Hanoi (VNS/VNA) - The regulation on theprivate placement shares of a start-up company is sparking opposing publicopinions as it can pose potential risks and create overlaps with other laws.

The amended draft law on securities, expected tobe approved by the National Assembly meeting in May 2020, regulates the privateplacement shares of a start-up company is directly detailed and monitored bythe Government.

Private placement is the sale of an issue of debtor equity securities to a single buyer or to a limited number of buyers withouta public offering.

According to the Ministry of Finance, the draftingagency of the new law, the regulation aims to create a legal basis for start-upenterprises to conduct private placement, facilitating the creation of acapital channel for start-ups, allowing them to access capital right from thevery first stages, ensuring equality between businesses.

But many experts expressed their objection orurged for more careful consideration when including the regulation in thenew law.

Vu Bang, former Chairman of the State SecuritiesCommission suggested clarifying the scope and scale of start-up enterprisessubjected to the regulation to avoid overlapping with the provisions of Law onSupport for Small- and Medium-sized Enterprises.

“It is very risky to allow a start-up to list onthe stock market when it is not ready because in most of cases, only the Stateor the angel funds could sponsor the firms when they first introduce theirbusiness idea,” Bang said.

“In developed countries, if the start-up can provetheir effectiveness, the venture capital funds will provide finance support inthe second stage, and after that, if the business grows well, it will beapproved for listing.”

He added that start-ups, especiallytechnology-based enterprises, needed huge capital with many unique ideas andmany countries support them by opening up a secondary market for them to trade,Vietnam can also consider this idea.

Meanwhile, according to Le Xuan Nghia, a member ofthe Prime Minister's Economic Advisory Group, countries seeing start-ups flourishsuch as Finland, Israel or the Republic of Korea allow the firms to list shareson the stock market.

“However, they have a firm scientific andtechnical base, advanced education and training system,” Nghia said.

“Meanwhile, we still have many limitations. Alarge number of business leaders in our country still lack legal knowledge,corporate culture as well as social knowledge.”

“Therefore, it is very risky for these enterprisesto participate in the stock market, at this time, we should only let them jointhe secondary market,” Nghia said.

In Ireland, the Government often holds a stake ofabout 70 percent of capital in start-up enterprises. But when the Governmentwants to withdraw capital from these firms, they must prepare procedures forthe businesses to list on the stock market and must strictly comply with thestandards of the stock exchange, Nghia said.-VNS/VNA