Prevent risks for investors
From January 1, 2025, the amended Securities Law will officially take effect. Experts assess that the amended Securities Law has many new breakthroughs, not only helping to improve the legal framework but also better meeting the needs of developing a sustainable and safe securities market in the context of international economic integration. In particular, there are many new points on bond issuance, strengthening discipline to help the market develop sustainably.
According to VIS Rating experts, these amendments benefit bondholders by preventing violations from bond issuers, restricting high-risk investment activities, and mandating timely disclosures and credit ratings to improve market discipline.
Compared to the current law, the new amendments clearly define the roles and responsibilities of each party involved in public and private bond issuance, including the advisory unit, auditor and credit rating unit. The new law stipulates that these units must comply with all applicable laws and regulations and provide services honestly and responsibly. The State Securities Commission (SSC) will have the right to enforce legal action against any violations that may harm investors, such as when issuers fail to disclose necessary information to investors.
In addition to increasing information transparency, the new law will prevent high-risk investment activities by individual investors.
First, high-risk companies will be restricted from issuing bonds to the public; issuers will have to comply with stricter criteria, such as debt-to-equity ratios, bondholder representative requirements, and regulatory credit ratings.
Second, for private placements, private placements are no longer distributed and sold to individual investors unless they are considered professional investors and the bonds are rated and must be guaranteed by a bank or have collateral.
Paving the way for foreign capital
Notably, the amended Securities Law has added a provision that "foreign organizations and individuals are also considered professional securities investors".
This regulation paves the way for foreign investors to participate in investing in the Vietnamese corporate bond market, while also providing stricter regulations on participants in the individual corporate bond market.
Accordingly, individual professional securities investors are only allowed to buy, sell and trade individual corporate bonds in two cases: Enterprises issuing individual corporate bonds have credit ratings and have secured assets; Enterprises issuing individual corporate bonds have credit ratings and have payment guarantees from credit institutions.
Mr. Nguyen Khac Hai - Director of Law and Compliance Control, SSI Securities Corporation - commented that this amendment will create conditions for foreign individual investors to easily participate in investing in the individual corporate bond market, promote indirect investment in Vietnam, and diversify the customer base participating in the corporate bond market.
Currently, institutional investors, including investment funds, insurance companies, and voluntary pension funds, own less than 10% of the value of outstanding bonds. Therefore, it is necessary to amend regulations to develop institutional investors, allowing financial institutions to participate more deeply in the corporate bond market based on a risk-based investment management framework.
Mr. Nguyen Khac Hai said that the above regulations will help relieve the psychology of investors in the market and "pave the way" for investors to return to the market, stimulating the excitement of the corporate bond market.
