Remove the regulation to increase the time limit for transferring individual securities to 3 years
Regarding the regulation to increase the time limit for transferring individual securities from 1 year to 3 years, Deputy Prime Minister and Minister of Finance Ho Duc Phoc said it will remain the same according to current regulations.
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Regarding the conditions for private securities offerings by public companies, securities companies, and securities investment fund management companies, the draft Law amending and supplementing a number of articles of the Securities Law; Accounting Law; Independent Auditing Law; State Budget Law; Law on Management and Use of Public Assets; Tax Management Law; and National Reserve Law, which has just been submitted by the Government to the National Assembly, clearly states that it proposes to increase the transfer restriction period from a minimum of 1 year for professional securities investors to a minimum of 3 years, similar to that of strategic investors.
At the group discussion session this afternoon (October 29), many National Assembly delegates opposed this proposal.
Delegate Trang A Duong (Ha Giang) said that increasing the time limit for transferring individual securities to 3 years (currently 1 year) is not suitable for the practical situation.
According to the delegate, international market practices, including developed economies such as the US, Japan, EU and countries with similar socio-economic conditions to Vietnam, do not have a minimum transfer restriction of 3 years as in the draft Law.
Furthermore, most investment funds usually have a term of operation of 5-7 years. For new investment funds, the appraisal and negotiation period for transactions also lasts about 1-2 years. If the transfer limit is 3 years, the new investment fund will not participate. For operating funds, it is likely that the remaining term of the fund will not exceed the appraisal, negotiation, transaction signing and transfer restriction period.
On the other hand, private placement of securities is mostly for the purpose of raising funds for investment projects or increasing the business's working capital. If the transfer restriction period is extended to 3 years, the business's ability to raise new capital through private placement will be limited. This will cause difficulties for businesses when other capital mobilization channels such as bond issuance, credit access, etc. are not always favorable.
In addition, the extension of the lock-up period will also affect the plan to upgrade the market to frontier status by 2025 by limiting the ability of new investors to participate in the market.
Therefore, delegate Trang A Duong proposed to keep the regulation as current law (1 year).
With this proposal, delegate Hoang Van Cuong (Hanoi) warned that if the new regulation is applied (increasing the time limit for transferring individual securities to 3 years), market liquidity will decrease.
Further analyzing the unreasonableness of this regulation, delegate Tran Hong Nguyen (Binh Thuan delegation), Deputy Chairman of the National Assembly's Law Committee, said that the nature, purpose of holding and trading securities of strategic investors and professional securities investors are different, so the transfer time should not be restricted equally.
In response to the opinions of National Assembly delegates, Deputy Prime Minister and Minister of Finance Ho Duc Phoc said that the drafting agency accepted and will keep the old regulation of 1 year.
Presenting the audit report this morning, the Chairman of the Economic and Budget Committee also proposed that the Government carefully consider the regulation to increase the transfer restriction period from a minimum of 1 year for professional securities investors to a minimum of 3 years, similar to strategic investors , because the nature, purpose of holding and trading securities of strategic investors and professional securities investors are different.
According to the review agency, the draft Law has narrowed the scope of participants in the purchase, sale and transfer of individual corporate bonds. Increasing the transfer restriction period may lead to investor apprehension, impact market liquidity, reduce the attractiveness and interest of investors in individual securities offerings; and may also cause difficulties for investment activities and portfolio restructuring of professional investors. Some opinions suggest that the transfer restriction period should be higher than the level prescribed in the current Law but lower than the transfer restriction period for strategic investors. Some opinions suggest keeping the transfer restriction period for professional securities investors as in the current Law.
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