Stock investment is a long-term investment form that investors should know

I. Current demand for stock investment by investors

In recent years, Vietnam's stock market has increasingly attracted strong interest from foreign investors. Stock investment is not only a long-term profit-generating channel but also demonstrates trust in the growth potential of Vietnam's economy. With open-door and integration policies, Vietnam has gradually improved its legal framework to create favorable conditions for foreign investors to access the domestic capital market.

II. Legal regulations on stock investment by foreign investors in Vietnam

1. Are foreign investors allowed to invest in stocks in Vietnam?

According to the Law on Investment 2020 and Law on Securities 2019, foreign investors are permitted to invest in Vietnamese stocks by purchasing shares of public joint-stock companies or indirectly via investment funds and securities firms. These activities must comply with ownership ratio regulations, investment conditions, and conditional business sectors.

2. In what forms can foreign investors invest in Vietnamese stocks?

Common stock investment methods for foreign investors include:

- Purchasing listed shares on the HOSE, HNX, or UPCoM exchanges;

- Purchasing shares in unlisted companies (per the Law on Enterprise and the Law on Investment);

- Investing through mutual funds or fund management companies;

- Establishing a foreign-invested economic organization to hold shares/stocks in Vietnamese enterprises.

3. Which sectors restrict or prohibit foreign stock investment?

Pursuant to Article 6 and Appendix IV of the Law on Investment 2020, foreign investors are restricted or prohibited from investing in certain industries:

- Prohibited sectors: narcotics production, prostitution, fireworks, debt collection services, etc.;

- Conditional investment sectors: telecommunications, media, education, banking, insurance, etc. In these sectors, foreign investors may only hold a maximum ownership percentage as stipulated by law and international treaties.

III. Questions about stock investment regulations

1. Can foreign investors invest in Vietnamese stocks using US dollars (USD)?

According to the Ordinance on Foreign Exchange 2005, amended in 2013, foreign investors are allowed to use foreign currencies to invest in Vietnamese stocks. However:

- Funds must be transferred through an indirect investment capital account opened at a Vietnamese commercial bank;

- Foreign exchange regulations must be strictly followed.

2. Which authority licenses and manages stock investment activities?

Foreign stock investments are supervised and managed by the State Securities Commission (SSC).
Additionally, the Ho Chi Minh Stock Exchange (HOSE), Hanoi Stock Exchange (HNX), and the Vietnam Securities Depository (VSD) participate in technical management and transaction settlement.

3. What are the conditions for foreign investors to invest in Vietnamese stocks?

According to the Law on Securities 2019, foreign investors must:

- Open a securities trading account at a licensed brokerage firm;

- Register for a foreign investor trading code;

- Comply with ownership limits by sector;

- Not fall under the restricted or prohibited investor categories.

4. What is the maximum stock ownership allowed for foreign investors?

This depends on the sector and industry:

- Unrestricted sectors: It can up to 100% ownership;

- Conditional sectors: Ownership ratio is vary, for example:

+ Commercial banks: up to 30% of charter capital (Clause 5, Article 7, Decree 01/2014/NĐ-CP);

+ Securities companies: up to 49%;

+ Education/healthcare: up to 100%, depending on the entity type.

5. Are foreign investors allowed to transfer their stock holdings in Vietnam?

Foreign investors must comply with:

- Reporting and clearing the transaction via VSD and the relevant Stock Exchange (for listed stocks);

- Fulfilling tax obligations (e.g., capital gains tax);

- Observing ownership limits in conditional sectors;

- For unlisted shares, compliance with the Law on Enterprises and possible prior approval from relevant authorities is required when foreign ownership ratios are affected.

IV. Legal consulting services for stock investment regulations

To ensure stock investments are legally compliant and minimize potential risks, it is essential to seek support from legal consulting services. NPLAW offers professional legal advisory services, including:

- Drafting contract;

- Consulting legal compliance;

- Supporting the investment procedures.

This comprehensive support helps save time and ensures secure and effective investment transactions.