ceiling for foreign investors for fear they may face some limitations as foreign-owned enterprises.

Meanwhile, STK hesitates to lift room ceilings because it may have to follow stricter regulations on information exposure if it becomes a foreign-owned legal entity.

The Saigon Securities Incorporated (SSI) has announced it would offer a foreign ownership ratio of up to 100% soon after the Decree No 60 took effect last year. However, very few other businesses have followed the move.