Sixth, the current Securities Law only stipulates that commercial banks when issuing shares to the public for the first time (IPO) must have a financial advisory organization, but it is not required to have a unit that guarantees the issuance. Should there be an issuance guarantee, investors will feel more secure, because the price of the shares has been guaranteed and to some extent will become more standard; the situation of an unsuccessful IPO and the issuance of shares must be re-offered, offered a second time will not happen.
Seventh, the regulations on administrative and criminal sanctions are still limited (the penalties are too light to be a deterrent) and the procedures from the state management agencies, although improved, are still cumbersome. Therefore, although there are few cases of commercial banks offering shares to the public being punished, with the current economic growth rate, there will be more and more cases of banks deliberately violating the law to carry out public offerings of shares when they have not met the conditions. At that time, commercial banks can choose to offer securities to the public but not register and are willing to pay the fine.
Thus, the main cause of all the above shortcomings is that the legal framework has not ensured that the stock market operates truly fairly and transparently, as well as the rights of investors; the market operates in conditions where there are not enough regulations on anti-fraud from the issuance to the trading of securities; there are not enough regulations on issuance guarantees, etc. It is easy to see that the legal regulations for the offering of shares of commercial banks in Vietnam in the past have been significantly lacking compared to the growth rate of this activity at banks. The sanctions have not ensured the strictness of the law, the deterrence against cases of securities fraud, and the slow disclosure of information. According to the World Bank (WB), the current mechanism for protecting investors in Vietnam is still quite weak and worrying (WB, 2011).
CONCLUSION OF CHAPTER 2
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Thus, along with the economic development process, securities issuance activities in general and public offering of shares by commercial banks in Vietnam in particular have become extremely important. The law on public offering of shares by commercial banks in Vietnam is currently being studied in a comprehensive and dialectical manner. The law on this issue has provisions as a basis for public offering of shares by commercial banks in practice. However, in order for public offering of shares by commercial banks to operate smoothly and effectively, the system of regulations on public offering of securities in general and public offering of shares by commercial banks in particular needs to be further amended and supplemented. Based on the content of the issues raised by the law on public securities issuance in general and public offering of shares by commercial banks in particular, as well as the requirement to improve the law on the securities market, I have proposed a number of directions and solutions for improving the legal regulations on public offering of shares by commercial banks in Vietnam today. Hopefully, in the coming time, along with the process of reasonable amendment and supplementation, the legal framework on public offering of shares by commercial banks in Vietnam will truly bring into full play its regulatory effect in creating an effective capital mobilization channel contributing to the process of national construction and development.
CHAPTER 3: DIRECTIONS FOR IMPROVING THE LAW ON PUBLIC OFFERING OF SHARES OF JOINT STOCK COMMERCIAL BANKS IN VIETNAM
3.1 Requirements for perfecting the law on public offering of shares of joint stock commercial banks in Vietnam
3.1.1 In accordance with the Party and State's guidelines and policies and the stock market development strategy
The establishment and completion of the legal framework for stock offering in particular and the stock market in general has always been one of the goals of our Party and State. In recent years, the determination of the Party and Government of Vietnam to pursue the policy of renewing the country's economy towards developing a market economy with the regulation and management of the State has been proven to be a wise policy, in line with the general development laws of the times and initially brought about great achievements for the cause of national construction. However, to be able to establish a developed market economy as desired on the basis of the current backward and inferior existence of Vietnam is indeed a very difficult thing and there are many challenges that we must solve. One of those challenges is that we must solve the capital needs of the economy. In the formation and synchronous development of the market mechanism in our country today, the creation of a new capital market has become an urgent requirement in both theory and practice. Therefore, in the political report of the 7th Party Central Committee at the 8th Party Congress, there was an orientational paragraph: "Develop the capital market through many forms of attracting medium and long-term deposits through banks and financial companies to lend for development investment. Expand the issuance of bonds and stocks and promote the establishment of the stock market while ensuring the healthy operation of this market" . This can be considered a very correct viewpoint of the Party on credit and financial policies in general as well as capital mobilization policies in particular. This viewpoint was once again affirmed at the 8th Party Congress.
IX and up to now, when the stock market has been established and operated for a while and is showing its effectiveness, it can be affirmed that: Continuing to improve the legal framework on securities and the stock market as well as the offering of shares of commercial banks in particular is the condition for better implementation of the national capital mobilization policy and contributing to the successful implementation of the general policy of the Party and State on developing the national economy.
After more than 10 years of operation, the Vietnamese stock market has yet to develop sustainably. Looking at the stock market development strategy for the period 2011 - 2020, many big goals have been set, but the most necessary thing at this time is to immediately issue essential products and a legal framework that is close to market operations for investors.
The Vietnam Stock Market Development Strategy for the 2011-2020 period aims to develop the scale and quality of operations for the stock market, maintain market order and safety, expand scope, enhance the effectiveness of market management and supervision, protect the rights and legitimate interests of investors, enhance competitiveness and integration...
Another content that needs to be emphasized is to ensure the openness and transparency of the market, encourage participants, and link the stock market with the development of the monetary and insurance markets. The market capitalization scale in 2015 is expected to be 65-70% of GDP, and in 2020 it is expected to be 90-100% of GDP.
The most important element of the market is investors, the project sets out the goal of developing investment funds, investment companies in the direction of diversifying fund types, establishing supporting organizations (credit rating, transfer registration, payment). Developing a system of institutional investors, banks, finance - securities, insurance, pension investment funds, along with professionalizing individual investors...
To implement the above solutions, the State will have incentive policies on taxes, fees, and charges for investors, listed companies, and securities companies, and increase the foreign ownership ratio in line with the commitment roadmap.
Improve the quality of operations of self-governing organizations, modernize and enhance the capacity of technology systems at Exchanges and Securities Depository Centers.
securities, perfecting and developing a 2-level monitoring system, automatic transaction monitoring (during and after trading hours), automating the depository system, clearing and settlement (shortening the payment cycle), building a 1-level depository registration system, building and developing an automatic information disclosure system. In particular, it will improve the effectiveness of state management, apply a risk-based management model, the State regulates the market through tax, interest rate, and investment policies, and limit intervention by administrative tools.
In fact, the market is demanding early regulations guiding important securities operations such as margin trading, managed short selling (securities lending and borrowing mechanism), compulsory buying and selling transactions, regulations guiding the implementation and trading of derivative securities such as options, futures contracts, etc.
Implementing a stock market development strategy in the next 10 years is not simple, especially how to make that strategy feasible. But for investors in the market, those goals are probably too far away, what they need is simply practical tools and solutions to support transactions, access to information in the most accurate way to make reasonable decisions in each trading session.
3.1.2 Requirements for international integration in the banking and stock market sectors.
November 7, 2006 was the day Vietnam officially joined the World Trade Organization (WTO), marking a milestone in Vietnam's integration into the world economy. Joining the World Trade Organization (WTO) brought many opportunities but also posed many challenges for Vietnam's young stock market.
The event of Vietnam joining the WTO has really had a strong impact on the development of the stock market. The strong increase in stock indexes shows investors' hope in the development potential of the Vietnamese stock market. Many enterprises have chosen the form of public offering of shares to raise capital, expand production and business activities, creating an abundant source of goods for the stock market. Securities and the stock market have become
The concepts that are most mentioned in the media and attract the attention of the whole society.
However, joining the WTO also brings many challenges and great risks because the Vietnamese stock market is now connected to the world, becoming a part of the global stock market. The capital flow in the Vietnamese stock market at this time is not only from domestic individuals and organizations but also from giant financial institutions in the world. These financial institutions have contributed significantly to the development of stock markets in the world but are also the cause of crisis and collapse of many national stock markets. Participating in the process of international economic integration, the possibility of spreading risks and the impact of financial fluctuations due to global connectivity is very likely to occur.
Therefore, the requirement for the Vietnamese stock market in the context of international integration is to have a solid legal corridor, regulate issues arising in the field of securities and the stock market, and create conditions for the stock market to develop stably and long-term.
3.1.3 Overcoming the shortcomings of the law on public offering of shares of joint stock commercial banks.
Based on the contents presented in Chapter 1 and Chapter 2 of the thesis, it can be seen that although we have built a system of legal documents regulating the public offering of shares of commercial banks, there are still many inadequacies between the documents and overlaps between the law and practical application.
That is the problem with the conditions for the offering. Although the regulations on the conditions for the offering are quite specific, they are not complete, and there is no mechanism to control the financial reports of the issuing bank. For IPO activities, the regulation and strict control of the financial regime and reporting regime right from the beginning is very important in contributing to the building of a transparent stock market. From 2001 to 2006, the Ministry of Finance issued 30 Vietnamese Accounting Standards (VAS) and circulars.
guidance. VAS is translated from international accounting standards (IAS) but has been modified, so sometimes the system loses its consistency. IAS provides definitions, methods of doing, presentation and mandatory information in financial statements but does not provide mandatory forms for companies to follow. The Vietnamese accounting regime not only provides a unified accounting system but also provides mandatory financial reporting forms for all enterprises. In addition, the basic earnings per share (EPS) has not been calculated correctly. According to VAS 30, Circular No. 21/2006/TT-BTC guiding VAS 30 and IAS 33, basic EPS is calculated by dividing the total net profit (loss) attributable to common shareholders by the average number of ordinary shares outstanding during the period. VAS 30 does not mention the adjustment to reduce profits not attributable to common shareholders such as bonus funds and welfare funds for employees. According to IAS, these amounts are expenses deducted from the profits for common shareholders [43]. After a year of profitable operations, the company spends 5-15% of its total net profit after tax to pay employees in the form of bonus funds and social welfare funds. Thus, it can be seen that the profit of financial statements prepared under the Vietnamese auditing regime will be much higher than that of statements prepared under international standards.
In addition, the offering procedure is still complicated. Take the case of Vietcombank's IPO as a typical example. VCB is considered the best quality state-owned commercial bank compared to other state-owned commercial banks in Vietnam. VCB's IPO was quite successful with the total number of shares offered in the first session reaching 97.5 million, equivalent to 6.5% of charter capital, with 9,473 investors participating with a purchase order of 1,222,17200 shares, the average winning bid price reaching 107,860 VND/share. However, many analysts are still troubled by the shortcomings of this IPO. According to author Phong Lan in the Securities Investment Magazine, an IPO that is too high will not assess the true value of the shares. Therefore, the trading price on the market quickly decreased from over 107,000 VND/share to 50,000 to
60,000 VND/share. This reflects the bubble market situation in our country. Not only that, IPO is also associated with the change of shareholder ownership.
in the company. Vietcombank has about 15,500 investors holding shares through IPO including small investors, employees buying preferential shares... but accounting for less than 10% of charter capital. The State still holds more than 90% of VCB's charter capital, has the right to convene a meeting of the Board of Directors, approve the content of the General Meeting of Shareholders while the other 15,500 investors can only "sit and watch and follow". That is the big calculation about "post-IPO" that many businesses have not solved [17, p.14].
3.2 Some recommendations to improve the law on public offering of shares of joint stock commercial banks in Vietnam.
3.2.1 Regarding the method of offering shares to the public:
The Securities Law does not regulate the method of offering shares to the public. It can be said that regulating the method of offering shares is very necessary to ensure market stability and reduce costs for issuers. The success or failure of an issue is very important. Therefore, to ensure the success of the offering, the offering organization must choose the most optimal issuance method. Among the methods of issuing shares, underwriting is considered the most modern and safest method. In the world, underwriting has been used for a long time. In Vietnam, this method has been regulated in Decree 48/1998 dated July 11, 1998, followed by Decree 144/2003/ND-CP dated November 28, 2003 and guiding documents for implementation. The Law amending and supplementing a number of articles of the Securities Law 2010 has supplemented this deficiency in the provisions of the Securities Law 2006, but it is still not complete. Therefore, in the coming time, it is necessary to supplement specific provisions on the conditions for establishing an underwriting organization, the organizational structure, operations of the underwriting organization and other issues related to its establishment and dissolution. Only then can banks offering shares be assured of issuing shares in large quantities, and investors will have a basis to place their trust in their stock investment projects. In addition to the underwriting method, it is necessary to stipulate some additional methods of issuing shares such as issuing agents or bidding so that offering organizations have the opportunity to choose the method of offering shares to the public that best suits their conditions.