Under the Securities Law 2006, shares issued by a public joint stock company (Public JSC) must be registered with the Vietnam Securities Depository (VSD). If shares of a Public JSC are registered with the VSD, then the transfer of shares in such Public JSC must be conducted via the VSD. Title over a share of such Public JSC will only be transferred after details of the transfer are recorded in VSD’s system.
For Public JSCs whose shares are not registered with the VSD, the story is different. Registration of shares with the VSD is to record the ownership rights and other rights of the shareholders. Accordingly, VSD’s registration may be considered as title registration (đăng ký quyền sở hữu). Under the Civil Code 2005, if an asset is subject to title registration then the sale of such asset is only effective after the title registration is completed (presumably in the name of the buyer). Therefore, under the Civil Code 2005, technically, the transfer of shares in a Public JSC whose shares are not registered with the VSD should become effective only such shares are registered with the VSD. Without a VSD registration, the buyer’s title to the shares may be challenged.
That being said, in practice, it is quite common to transfer shares in a Public JSC whose shares are not registered with the VSD without registration with the VSD. Instead, the share transfer in such Public JSC is still completed via a Shareholder Register maintained by such Public JSC (either directly or via a securities company). Some regulations of the MOF recognise that there are Public JSCs whose shares are not registered with the VSD. In fact, an investor in a Public JSC whose shares are not registered with the VSD may find a hard time to request the Public JSC to register its shares with the VSD. Therefore, while the risk may look serious in paper, in practice, it may not be as serious as such.