VIETNAM - NEW DECREE 245 ON ATTRACTING FOREIGN INVESTMENT AND ACCELERATING VIETNAM'S MARKET UPGRADE TO EMERGING MARKET STATUS

VIETNAM - NEW DECREE 245 ON ATTRACTING FOREIGN INVESTMENT AND ACCELERATING VIETNAM'S MARKET UPGRADE TO EMERGING MARKET STATUS

1. VIETNAM - NEW DECREE 245 ON ATTRACTING FOREIGN INVESTMENT AND
ACCELERATING VIETNAM'S MARKET UP GRADE TO EMERGING MARKET STATUS

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

2. 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.