CEU Electronic Theses and Dissertations, 2022
| Author | Mai, An |
|---|---|
| Title | Thailand's Non-Voting Depository Receipts and the Dual-Class Non-Voting Stocks of the United States: Lessons for the Emerging Capital Market of Vietnam |
| Summary | Vietnam and Thailand share similar general rules on foreign ownership limitation (FOL) for public companies. However, the Thai capital market maintained a far larger foreign trading volume and became a major emerging market in Asia. The success story of Thailand is due to its signature financial product: non-voting depository receipts (NVDR). In simplest terms, NVDR offers its holder financial interests but no voting rights, which allows foreign investors to invest in a Thai company without raising the proportion of foreign ownership. After two decades of implementation, NVDR has proved to be a prime tool for attracting foreign indirect investment despite tight foreign ownership restrictions. Following the successful steps of its neighbor, Vietnam is now constructing a legal framework for NVDR. With the purpose of contributing recommendations for Vietnam’s NVDR framework, this thesis will explore the legal and economic issues revolving around NVDR and non-voting shares, and solutions to such issues. For such purpose, the Thai NVDR framework is undoubtedly a benchmark. Another benchmark is the US’ dual class stock structure, to the extent where non-voting shares are involved. The analysis herein is divided by two main coordinates. First, the author explores the factors contributing to the success of NVDR on the Thai capital market, including the legal engineering of Thai regulators to solve a number of unique issues related to NVDR, such as redefining the nature of FOL and the well-known problems of non-voting shares, i.e., the equity-control imbalance. Second, the thesis explores the US’ legal framework for dual class stock structure and solutions for protecting minority stockholders in dual class firms. This second coordinate leads the author to believe that good practices on corporate governance are important tools to limit the harmful effects of non-voting shares and the equity-control imbalance. While Singapore and Hong Kong, two Asian financial centers, adopted a restricted approach to listing dual class shares and merit-based review mechanism, the US’ class action mechanism should also be considered as it allows more flexibility in protecting minority stockholders and investors. Finally, some policy recommendations are given for the incubation of Vietnam’s NVDR market based on the previous analysis. |
| Supervisor | Tibor Tajti |
| Department | Legal Studies LLM |
| Full text | https://www.etd.ceu.edu/2022/mai_an.pdf |
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