VINACHEM

Foreign investors will be able to put down deposits and collateral in foreign currency when participating in auctions to purchase shares in State-owned enterprises next week, according to a circular issued recently by the State Bank of Vietnam.

Under the circular, foreign investors are permitted to pay deposits and provide collateral in foreign currency via transfer when taking part in auctions to purchase shares in State-owned enterprises (SOEs) whose equitization scheme has been approved by the Prime Minister.

They are also entitled to use the deposits and collateral to buy state shares and capital contributions in SOEs and state-invested enterprises under the divestment scheme which has received approval by the Prime Minister.

In addition to these changes, deposits and collateral in foreign currency via transfer will also be used to acquire shares and capital contributions in SOEs that make investments in other enterprises which carry out the divestment of state capital as approved by the Prime Minister.

If they are successful during an auction, foreign investors are to transfer their investment capital according to the country’s legal regulations on foreign exchange management in order to make payment for the purchased shares and capital contributions.

In the case of losing an auction, they may transfer abroad their deposits and collateral in foreign currency after deducting the related arising expenses, if any.

Previous regulations reportedly do not allow foreign investors to put down deposits and provide collateral in foreign currency during initial public offerings (IPOs).

Therefore, the new regulations of Circular No.03 serve as a catalyst for foreign investors to further participate in the equitization and divestment of SOEs in Vietnam.

The circular is set to come into force from May 13 onwards. - Source: VOV -