Depository receipts let Vietnamese companies reach global investors without leaving home exchanges behind. This article provides general information only and is not legal advice for any specific case. Regulations may change – please consult a professional before acting. Questions: info@ivlf-advisors.com.
1. Market Upgrade Momentum and the Pressure to Restructure Capital
Depository receipts in Vietnam are fast becoming a key instrument for companies that want to raise international capital without upending their governance. As Vietnam’s stock market upgrade enters its final stretch, the race to widen access to foreign capital has become urgent: traditional funding channels – bank credit and domestic share issuance – are increasingly constrained by foreign ownership limits (FOL).
For companies preparing large-scale offerings, the Depository Receipt (DR) has emerged as an elegant compromise: deep access to global capital markets without disturbing the core governance structure or internal voting ratios.
2. The Legal Nature of DRs in Cross-Border Finance
Legally, a DR is a transferable security issued by a reputable international depository bank, representing a quantity of underlying shares of the domestic company held in custody with an agent bank in Vietnam.
Structures such as Non-Voting Depository Receipts (NVDRs) deliver a double advantage:
- For foreign investors: full economic benefits – dividends and rights in new issuances – equivalent to ordinary shareholders;
- For the issuer: international capital raised beyond the FOL ceiling, while remaining immune to takeover risk or deep interference in management by foreign funds.
3. Vietnam’s Current Legal Framework for Offshore DR Offerings
Unlike its early days, Vietnam’s financial market now has a relatively complete regulatory system for offshore securities offerings via DRs:
- Securities Law 2019 (as amended by Law No. 56/2024/QH15): the foundational instrument that formally recognises depository receipts as securities;
- Decree No. 155/2020/ND-CP (as amended by Decree No. 245/2025/ND-CP): detailed conditions on foreign ownership ratios, issuer financial standing, and dossiers for offering and listing DRs on international exchanges such as SGX, HKEX or NASDAQ;
- Circular No. 119/2020/TT-BTC: mechanics for converting ownership of the underlying securities when DRs are issued or cancelled, protecting capital flows and liquidity.
4. IVLF’s International IPO and DR Issuance Roadmap
Although the potential is enormous, few Vietnamese companies have executed DR programmes successfully – held back by IFRS conversion, cross-border audit compliance and technical custody conditions. IVLF Advisors supports issuers end to end:
- Capital structuring: optimal capital models, exchange-rate risk control and the tax treatment of dividends paid to international investors;
- Compliance and legal due diligence: offering dossiers that satisfy both the State Securities Commission of Vietnam and host-country regulators;
- Global depository connections: negotiating and establishing agreements with depository banks and custodian banks within the Euroclear/Clearstream system.
Planning an international listing or DR programme?
IVLF Advisors advises issuers on capital markets transactions and cross-border financing in Vietnam. Contact us for a confidential discussion.
Depository receipts: quick answers for issuers
What problem do depository receipts solve?
They separate where a company lists from where its investors sit. A Vietnamese issuer keeps its onshore listing while depository receipts trade on an international venue in a hard currency, widening the investor base without a full offshore restructuring – and without testing the foreign ownership limits that constrain direct share purchases.
Sponsored or unsponsored – does it matter?
Materially. Sponsored depository receipts give the issuer control over the programme, disclosure and the depositary relationship; unsponsored programmes arise without issuer involvement and can fragment trading. Issuers considering capital raising should always anchor a sponsored programme first.
What approvals does a Vietnamese issuer need?
Offshore issuance touches securities regulation, foreign exchange control and, for some sectors, ownership caps. The approval path runs through the securities regulator with State Bank touchpoints for the currency flows – a sequencing exercise our capital markets team handles as one workstream.
Are depository receipts only for giants?
No. Mid-cap issuers with a clear equity story use compact programmes to court regional funds; the fixed costs have fallen sharply. What matters is disclosure readiness – the same threshold any serious international capital raising demands.
This article is provided for general information only and does not constitute legal advice for any specific case. Regulations may change – please consult a qualified professional before acting. Should further analysis be required, please contact one of our lawyers below.
