Legal framework streamlined for securities market growth
Updated at Friday, 15 Jun 2018, 08:30
The Hanoitimes - The securities sector is expected to witness the largest streamlining process with the proposed elimination of many cumbersome regulations to promote the development of the stock market.
Under the revised Securities Law, which will be submitted to the National Assembly in October this year, the Ministry of Finance (MoF) and the State Securities Commission (SSC) have proposed slashing 38 business conditions and simplifying 40 administrative procedures in the securities sector.
The business conditions mentioned in the review include the capital requirement for establishing securities companies (VND100 billion, or US$4.4 million, for a self-trading securities operation and VND165 billion for an underwriting operation).
Many business conditions in the securities sector will be likely removed
Conditions related to personnel such as full civil act capacity, offices, working facilities and equipment are also under review.
Improved corporate governance
Besides, Le Cong Dien, director of SSC’s Public Enterprises Supervisory Department, said under the revised Securities Law, SSC will also issue the Code of Corporate Governance to streamline the legal framework for the Vietnamese securities market in line with international practice.
According to Dien, the institution and maintenance of good corporate governance practice is an important issue in the revised Securities Law. This is also a critical topic in economic action programs, business communities in most countries in the world.
Good corporate governance helps improve business performance and contributes to the prosperity of the economy in general, he said.
Phan Duc Hieu, deputy director of Central Institute for Economic Management under the Ministry of Planning and Investment, said that the average corporate governance quality of Vietnamese companies is much lower than the common ground in the region.
Vietnam’s corporate governance scorecard of the six ASEAN countries was the lowest and lagged far behind the surrounding countries like Indonesia, Malaysia, the Philippines, Singapore and Thailand, Hieu said investor relation is also a very new issue for listed companies here.
There are very few companies aware of this problem, let a lone take actual action to implement this program, Hieu said.
He added in the countries with high corporate governance quality, managers will apply the practice for the benefit of the company, even if the law does not require it.
According to Hieu, as the corporate governance in Vietnam is at a very early stage, the State invention is necessary to make sure companies comply with good practice.
Hieu also suggested the government create the right environment and mechanism to develop the intermediaries or organizations that observe and evaluate companies, or carry out activities to protect the interests of shareholders. For example, in Malaysia, there are associations or companies established to protect shareholders.
Such organizations would put pressure on companies to adopt better practice and mechanism to protect shareholders’ interests, Hieu said.
Nguyen Anh Phong, deputy general director of the Hanoi Stock Exchange, said good investor relations would bridge the gap between companies and their shareholders, at the same time supporting companies to raise capital from the securities market.
SSC, Hanoi and Ho Chi Minh stock exchanges have so far made efforts to popularize and raise corporate awareness of enterprises, as well as encourage businesses to adopt good practice through training programs and annual assessment on corporate governance of listed companies.