The starlins, point for the development o f securities regulation, as mentioned earlier, can be traced back as early as 1990 vvhen the íìrst C om pany A ct and the O rdinance on B anks, C redit Cooperatives and F inancial C om panies were ađopted, with the recognition o f shareholding companies and shareholding banks.
Then in 1992, the government made a íurther eíTort in issuing D ecision 203/C T,
p u rsu a n t to w h ic h the n r s t g ro u p o f se v e n State enterprises w a s s in g lc d out for
convcrsion into shareholding companics through the sale o f equity.
In 1994, a considerable number oi' lee,al documents concerning the issuance o í'securitics vvere passed. Started in July 26 when the governm ent passed D ecree 72/CP, accorđing to w hich thc issuance oỉ' three types o f governm ent bonds (treasury bills whose term is less than one year to maturity; treasury bonds which malure after one ycar; and prọịcct-lìnance bonds vvhose term is more than 5 years) was iniliated. Then in Septem ber 17. the eovem m cnl issued a second regulation
The c u r r e n t 1'oreign i n v e s t m e n t lavv still o í ĩ c r s l a v o r a b l e t r e a t m e n t t o f o r e i g n i n v e s t e d enterprises. T he F oreign /n v e s lm e n l A c l o f 1996 (as amended in 2 0 0 0 ) g iv e s tax e xe m p tion and reduction to foreign inveslcd Enterprises (Alt. 2 la). Loss incurred by a íoreign invested enterprise in the current financial year can be deducled from the enterprise’s assessa b le inco m e o f the f o llo w in g ílscal year ( A lt. 4 0 ). Pacilities and machines thai are imported to constitute im m ovable assets ol" Ibreiun invcsted enlcrpriscs are also exem pted IVoni import tax (Art. 4 7 .2 ) . See also Deereư 2 4 / 2 0 0 0 - N D / C P dated Jul. 31. 2 0 0 0 (miidiim the im plem entation o f the Foreign Invescment Act) Arls. 55, 57; and scc C irc u h tr 13/2001 TT.B TC dated Mar. 8, 2001 (guiding the implementation o í t h c rcmilation oTtaxcs uitli rcspccl to tbrcimi invested enterprises), Section II.
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(D ecree 120/CP) under which State enterprise bonds and s h a r e s could be publicly oíTcrcd.
In the same year, the State Bank also passecl som e legal instruments to enable the issuance o f State Bank Bills (D ecisỉon 2 1 1 -Q D /N H 1 dated September 22, 1994) and the issuance o f bonds and shares by com m ercial banks (Decision 2 1 2 -Q D /N H l dated Septem ber 22, 1994 and D ecision 275-Q D /N H 5 dated N o v e m b e r 7, 1994, respectively).
In 1995, markets for bidding and for repurchase and resale o f Treasury Bills and bank bills vvere eslablished under D ecision 88-Q D /N H 9 dated M arch 28, 1995 and D ecision 89-Q D /N H 9 (on the same date), issued by the State Bank.
A lthough, up to this stage, a formal securities m arket had continuously been absent in Victnam, nevertheless the prim ary securities m arket was broader than thai w hich hađ been operating beíbre the introduction o f the Open D oor Policy.
On such a securities market, the issuancc oí' governm enl bonds, com pany shares and bonds and bank bonds was conducted.62 A lthough the prim ary market existed, a num ber o f problems still remained. The principal ones were:
(1) There vvas a lack o f an adequate inibrmation disclosure regime. Enterprises that souíìhl to issnc shares and bonds had to apply for an issuing license from the Ministry ol' 1 inancc (MOI7). Thcy liad to lì le Ihc Iblknving documents with the MOI': a letter ol' application; the cnterprise charler; a proposed business plan; thc lìnancial slatements o f the most recent three years; and the proposal o f the issuance. A lter getting the issuins license iVom Ihe M OF, they merely had to announce 011 public media some iníbnnation concerning the íuture issuance, such as num bcr oí' shares or bonds going lo be issued, thcir nominal value, time, and vcnuc 1'or the issuance, and rights o f the securities h o ld e rs .63 There was no provision saying thai either the issuers or ihe M O F vvould be responsible íor disclosing íìnther iníòrm ation that could affect Ihe securities' price; nor was there any provision sayinẹ, tliat continuous and timely disclosure o f iníbrmation was required.
62 L e g a l b a s e s f o r this m a r k è t , a s e a r l i e r m e n t i o n e d , h a d been c o n t i n u o u s l y r e l e a s e d s i n c e the
c a i i y 1 9 9 0 s . R e c e n t l y s o i n e o f t h e s e d o c u m e i i t s l i a v e b e e n r e p l a c e d . F o r e x a m p l e : t h e 1 9 9 0 C ư m p c n i y A c t w a s r e p l a c e d b y t h e 1 9 9 9 E n t e r p r i s e A c l : D e c r e e 7 2 / C P v v a s r e p l a c e d b y D e c r e e 0 1 / 2 0 0 0 ' X D - C P d a t c d . l an. I 3 . 2 0 0 0 , p r o i m i l m i t i n g “ T h e I s s u a n c e o f G o v e r n m e n t B o n d s ’ .
()í S e e C i r c u / a r 9 1 - T C / K B N N d a t e d N o v . I I, 1 9 9 4 ("1’ r o v i s i o n a l R c s ĩ u l a l i o n o f tlie I s s u a n c e o f S l i a r e s a n d B o n d s ot t h e Slate-ONMicd 1 Enterprises'' ). P a r t s 1.12. 11.12, S i 11.14. H e r e i n a f t e r , C i r r u / a r 9 1 -T C /K B N N .
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(2) There were neither anti-fraud provisions to prevent m isconduct on the market, nor any speciíìc provision to handle violators o f the regulation o f such a primary market.
(3) There was a shorlage o f professional intermediaries such as brokers and dealers for offering and distributing securities.64 Securities were often issued through the State Treasury, commercial banks and financial companies, or were even issued by the issuing enterprises themselves.
(4) A lthough there were legal bases for the issuance o f com pany shares and bonds and governm ent boncls, as earlier mentioned, it was reported that in practice most o f the securities issued were short-term bonds whose terms were less than one year.65
The intention o f the Vietnamese governmenl to set up fully-fledged securities markets was expressly revealed in the middle o f 1995, when the Prime Minister issued D ecision 361/T T g to form a Preparatory Com m ission for the Establishment o f a Securities Market. The Commission's task was to study and to draft proposals on the establishment and development o f a securities market in Vietnam. Then the year 1996 marked an important event, the establishment o f the State Securities Commission (the s s c - thc public regulatory authority over securitics markets) under D ecree 75/CP.
Tvvo ycars later, in 1998, a basic legal iramevvork for the operation o f securilies markets, D ecree 48/1998, and a legal íbundation for the establishment o f stock trading centers and the planned stock exchanges, D ecision 127/1998, were issued 011 July 11, 1998. Thesc oovernmental legal I n s t r u m e n t s , together with various decisions and circulars issued by the ssc since 1998 to date, have created the currenl securilies regulalions in Vielnam.
D ecree 4 8 /Ỉ9 9 S reaulates public olìeiings and the trade o f listed securities.
Private olTerings and the trade o f non-listed securities are not subịect to this Dccree.
It can be said that all lavvmakine activities throughout the 1990s have shovved the sovernm ent's elTorts in preparinỉỉ nccessary conditions for the birth oi'
64 See Ibr exam ple: Alt. 9, D e c r c e 72/C P: this Articlc said that " overnm ent bonds can be issued tlirough the State Treasury and co m m ercial banks, lìnancial c o m p a n ie s and Insurance companies;
A n 30, D e c r c e Ỉ2Ọ/CP: tliis Article vested in the State Bank o f Victnam a righl to giiide com m crcial banks and nnnncial c o m p a n ic s in actiim as aiằencies for issuing co m p a n y shares and bonds; Parts: 1.15.! and II. 15, C ir c ii/a r 91-TC'KBN N.
<>? See Níiuven 1 raII Ouo. a b o \ o II. 5 1, 232.
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a íorm al securities market in Vietnam. Those efforts w ere íìnally realizcd on July 20, 2000, w hen the íìrst Securities Trading Centcr vvas put into operation in Ho Chi Minh City.