Vietnam aims to attract international investments through depository receipts issuance
In a bid to solidify its position as a strategic beacon in innovation and high-tech industries, Vietnam is making significant strides in improving its legal framework for international securities offerings. One key tool in this endeavour is the model of issuing depository receipts for foreign stocks.
A comprehensive legal corridor is needed to implement this model effectively in the Vietnamese market. The Law on Securities 2019 provides the legal basis for Vietnamese issuers to offer securities abroad, with Circular No.119/2020/TT-BTC outlining regulations on the transfer of securities ownership in connection with the issuance or cancellation of depository receipts.
Depository receipts are becoming an essential tool for expanding access to international capital markets and enhancing the visibility and competitiveness of Vietnamese businesses on the global financial stage. They offer global investors a more convenient gateway to Vietnamese companies.
Key aspects of the framework include access to global markets, improved financial transparency, enhanced liquidity, and regulatory compliance. Depository receipts allow Vietnamese companies to list their shares on foreign exchanges, providing them with access to a broader pool of international investors. This increased transparency can improve investor confidence, making Vietnamese businesses more attractive to foreign investors.
Recent developments in Vietnam’s legal framework, such as updates to the Law on Investment and Law on Enterprises, aim to streamline regulatory processes and provide clearer guidelines for companies engaging in international transactions. New regulations like Decree No. 20/2025/ND-CP also aim to improve transparency in tax compliance, which is crucial for international investors.
While there is no direct mention of depository receipts in the current legal framework updates, the overall regulatory environment in Vietnam supports internationalization by enhancing transparency, streamlining investment processes, and improving financial compliance.
To further enhance the ability of Vietnamese companies to raise capital globally and compete internationally, Vietnam could consider specific legal reforms or incentives that directly facilitate the issuance of depository receipts and other international securities offerings. This would build upon the foundation already laid out, making it easier for Vietnamese businesses to list their shares on foreign exchanges and attract international investors.
The market for depository receipts in Vietnam is still in its early development stages, with only a limited number of enterprises meeting the criteria for issuing and listing depository receipts abroad. The limitations in Vietnam's depository receipt market are primarily due to challenges related to accounting standards, information disclosure, and access to international capital markets. However, initial successes have been recorded, such as Vietnamese depository receipts being issued and traded on the Thai market.
In conclusion, the legal framework for depository receipts in Vietnam plays a crucial role in supporting the expansion of international securities offerings and enhancing the competitiveness of Vietnamese businesses on the global financial stage. By continuing to solidify its legal infrastructure and encouraging the use of depository receipts, Vietnam can attract more international capital and establish itself as a key player in the global financial market.
The Law on Securities 2019 and Circular No.119/2020/TT-BTC establish a legal basis for Vietnamese issuers to offer securities abroad, providing them with a more convenient gateway to international capital markets through the issuance of depository receipts. To further boost the capacity of Vietnamese companies to raise capital globally and compete internationally, Vietnam could consider legal reforms or incentives that facilitate the issuance of depository receipts and other international securities offerings.
