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Stock market law proposed to boost investor confidence
Laos is to develop a law on stocks and the stock market, aiming to boost investor confidence in the Lao Securities Exchange (LSX).
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| Mr Somsavat Lengsavad chairs the Lao Securities Exchange Commission meeting. |
The Lao Securities Exchange Commission discussed proposing the new law at its seventh conference held at the Bank of the Lao PDR in Vientiane yesterday. The half-day meeting was chaired by Standing Deputy Prime Minister Somsavat Lengsavad.
Information on when the National Assembly will consider and approve the law is not yet available, but it is deemed necessary to encourage investors and give them greater confidence in the LSX, Asia's newest stock market, which opened for trading earlier this month.
Progress to date on initial public offerings, establishment and operation of the stock market has been made possible through a prime ministerial decree on securities and the securities exchange, which lawyers have said could not be used in court to make judgments in cases of dispute.
Areas for potential dispute cases between listed companies and investors, which would be addressed by a law to provide rulings in such cases, include if a company were to provide false information causing loss of investment capital.
There is also potential for stock traders to influence stock prices and profit from rising prices. At present, the stock market operator can only ban them from trading, but it would be difficult to file a legal case against dishonest traders.
Lao Securities Exchange Chairman and CEO, Mr Dethphouvang Mounlarat, said recently the market had measures in place to prevent people manipulating stock prices for profit gains, including setting daily bottom and ceiling prices within a five percent range.
He added that the stock market will freeze transactions for investigation after finding unusual stock price fluctuations. But he did not say how those who influenced stock prices would be penalised.
Participants in yesterday's meeting also considered and approved regulations on foreign stock investors. At present, the commission allows an individual foreign investor to hold a maximum 3 percent of shares issued by a listed company.
Investors who have bought more than three percent of shares in a company will not be able to exercise rights associated with the excess shares.
At the conference Mr Somsavat, who is Chairman of the Lao Securities Exchange Commission, expressed appreciation to its members and others involved for their efforts to make the opening and operation of the LSX possible.
The government hopes the LSX will provide new channels for companies in Laos to mobilise investment capital so they can expand and create more jobs.
The two companies presently listed on the LSX - BCEL and EDL Generation - have raised about US$19 million and US$115 million respectively since share trading began on January 11.
Vientiane Times
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