The Government Office has lent its support to a proposal allowing foreign firms a greater stake holding in listed companies, the Dau tu chung khoannewspaper has reported.

Overseas investors are expected to be permitted to purchase between 49 and 100 per cent of charter capital of securities companies.

The new draft, proposed by the Ministry of Finance and the State Securities Commission, would amend some regulations on foreign holdings on the market, allowing foreign investors to hold up to 59 per cent of charter capital in a listed company - 10 per cent more than the current cap.

The additional shares would not hand foreign owners any further voting rights, but would allow them to increase their financial returns.

In another proposed change, overseas investors would be permitted to purchase between 49 and 100 per cent of charter capital of securities companies. Currently they must meet a fixed level of either 49 per cent or 100 per cent and can have nothing in between.

The draft has been submitted to the Prime Minister for consideration.

Nguyen Son, head of the commission's Market Development Department, told the media that one policy target in the near future was to lift the permitted holdings of foreign strategic investors to 60 per cent with voting rights, except in conditioned businesses such as banks. .

The enterprises affected by the new regulations would be State companies that did not require major State holdings, Son said

In addition to easing foreign ownership, the commission also plans to implement measures boosting the stock market until the end of this year. These include issuing shares below their face value, proposing tax incentives for the operations of open-end funds and real estate investment funds and completing a legal framework for the introduction of exchange-traded funds.

The HCM City Stock Exchange has recently proposed the issuance of non-voting depository receipts (NVDRs), a new trading instrument which aims to stimulate foreign trading activities in the local stock market.