Analysis of the Legal Framework of Vietnam's Stock Market

Vietnam’s stock market has gone through 25 years of development with significant legal changes. This article comprehensively analyzes the legal framework of Vietnam’s stock market, from its early days to the present, while also evaluating prospects for future development.

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I. The Development of Vietnam’s Stock Market Legal Framework (2000-2025)

1. Early stage (1996–2000): Laying the foundation

Vietnam’s stock market was officially established in 2000 with Decree No. 48/1998/NĐ-CP on securities and the securities market. During this period, the legal framework was rudimentary, mainly focusing on establishing basic principles for market operations.

Important legal documents issued during this period:

Decree No. 48/1998/NĐ-CP dated July 11, 1998 on securities and the securities market
Decision No. 127/1998/QĐ-TTg dated July 11, 1998 on the establishment of the State Securities Commission
2000: Establishment of Ho Chi Minh City Securities Trading Center (now HOSE)
28/07/2000: The first trading session with two stock codes: REE and SAM

2. Initial development stage (2001–2009): Expansion and volatility

2005: Establishment of Hanoi Securities Trading Center (now HNX) and Vietnam Securities Depository (VSD)
2006: Vinamilk listed, helping HOSE’s market capitalization double in a day. VN-Index reached 752 points, up 144% for the year

The year 2006 marked an important milestone with the promulgation of Vietnam’s first Securities Law, creating a more solid legal foundation for market development.

Securities Law No. 70/2006/QH11 (issued on June 29, 2006):

The first law to comprehensively regulate securities activities in Vietnam
Clear regulations on securities offerings, listing, trading, securities companies, investment funds, and investor rights

3. Integration and reform stage (2010–2025): Strong breakthrough

Amendment Law No. 62/2010/QH12:

Updated regulations to align with practical needs and international integration
Enhanced supervision, transparency, and investor protection

Securities Law No. 54/2019/QH14 dated November 26, 2019 (effective from January 1, 2021):

Increased minimum charter capital for public offerings from 10 to 30 billion VND
Clear regulations on the organizational model of Vietnam Stock Exchange and its subsidiaries
Expanded definitions of securities, insiders, and related persons
Enhanced corporate governance of public companies according to international practices

Decree No. 155/2020/NĐ-CP detailing the implementation of the Securities Law:

Public offerings of securities
Listing and registration for trading
Securities and fund management companies
Information disclosure and violation handling
The main legal foundation for the activities of organizations and individuals in the securities market
Circular 116/2020/TT-BTC – Guidelines on public company governance

Issuance of internal regulation templates:

Company charter
Board of Directors operational regulations
Supervisory Board
Audit Committee
Requirements for companies to develop internal regulations in accordance with the Enterprise Law, Securities Law, and Decree 155
Circular 51/2021/TT-BTC and amendments such as Circular 20/2025/TT-BTC: regulations on obligations of organizations and individuals in foreign investment in the securities market

Circular 68/2024/TT-BTC – Foreign investment management:

Allows foreign institutional investors to place stock purchase orders without having sufficient funds at the time of order placement
Securities companies must assess settlement risks and may use their proprietary trading accounts to process transactions with insufficient funds
Custodian banks are responsible if they incorrectly confirm cash balances
Mandatory information disclosure in English, helping to increase transparency and attract international capital

Circular 03/2025/TT-NHNN – International capital flows:

Regulations on opening and using VND accounts for foreign indirect investment activities

Applicable to:

Non-resident foreign investors
Banks authorized to conduct foreign exchange business
Indirect investment accounts are the only channel for transactions related to securities investment, capital contribution, share purchase, dividend receipt, transfers, etc.
Circular 19/2025/TT-BTC: regulations on public company registration, audited contributed charter capital reports

II. Analysis of Key Legal Aspects
1. Regulations on foreign capital flows

Circular 68/2024/TT-BTC and Circular 03/2025/TT-NHNN have created significant changes in managing foreign capital flows in Vietnam’s securities market. The new regulations focus on:

Relaxing foreign ownership limits in certain sectors
Simplifying investment procedures for foreign investors
Enhancing transparency in foreign investor transactions
Protecting the market from short-term speculative capital flows

Compared to previous regulations, the new legal framework has created a more favorable environment for foreign investors while still ensuring national economic security. However, some barriers still exist that need to be addressed to meet market upgrade requirements.

2. Market upgrade roadmap

Vietnam is striving to meet legal criteria to be upgraded from a frontier market to an emerging market. Important legal changes include:

Perfecting the T+2 settlement mechanism and implementing a continuous matching cycle
Deploying the KRX system to enhance market supervision and transparency
Improving regulations on foreign ownership and market access rights
Enhancing the legal framework for investor protection according to international standards

According to assessments by FTSE Russell and MSCI, Vietnam has made significant progress in meeting legal criteria, but still needs to continue improving certain aspects such as market access rights for foreign investors and settlement mechanisms.

3. Investor protection mechanisms

The current legal framework for investor protection in Vietnam’s securities market includes:

Regulations on transparent and timely information disclosure
Transaction monitoring and fraud prevention mechanisms
Corporate governance regulations and minority shareholder protection
Strict sanctions for violations

Compared to international standards, Vietnam’s investor protection mechanisms have improved significantly but gaps remain, especially in law enforcement and violation handling. Improvement proposals include strengthening regulatory authorities’ capacity, enhancing violation processing efficiency, and perfecting dispute resolution mechanisms.

4. Tax Policies in Securities Transactions

The current legal framework for taxation of securities transactions in Vietnam includes:

Personal income tax from securities transfers: 0.1% on transaction value
Corporate income tax from securities transfers: 20% on income
Tax on dividend income: 5% for individuals

Compared to markets in the region, Vietnam’s tax policies are quite competitive. However, the application of personal income tax as a percentage of transaction value rather than actual profit remains controversial and may need to be reconsidered in the future.

III. Challenges and Prospects
1. Current Legal Challenges

Vietnam’s stock market is facing several legal challenges that need to be addressed:

Gap between regulations and law enforcement
Limited market supervision capacity
Sanctions not strong enough to deter violations
Legal system still overlapping and lacking coherence
Slow adaptation to new trading forms and financial technology

2. Future Legal Development Directions

To meet development requirements and international integration, Vietnam’s stock market legal framework needs to develop in the following directions:

Continue to improve regulations in line with international standards
Strengthen law enforcement and violation handling capabilities
Develop legal frameworks for new financial products and financial technology
Enhance transparency and investor protection
Reform tax policies to encourage long-term investment

IV. Conclusion

After 25 years of development, Vietnam’s stock market legal framework has made significant progress, from rudimentary regulations to the relatively comprehensive legal system today. The Securities Law of 2019 and its guiding documents have created a solid foundation for sustainable market development.

To ensure sustainable development in the future, continuing to improve the legal framework, enhancing law enforcement effectiveness, and adapting to new development trends are urgent requirements. With these efforts, Vietnam’s stock market has the prospect of achieving its upgrading goals and becoming an effective capital mobilization channel for the economy.

V. Frequently Asked Questions (FAQs)
1. What legal regulations are hindering Vietnam’s upgrade to emerging market status?

The main legal barriers include: foreign ownership limits, settlement and clearing cycles that don’t meet international standards, issues with market access for foreign investors, and investor protection mechanisms that aren’t fully developed according to international standards.

2. What limitations from the old law has the Securities Law 2019 addressed?

The Securities Law 2019 has strengthened regulations on information transparency, improved corporate governance quality, reinforced investor protection mechanisms, enhanced sanctions, and created a legal framework for new products such as derivatives.

3. What legal regulations do individual investors need to know when participating in Vietnam’s stock market?

Individual investors need to understand regulations on opening trading accounts, securities income tax (0.1% on transaction value), information disclosure requirements, ownership limits, and trading regulations such as T+2, securities and margin requirements.

4. How do tax policies for securities transactions in Vietnam differ from other countries in the region?

Vietnam applies a 0.1% tax on securities transaction value, regardless of profit or loss. Meanwhile, many countries in the region apply income tax on actual profits (such as Thailand, Singapore).

5. How can one verify the legality of a securities company in Vietnam?

Investors can verify the legality of securities companies through the official website of the State Securities Commission (ssc.gov.vn), which publishes a list of licensed companies. Additionally, verification can be done through the websites of the Ho Chi Minh City Stock Exchange (hsx.vn) or Hanoi Stock Exchange (hnx.vn).

VI. Introduction to Securities Legal Advisory Services of Harley Miller Law Firm

Harley Miller Law Firm specializes in providing legal advisory services in the field of securities and capital markets in Vietnam with over 20 years of experience. We are proud to offer comprehensive legal solutions for both domestic and international clients.

1. Securities Legal Advisory Services

Legal advice on securities listing and issuance
Legal support in M&A transactions related to listed companies
Advisory on compliance with information disclosure and corporate governance regulations
Support in handling legal tax issues in securities investment

2. Investor Representation and Protection Services

Representing investors in securities disputes
Advising and supporting investors in cases related to market fraud
Legal support for foreign investors participating in the Vietnamese market

3. Corporate Legal Advisory Services

Advising on capital structure and corporate structure before IPO
Supporting companies in preparing listing documents
Legal advice on public company governance
Supporting companies in organizing Shareholders’ General Meetings

With a team of lawyers who have deep expertise in the stock market and experience working with regulatory agencies, Harley Miller Law Firm is committed to providing high-quality legal advisory services, meeting diverse client needs in the context of Vietnam’s increasingly developing stock market.

Contact us: info@luatminhnguyen.com | Hotline: (+84) 9372 15585