On 11 September 2025, the Government of Vietnam issued Decree
No. 245/2025/ND-CP ("Decree 245"), which amends and
supplements key provisions of the previous securities law. Decree
245 introduces several reforms that directly address criteria for
an upgrade by international index providers like FTSE Russell and
MSCI. These changes are designed to attract foreign capital by
making the market more accessible, transparent, and secure for
international investors. This legal document is a significant
reform effort aimed at aligning Vietnam's capital market with
international standards, thereby facilitating its upgrade to
emerging market status.
Key highlights of Decree 245:
1. Streamlined Procedures for Foreign Investors
Decree 245 makes it easier and faster for foreign investors to
participate in Vietnam's securities market. Notably, recently,
the State Bank of Vietnam ("SBV") issued Circular No.
03/2025/TT-NHNN and Circular No. 25/2025/TT-NHNN to simplify
procedures for opening indirect investment capital accounts and
payment accounts, thereby reducing costs and time to access the
market for foreign investors.
• Simplified Trading Codes: Foreign investors can now receive
an electronic securities trading code (E-STC) and begin trading
immediately, without the prior requirement of submitting physical
paperwork to obtain an official certificate.
• Dual Trading Codes for Fund Managers: Foreign fund
management companies can now be granted two securities trading
codes, one for proprietary trading and another for managing client
transactions. This aligns with the Omnibus Trading Account (OTA)
model, which is a key requirement for market classification
upgrades.
2. Enhanced Market Infrastructure and Security
The new regulations establish a legal foundation for a modern and
secure trading environment.
• Central Counterparty (CCP) Clearing: The Decree provides the
legal basis for implementing a CCP mechanism, a critical component
of a mature market. This system will mitigate risks for both
domestic and foreign investors by guaranteeing trade settlement,
reducing counterparty and exchange rate risks. The State Securities
Commission of Vietnam (SSC) plans to implement this by the first
quarter of 2027.
• Simultaneous IPO and Listing: The Decree allows companies to
concurrently register for an Initial Public Offering (IPO) and a
stock listing. This shortens the time from IPO approval to the
start of trading from a previous 90 days to just 30 days, improving
market liquidity and investor protection. Accordingly, the IPO
process can be shortened by 3-6 months compared to before, ensuring
investors' rights and increasing the attractiveness of the
issuance.
3. Other Notable Reforms
• Credit Ratings for Bonds: All organizations issuing or
registering bonds for a public offering must now obtain a credit
rating from an independent agency. This enhances transparency and
helps protect investors by ensuring that only financially sound
entities can raise capital from the public.
• Mandatory English Disclosure: On 18 September 2024, the
Ministry of Finance issued Circular No. 68/2024/TT-BTC where it
requires public companies and listed firms will be required to
disclose information in both Vietnamese and English. Decree 245
once again emphasizes on this matter by requiring applicable
entities to follow the prevailing rules on disclosure of
information.
• Abolishing Lower Foreign Ownership Limits: Decree 245
removes the provision that previously allowed a public
company's charter or general meeting of shareholders to set a
foreign ownership limit (FOL) below the maximum allowed by law or
international commitments. This change opens up more opportunities
for foreign investors to acquire shares in Vietnamese
companies.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
