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.
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Please do not hesitate to contact Dr. Oliver Massmann under [email protected] if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
