DECREE No.48/1998/ND-CP OF JULY 11, 1998 ON SECURITIES AND SECURITIES MARKET
THE GOVERNMENT
Pursuant to the Law on Organization of the Government of September 30, 1992;
In order to create a favourable environment for issuing and trading securities, encourage the mobilization of long-term capital resources at home and abroad, ensure the organized, safe, transparent, fair and efficient operation of the securities market and protect the legitimate rights of investors;
At the proposal of the Chairman of the State Securities Commission,
DECREES:
Chapter I
GENERAL PROVISIONS
Article 1.- Scope of regulation
This Decree stipulates the issuance of securities to the public, securities transactions and securities-related services and the securities market on the territory of the Socialist Republic of Vietnam.
Article 2.- Interpretation of terms
In this Decree, the following terms shall be understood as follows:
1. Securities mean certificates or book entries which certify lawful rights and benefits of the securities owners over assets or capital of the securities issuing organizations. Securities include:
a/ Shares;
b/ Bonds;
c/ Investment fund certificates;
d/ Other types of securities.
2. Issuance of securities to the public means offering securities transferable under the conditions stipulated in Clause 5, Article 6 and Clause 2, Article 8 of this Decree.
3. An issuing organization is a legal person that is authorized to issue securities to the public in accordance with the provisions of this Decree.
4. A prospectus is a statement of an issuing organization which states the financial situation, business activities and plan on using the proceeds from the issuance in order to help the public evaluate and make decisions to buy securities.
5. Securities listing means permitting the eligible securities to be traded at the Central Trading Market.
6. Securities brokerage means activities of an intermediary or a representative to buy or sell securities on behalf of his/her clients in order to get commissions.
7. Dealing means buying and selling securities by a securities firm for itself.
8. Securities distribution means the sale of securities through an agent or an issuance underwriter on contractual basis.
9. Issuance underwriting means the assistance rendered by a underwriting organization to an issuing organization to carry out the procedures before offering securities, buying securities from the issuing organization in order to resell them, or buy the remaining securities which are not yet distributed.
10. Securities trading means buying and selling securities on the Central Trading Market.
11. Securities investment consultancy means activities of analyzing, providing securities-related recommendations or making public and distributing analytic reports on securities.
12. Portfolio management means the management of clients' capital by buying, selling and holding securities in the interest of clients.
13. A securities firm is a joint stock company or a limited liability company, which is permitted to conduct securities business of one or several types.
14. Liquidity capital means cash and current assets which are convertible into cash within a certain period of time.
15. A securities investment fund is a fund set up with capital contributed by investors and entrusted to an investment fund management company, with at least 60% of asset value of the fund being invested in securities.
16. Securities custody means keeping and preserving clients' securities and helping clients exercise their rights over securities.
17. Securities registration means the recognition of the ownership right, other rights and relevant obligations of the securities holders by an information system kept in the securities custody accounts.
18. A securities custody account is an account used for accounting of the deposit, withdrawal or transfer of securities; and for accounting of delivery and receipt of securities.
19. The Central Trading Market is a place or an information system where securities are bought and sold, or a place of reference in order to effect securities transactions.
20. Involving persons are individuals or organi-zations that are interrelated as in the following cases:
a) A parent company and its subsidiary companies (if any);
b) A company and its managers;
c) A group of persons who act in co-ordination on the basis of an agreement to acquire the control of a company or the decisions of such company;
d/ Parents, spouses, offspring and/or siblings.
21. A securities business practitioner is an indivi-dual licensed by the State Securities Commission to participate in the securities business activities.
22. An investor is a person who owns, buys or intends to buy securities for himself/herself.
23. A securities holder is an individual or organi-zation that is controlling securities. A holder may be a securities owner or a representative of a securities owner.
24. A representative of a bond owner is a legal person authorized to hold bonds and represent the interests of a bond owner.
25. A minor shareholder is a person who holds less than 1% of the voting shares of an issuing organization.
26. A major shareholder is a person who holds 5% or more of the voting shares of an issuing organization.
Chapter II
ISSUANCE OF SECURITIES
TO THE PUBLIC
Article 3.- Securities issuance
1. The issuance of securities to the public for listing on the Central Trading Market must be licensed by the State Securities Commission except for the issuance of the government bonds.
2. The issuance of securities, which is not governed by Clause 1 of this Article, shall comply with the current regulations.
Article 4.- Form and par value of securities
1. Securities issued to the public may be either registered or bearer ones, and in form of certificates or book-entry records.
2. Securities to be issued must be nominated in Vietnam Dong (VND).
3. The par value of a share or an investment fund certificate shall insistently be 10,000 VND; the minimum par value of a bond shall be 100,000 VND.
Article 5.- Securities distribution
Securities issued to the public must be distributed through agents or issuance underwriters.
Article 6.- Conditions for initial issuance of shares
Any issuing organization that is to make initial issuance of shares to the public shall have to meet the following conditions:
1. Having a statutory capital of at least VND 10 billion;
2. Conducting business with profits in the last two consecutive years;
3. Members of its Managing Board and its Director (General Director) are experienced in business management;
4. Having feasible plans on the use of capital acquired from the issuance of shares;
5. At least 20 % of the equity capital of the issuing organization must be sold to more than 100 investors outside the issuing organization; in cases where the issuing organization has an equity capital of VND 100 billion or more, such a minimum rate shall be 15% of the equity capital of the issuing organization;
6. Founding shareholders must hold at least 20% of the equity capital of the issuing organization and maintain such minimum level for at least 3 years from the closing date of the issuance.
7. In cases where the issued shares have an aggregate value according to their par value exceeding VND 10 billion, an issuance underwriting organization is required.
Article 7.- The conditions for additional issuance of shares
Any issuing organization that makes additional issuance of shares to the public in order to increase its capital shall, besides meeting the conditions stipulated in Clauses 1, 2, 3, 4, 5 and 7, Article 6 of this Decree, have to meet the following conditions:
1. An additional issuance must be conducted one year after the previous issuance;
2. The value of additionally issued shares shall not exceed the total value of the existing shares.
Article 8.- The conditions for issuance of bonds
Any issuing organization that wishes to issue bonds to the public shall have to meet the following conditions:
1. Abiding by the provisions of Clauses 1, 2, 3 and 4, Article 6 of this Decree;
2. At least 20% of the total value of bonds to be issued must be sold to more than 100 investors; in cases where the total value of bonds to be issued reaches VND 100 billion or more, such a minimum rate shall be 15% of the total bond value;
3. Having to acquire an issuance underwriting organization, except for the cases where the issuing organization is a credit institution;
4. Having made commitment to fulfil its obligations towards the investors;
5. Having determined representatives of bond owners.
Article 9.- Dossiers of application for issuing licenses
1. A dossier of application for a license to issue shares to the public comprises:
a) An application for issuing license;
b) The business registration certificate;
c) The company's statute;
d) The resolution of the shareholders' congress on the issuance of shares;
e) A prospectus;
f) A list of the members of the Managing Board and the Director (General Director);
g) Financial statements for the last two consecutive years, with certification by the accepted auditing organization;
h) A report on the evaluation of the enterprise's asset value, made by the competent agency, in case of a State enterprise to be equitized;
i) The issuance underwriting commitment (if any).
2. A dossier of application for a license to issue bonds to the public comprises:
a) Documents specified in Points a, b, c, e, g, h and i of Clause 1 of this Article;
b) The resolution of the Managing Board;
c) The issuance underwriting organization's commitment to underwrite the issuance;
d) The bond-issuing organization's commitment to fulfil its obligations;
e) An agreement between the bond issuing organization and a representative of a bond owner.
Article 10.- Conditions for underwriting the issuance
1. A underwriter for the issuance of securities to the public must be a securities firm meeting the following conditions:
a) Having an issuance underwriting license;
b) Not being a person related to the issuing organization.
2. The underwriting organization shall only be allowed to underwrite the issuance of securities with the total value not exceeding 4 times of the difference between the current assets and the short-term liabilities of such organization.
Article 11.- The procedures and time limit for issuing license granting
Dossiers of application for licenses to issue securities to the public shall be submitted to the State Securities Commission. Within 45 days from the date of receipt of complete dossiers of application for issuing licenses, the State Securities Commission shall either grant or refuse to grant licenses. In cases of refusal to grant licenses, the State Securities Commission shall have to clearly state the reasons therefor in writing.
Article 12.- The use of information before obtaining issuing licenses
During the period the State Securities Commission examines a dossier of application for an issuing license, the concerned issuing organization, the issuance underwriting body and the involved parties shall only be allowed to use truthfully and accurately the information in the prospectus already sent to the State Securities Commission to survey the market.
Article 13.- The issuance announcement
Within 5 days from the date of receipt of the issuing license, an issuing organization shall have to announce the issuance on 5 consecutive issues of a centrally-run newspaper and a newspaper of the locality where the issuing organization's head office is located. The issuing organization, the issuance underwriting body or their representatives shall only be allowed to use information contained in the dossier of application for the issuing license, which has been approved by the State Securities Commission.
Article 14.- The time limit for sales offering
An issuing organization must issue securities according to the approved plan within 90 days from the effective date of its issuing license. Past that time limit, all unsold securities shall no longer be issued to the public.
Article 15.- Issuance suspension
1. A licensed issuing organization shall be suspended from the issuance if the State Securities Commission detects any errors or inaccurate information in the prospectus which may affect investment decisions and cause damage to investors. The issuing organization shall have to make amendments and/or supplements at the request of the State Securities Commission and announce publicly such amendments and supplements.
2. In cases where the issuance is suspended, the investors shall be entitled to cancel the securities subscription or return securities already bought; in such cases, the issuing organization and other relevant organizations shall have to refund the money to the buyers within 30 days from the date of issuance suspension.
Article 16.- Withdrawal of issuing licenses
1. An issuing license shall be withdrawn in one of the following cases:
a) The errors mentioned in Clause 1, Article 15 are not amended and/or supplemented in strict accordance with the prescribed procedures and time limit;
b) Failure to fully meet the conditions prescribed in Clause 5, Article 6 and Clause 2, Article 8, of this Decree.
2. In cases where its issuing license is withdrawn, the issuing organization must promptly notify the securities investors thereof; the issuing organization shall have to withdraw securities already issued and reimburse money to the investors within 30 days from the date of the issuing license is withdrawn, if it is so requested by investors.
Article 17.- The issuing license-granting fee
Every issuing organization shall have to pay to the State Securities Commission an issuing license-granting fee equal to 0.02% of the total value of the issued securities but not exceeding VND 50 million.
Article 18.- The reporting regime
1. Within 10 days from the closing date of an issuance, the issuing organizations shall have to report to the State Securities Commission on the result of the issuance.
2. The issuing organizations shall have to comply with the regime of periodical reports on their respective financial situation and business activities in accordance with the provisions of law and regulations of the State Securities Commission.
3. The issuing organizations shall have to promptly report to the State Securities Commission and make public information that may affect the prices of their securities.
4. In cases of necessity, in order to protect the interests of investors, the State Securities Commission shall be entitled to request an issuing organization to make report on its business activities.
5. Financial statements of the issuing organi-zations must comply with the State's accounting and auditing legislation. In cases where an issuing organization owns 50 % or more of the equity capital of another organization, its financial statement must include the financial statement of such organization.
Article 19.- The protection of investors' interests
The Managing Board and Director (General Director) of an issuing organization shall have to protect the interests of all shareholders and investors, and to:
1. Transparently announce information on the voting right, the right to register the purchase of securities, the right to transfer securities and other rights to all shareholders.
2. Set and observe rules on public disclosure of stake of directors, managers, major shareholders and involving persons over the securities of such organization.
3. Abide by the stipulations in Chapter VIII of this Decree.
Chapter III
THE CENTRAL TRADING MARKET
Article 20.- The way of organizing the Market
The Central Trading Market shall be organized step by step from the Securities Trading Center to the Stock Exchange.
The Securities Trading Center and the Stock Exchange shall be established by decisions of the Prime Minister.
Article 21.- The Securities Trading Center
1. The Securities Trading Center is a non-business unit having revenues, attached to the State Securities Commission, enjoys the legal person status, has its head office, its own seal and accounts; the operating fund of the Securities Trading Center shall be allocated from the State budget.
2. The Securities Trading Center has the function of managing, executing and supervising the securities buying and selling activities at the Center.
3. The Prime Minister shall authorize the Chairman of the State Securities Commission to appoint and dismiss the Director of the Securities Trading Center and issue the regulations on organization and operation of the Securities Trading Center.
Article 22.- Securities trading
1. Securities issued under the provisions of the Articles 6, 7, 8 and 50 of this Decree and Government bonds shall be traded at the Securities Trading Center.
2. Securities buying and selling at the Securities Trading Center shall be effected in accordance with the trading regulations of the Securities Trading Center.
3. Only members of the Securities Trading Center shall be entitled to buy and sell securities through the trading system at the Securities Trading Center .
4. The Securities Trading Center shall carry out the registration, clearing payment and custody of securities traded at the Securities Trading Center.
Article 23.- The Stock Exchange
1. The Stock Exchange is a legal person with financial autonomy and subject to the supervision and management by the State Securities Commission.
2. The Stock Exchange has a Managing Board consisting of 9 members: one chairman, two deputy chairmen one of whom shall act concurrently as the general executive director; two members representing the securities firms; two members representing the public; and two members representing the Government.
3. The chairman and deputy chairmen of the Managing Board, the general director and the members representing the Government shall be appointed and dismissed by the Prime Minister at the proposal of the Chairman of the State Securities Commission. The members representing the securities firms and those representing the public shall be selected by the Chairman of the State Securities Commission for appointment and/or dismissal.
4. Only securities firms which are members of the Stock Exchange shall be entitled to conduct securities trading at on the Stock Exchange.
Article 24.- The tasks and powers of the Securities Trading Center and the Stock Exchange
The Securities Trading Center and the Stock Exchange shall have the following main tasks and powers:
1. To organize, manage and run the securities buying and selling activities;
2. To manage and run the securities trading system;
3. To provide services in support of securities buying and selling activities; and securities custody services;
4. To carry out the securities registration;
5. To effect clearing payment for securities transactions;
6. To announce information on securities trading activities;
7. To inspect and supervise securities trading activities;
8. To collect securities listing fee, membership fee, trading fee, information service fee, and other service fees, as prescribed by law;
9. To observe the reporting, statistical, accounting and auditing regimes prescribed by the State.
Article 25.- Members of the Securities Trading Center and the Stock Exchange
1. Any securities firm that has been licensed to conduct brokerage or dealing activities shall have the right to register for membership of the Securities Trading Center or the Stock Exchange (hereafter referred to as "member")
2. The members shall have to appoint their representatives to trade at the Securities Trading Center or the Stock Exchange.
3. The members shall not be entitled to buy and sell securities outside the Securities Trading Center or the Stock Exchange.
Article 26.- The rights and obligations of members of the Securities Trading Center and the Stock Exchange
A member of the Securities Trading Center or the Stock Exchange shall have the following rights and obligations:
1. To abide by the regulations on securities business activities set by the Securities Trading Center or the Stock Exchange;
2. To be subject to the inspection and supervision by the Securities Trading Center or the Stock Exchange;
3. To pay membership fee, trading fee, various contributions to setting up the payment supporting fund and other service charges as prescribed by law;
4. To report to the Securities Trading Center and/or the Stock Exchange on business activities, financial situation and important events which may adversely affect its own activities and benefits of the investors in accordance with the regulations of the State Securities Commission;
5. To promptly report to the Securities Trading Center and/or the Stock Exchange upon detecting any law-breaking acts relating to securities and securities market;
6. To use the trading system and services provided by the Securities Trading Center or the Stock Exchange.
7. To collect various charges for services provided to clients in accordance with law;
8. To withdraw the membership after obtaining approval of the Securities Trading Center and/or the Stock Exchange.
Article 27.- The payment support fund
1. The Securities Trading Center or the Stock Exchange shall be entitled to set up a payment support fund in order to make payment on behalf of the members in cases where such members are temporarily incapable of paying for transactions. This fund shall be contributed by the members in accordance with the regulations of the State Securities Commission.
2. The scope, level and mode of payment support shall be stipulated by the State Securities Commission.
3. The assets of the payment support fund must be separated from the assets of the Securities Trading Center and the Stock Exchange.
Article 28.- Financial regime
The Securities Trading Center shall comply with the financial regime applicable to non-business units having revenues and shall be entitled to set up funds in accordance with regulations of the Government.
Chapter IV
SECURITIES FIRMS
Article 29.- The objects and contents of operation license granting
1. A securities firm must be a joint stock company or a limited liability company which meets the conditions prescribed in Article 30 of this Decree; credit institutions, insurance companies or corporations wishing to engage in the securities business shall have to establish independent securities firms. The State Securities Commission shall grant operation licenses to securities firms.
2. A securities firm shall be allowed to conduct business in one or a number of the following business types:
a) Brokerage;
b) Dealing;
c) Portfolio management;
d) Issuance underwriting;
e) Securities investment consultancy.
Article 30.- The conditions for being granted operation license
A firm which is to be granted an operation license must meet the following conditions:
1. Having a business plan compatible to the socio-economic development objectives and securities industry development objectives;
2. Having sufficient material and technical facilities in service of securities business activities;
3. Having legal capital level as prescribed for each type of business as follows:
a) Brokerage VND 3 billion
b) Dealing VND 12 billion
c) Portfolio management VND 3 billion
d) Issuance underwriting VND 22 billion
e) Securities investment consultancy VND 3 billion
In cases where a securities firm applies for license for several types of business operation, its legal capital shall be the total amount of legal capital levels prescribed for all types of business operation for which the firm is to be granted license;
4. The director (general director), business staff (excluding accounting staff, administrative staff, cashier) of a securities firm must have securities business practice licenses granted by the State Securities Commission.
Article 31.- Dossiers of application for operation licenses
A dossier of application for an operation license shall comprise:
1. An application;
2. A permit for the establishment of the firm (if any);
3. The statute of the firm;
4. Valid documents proving that the firm has met the conditions prescribed in Article 30 of this Decree;
5. Projected capital sources for the first 12 months' business operation.
Article 32.- The operation license-granting procedures and fee
1. Dossiers of application for securities operation license shall be submitted to the State Securities Commission. Within 90 days from the date of receipt of complete dossiers of application for securities operation licenses, the State Securities Commission shall either grant or refuse to grant licenses. In cases of refusal to grant licenses, the State Securities Commission must clearly state the reasons therefor in writing.
2. A securities firm must pay an operation license-granting fee equal to 0.2% of its legal capital.
Article 33.- Amendments and supplements to the operation licenses
1. A securities firm which has been granted a securities operation license, and wishes to supplement or change its securities business operations, to undertake corporate merger or splitting, shall have to carry out the procedures to apply for re-granting of license or granting of an additional license.
2. Any changes to the registered office and/or name, opening or shut-down of branches, change of Director (General Director) or Deputy General Director of a securities firm and other changes must be reported to and approved by the State Securities Commission.
Article 34.- The announcement of operation licenses
Before commencing its operation, a securities firm shall have to publish such information on newspaper(s) as required by law and post up its operation license at all places where the firm conducts business.
Article 35.- Liquidity capital of a securities firm
A securities firm that conducts brokerage and dealing operation must sustain its minimum liquidity capital level equal to 8% of its debt capital. The State Securities Commission shall specify the method of determining the liquidity capital level.
Article 36.- Deduction for setting up the fund for statutory capital supplement
Every securities firm shall have to set aside a part of its annual net profit to supplement its statutory capital as prescribed by the law.
Article 37.- The reporting regime
1. Securities firms shall have to make periodical reports in accordance with provisions of law and guidance of the State Securities Commission. Their accounting balance sheets and annual business performance reports must be audited.
2. Upon the occurrence of any extraordinary event that may seriously affect its financial capability and business activities, a securities firm shall have to report it to the State Securities Commission.
3. Securities firms shall have to preserve and keep contracts and transaction documents for a period of time prescribed by law.
Article 38.- The rights and obligations of securities firms
A securities firm shall have the following rights and obligations:
1. To sign written contracts with clients on securities buying and selling, investment portfolio management, issuance underwriting or provision of securities custody services;
2. To gather all information on financial status and investment purposes of clients;
3. To manage securities assets of clients in separation from securities assets in the possession of the firm;
4. To receive transaction orders from clients only at its office;
5. To execute securities selling or buying orders of clients ahead of those of the firm;
6. To keep information confidentiality for clients;
7. To collect service charges. The charge levels shall be set by the State Securities Commission after consulting the Ministry of Finance;
8. To comply with the accounting and financial regime prescribed by law;
9. To abide by other regulations of the State Securities Commission on securities business.
Article 39.- The suspension of operation and withdrawal of licenses
1. A securities firm may be suspended from securities business activities for a maximum period of 60 days in the following cases:
a) It has ceased securities business activities without any prior written permission from the State Securities Commission;
b) It violates stipulations in Articles 35, 36, 37 and 38 of this Decree.
2. A securities firm shall have its operation license withdrawn in the following cases:
a) It fails to mend its violations within the securities business suspension time limit prescribed in Clause 1 of this Article;
b) It fails to commence its operation within 12 months from the date of being granted operation license;
c) It voluntarily applies for termination of securities business activities, dissolves or goes bankrupt;
d) It is no longer able to fully meet the conditions for being granted securities operation license prescribed in Article 30 of this Decree;
e) It violates stipulations in Articles 69, 70, 71, 72 and 73 of this Decree.
3. A securities firm that is suspended from operation or has its securities operation license withdrawn shall have to complete all transactions and contracts which it previously committed itself to. The State Securities Commission may designate another securities firm to complete transactions and/or contracts of the securities firm having its operation suspended or its license withdrawn; in this case, the authorization relationship between the two firms is automatically established.
Article 40.- The conditions for being granted practitioner licenses
An individual who applies for a securities business practising license must meet the following conditions:
1. Having full legal capacity and full capacity for civil acts;
2. Meeting ethical and professional criteria;
3. Possessing all necessary certificates of professional securities expertise granted by the State Securities Commission.
Article 41.- The practitioner license-granting procedures and fees
1. The form of dossiers of application for securities business practising licenses shall be prescribed by the State Securities Commission.
2. The time limit for issuing notices on granting or refusal to grant securities business practising licenses shall be 30 days from the date of receipt of complete valid dossiers of application.
3. The securities business practising license-granting fee shall be set by the State Securities Commission.
Article 42.- The restrictions on securities business practitioners
A securities business practitioner shall not be allowed to:
1. Concurrently work for or contribute capital to two or more securities firms;
2. Concurrently work as director or a member of the Managing Board or a shareholder possessing more than 5% of the voting shares of a securities issuing organization;
3. Lend his/her securities business practising license to another person.
Article 43.- Withdrawal of securities business practising licenses
A securities business practitioner shall have his/her securities business practising license withdrawn in the following cases:
1. He/she is no longer able to meet the conditions for being granted securities business practising license stipulated in Article 40 of this Decree;
2. He/she violates stipulations in Articles 42, 69, 70, 71, 72 and 73 of this Decree.
Chapter V
A SECURITIES INVESTMENT FUND AND A FUND MANAGEMENT COMPANY
Article 44.- Participating parties
1. Parties participating in the activities of a securities investment fund shall include a fund management company, a supervisory bank and investors.
2. The fund management company shall manage the securities investment fund.
3. The supervisory bank shall conduct the maintenance and custody of the assets of the securities investment fund and supervise the fund management company in protecting the benefits of investors.
4. Investors shall contribute capital to the securities investment fund and benefit from the investment by such securities investment fund.
Article 45.- The fund management company
1. Fund management companies must be granted operation licenses by the State Securities Commission.
2. To be granted an operation license, a fund management company must:
a) Be a joint stock company or a limited liability company established under the provisions of law and have a legal capital of VND 5 billion;
b) Have a contingent of professional personnel trained in the field of securities, have material and technical facilities to serve the fund management in accordance with regulations of the State Securities Commission;
c) Have managers to run the fund management company and the fund, who have been granted securities business practising licenses by the State Securities Commission.
3. A fund management company's dossier of application for an operation license shall comprise:
a) An application for license;
b) The permit for establishment of the company (if any);
c) The statute of the company;
d) Other documents prescribed by the State Securities Commission.
Article 46.- The procedures and time limit for granting operation licenses to fund management companies
1. Dossiers of application for operation licenses of fund management companies shall be submitted to the State Securities Commission. Within 90 days from the date of receipt of complete dossiers of application for operation licenses from fund management companies, the State Securities Commission shall either grant or refuse to grant licenses. In cases of refusal to grant licenses, the State Securities Commission shall have to clearly state the reasons therefor in writing.
Article 47.- The rights and obligations of the fund management companies
A fund management company shall have the following rights and obligations:
1. To apply for the establishment or dissolution of a securities investment fund;
2. To select and realize capital investment objectives of the securities investment fund;
3. To pay dividends and capital interests gained from assets of the securities investment fund to investors;
4. To manage one or several securities investment funds;
5. To provide securities investment consultancy after being granted license therefor by the State Securities Commission;
6. To conduct other operations in the interest of investors;
7. To be entitled to receive fees and bonuses in accordance with the fund's charter.
Article 48.- The restrictions on operation of a fund management company
1. A fund management company shall only be allowed to invest capital of a securities investment fund in securities or other assets in accordance with the fund's charter;
2. A fund management company shall not be allowed to use capital and assets of a securities investment fund for investment which exceeds 15% of the total value of the circulating securities of an issuing organization and not be allowed to use more than 10% of the total asset value of a securities investment fund to invest in the circulating securities of an issuing organization.
3. A fund management company shall not be allowed to use the capital and assets of all securities investment funds under its management for investment which exceeds 49% of the total value of circulating securities of an issuing organization.
4. A fund management company shall not be allowed to use capital and assets of a securities investment fund to lend or guarantee for any loan and not be allowed to borrow to finance the fund, except for short-term borrowings to cover necessary expenditures.
5. A fund management company shall have to abide by other restrictions imposed by law in order to ensure the benefits of investors and securities issuing organizations.
Article 49.- The granting and withdrawal of practitioner licenses
The granting and withdrawal of securities business practising licenses of managers of a fund management company and a securities investment fund shall comply with the provisions of Articles 40, 41, 42 and 43 of this Decree.
Article 50.- Dossiers of application for setting up of funds
In order to set up an investment fund and issue investment fund certificates, a fund management company shall have to submit to the State Securities Commission an application dossier comprising:
1. The application form;
2. The charter of the fund;
3. The contract for management and supervision of the fund;
4. The prospectus.
Article 51.- The procedures and time limit for granting licenses to set up funds
Dossiers of application for licenses to set up securities investment funds shall be submitted to the State Securities Commission. Within 45 days from the date of receipt of complete dossiers of application for licenses to set up securities investment funds, the State Securities Commission shall grant or refuse to grant licenses. In cases of refusal to grant licenses, the State Securities Commission shall have to clearly state the reasons therefor in writing.
Article 52.- The payable fees
A fund management company shall have to pay to the State Securities Commission the following fees:
1. The fee for granting an operation license to the fund management company, equal to 0.2% of its legal capital.
2. The fee for granting a license to set up a securities investment fund equal to 0.02% of the total value of the issued certificates, but not exceeding VND 50 million.
Article 53.- The issuance of investment fund certificates
The issuance of investment fund certificates shall comply with the provisions of Articles 12 and 13 of this Decree.
Article 54.- The suspension of issuance of investment fund certificates and withdrawal of licenses to set up funds
The suspension of issuance of investment fund certificates shall comply with provisions of Article 15 of this Decree. The withdrawal of licenses to set up securities investment funds shall comply with Point (a), Clause 1 and Clause 2 of Article 16 of this Decree
Article 55.- The conditions to be met by a supervisory bank
A supervisory bank must meet the following conditions:
1. Having been granted the establishment and operation license by the State Bank of Vietnam;
2. Having been granted the securities custody license by the State Securities Commission;
3. Being a bank independent from the concerned fund management company;
4. Not possessing any assets of the concerned securities investment fund.
Article 56.- The responsibilities of a supervisory bank
1. A supervisory bank shall have the following responsibilities:
a) To preserve assets of the concerned securities investment fund and separate the securities investment fund's assets from other assets.
b) To inspect and supervise investment decisions made by the fund management company and ensure their compliance with laws and the charter of the fund, to protect the interests of the investors.
Article 57.- The interests of investors
An investor shall benefit from investment operations of the securities investment fund but not directly exercise the rights over and perform the obligations toward assets included in the securities investment fund's portfolio.
Article 58.- The financial, accounting and reporting regimes
1. Fund management companies shall have to comply with the accounting and financial regimes prescribed by laws.
2. Fund management companies and supervisory banks shall have to abide by the reporting regime stipulated by the State Securities Commission.
Article 59.- The suspension of operation and withdrawal of operation licenses
1. A fund management company may be suspended from operation for a maximum period of 60 days in the following cases:
a) It has ceased its operation without any plausible reason(s) and written approval of the State Securities Commission;
b) It violates the stipulations in Articles 48 and 58 of this Decree.
c) It is no longer able to meet the conditions prescribed in Clause 2, Article 45 of this Decree.
2. A fund management company shall have its operation license withdrawn in the following cases:
a) It fails to mend its violation within the period of operation suspension;
b) It fails to commence its operation within 12 months from the date of being granted operation license;
c) It voluntarily terminates its operations or dissolves or goes bankrupt;
d) It violates stipulations in Articles 69, 70, 71, 72 and 73 of this Decree.
3. A supervisory bank which breaches commitments in the contract for fund management and supervision shall be dealt with in accordance with the provisions of Article 64 of this Decree.
Chapter VI
THE SECURITIES REGISTRATION, CLEARING PAYMENT AND CUSTODY
Article 60.- The registration, clearing payment and custody
1. The securities registration, clearing payment and custody shall be carried out in accordance with the regulations of the State Securities Commission.
2. Before issuing securities to the public, an issuing organization shall have to register securities at the Securities Trading Center and the Stock Exchange.
3. Securities issued before the effective date of this Decree shall have to be re-registered in accordance with the regulations of the State Securities Commission before being traded at the Securities Trading Center and/or the Stock Exchange.
Article 61.- The contents of securities registration, clearing payment and custody
The securities registration, clearing payment and custody shall include the following activities:
1. Registration of securities;
2. Clearing payment of securities transactions;
3. Preservation of securities certificates;
4. Book-entry accounting of securities by opening securities custody accounts for clients;
5. Transfer and settlement of securities;
6. Other services provided under the authorization of clients who have their securities in custody.
Article 62.- The conditions for securities custody activities
1. An organization engaged in the securities custody activities must be a bank or a securities firm which meet criteria of capital, material and technical facilities and professional expertise as prescribed by the State Securities Commission and be granted a license for securities custody activities by the State Securities Commission.
2. An organization that has been granted a license for securities custody activities shall be allowed to participate in the registration and clearing payment activities at the Securities Trading Center and the Stock Exchange.
Article 63.- The management of clients' assets
1. An organization engaged in the securities custody activities, the Securities Trading Center or the Stock Exchange shall have to manage assets of each client in separation from its own assets.
2. An organization engaged in the securities custody activities, the Securities Trading Center or the Stock Exchange shall not be allowed to consider the clients' assets under its management its own assets and use them to settle its debts.
Article 64.- The suspension of securities custody activities and withdrawal of licenses therefor
1. A securities custody organization shall be suspended from securities custody activities if it violates stipulations in Articles 56, 58, 60, 62 and 63 of this Decree.
2. A securities custody organization shall have its securities custody license withdrawn if it has already been suspended from securities custody activities, but failed to mend its violations within prescribed time limit.
Article 65.- The fees for securities registration, clearing payment and custody
The securities registration, clearing payment and custody fees shall be set by the State Securities Commission after consulting the Ministry of Finance.
Chapter VII
THE PARTICIPATION OF FOREIGN PARTIES
Article 66.- General principles
Foreign organizations and individuals that buy and/or sell securities or conduct securities business in Vietnam shall have to abide by the provisions of this Decree and Vietnamese laws.
Article 67.- Investment and joint venture
1. Foreign organizations and individuals shall be allowed to buy and/or sell securities on Vietnam's securities market. Any foreign securities business organizations wishing to conduct securities business in Vietnam shall have to establish joint ventures with Vietnamese partners under the licenses granted by the State Securities Commission.
2. The Prime Minister shall stipulate ratios of securities holding by foreign organizations or individuals, ratios of capital contribution by foreign organizations to joint ventures with Vietnamese partners.
3. Foreign investment funds wishing to invest in Vietnam's securities market must be licensed by the State Securities Commission, after getting approval from the Prime Minister.
Article 68.- Representative offices
Foreign securities business organizations must be licensed by the State Securities Commission to set up their representative offices in Vietnam.
Chapter VIII
THE PROHIBITED OR
RESTRICTED ACTS
Article 69.- Short sale
Organizations and individuals are prohibited from selling securities in any form if they do not possess such securities at the trading time.
Article 70.- Inside trading
The following organizations and individuals shall not be allowed to directly or indirectly buy and/or sell securities when the issuing organization has yet to announce to the public information which may affect the prices of the securities:
1. The securities issuing organizations and involving persons;
2. The officials and employees of the securities issuing organizations and involving persons;
3. The major shareholders of the securities issuing organization and involving persons;
4. The auditors and the involving persons of an auditing organization which is designated to audit the securities issuing organization(s);
5. The officials and employees of the State Securities Commission, the Securities Trading Center, the Stock Exchange and involving persons; the officials and employees of other agencies, who have access to internal information.
Article 71.- False information
1. Organizations and individuals must not announce and/or disseminate false information.
2. While the State Securities Commission is examining the dossiers of application for securities issuance, the issuing organizations, the issuance underwriting organizations and the concerned persons are not allowed to make any advertisement, sale offer or take any acts of advertising nature for the purpose of misleading investors about the securities intended to be issued.
Article 72.- The participation in securities credit and/or lending activities
Securities business organizations and securities business practitioners shall not be allowed to carry out securities credit and/or lending activities.
Article 73.- Market manipulation
Organizations and individuals shall not be allowed to conduct directly or indirectly the following activities:
1. Conspiring with one another to buy and/or sell securities of a certain kind for the purpose of creating false supply and demand ;
2. Conducting securities buying or selling transactions without effecting any transfer of the ownership over securities;
3. Continuously buying securities at high prices or continuously sell securities at low prices;
4. Re-buying then re-selling their own securities without prior permission from the State Securities Commission, in cases of issuing organizations.
Article 74.- Business acquisition and merger
1. Organizations and/or individuals carrying out any transaction which may cause a change whereupon they are going to hold 5% or more of the voting shares or no longer hold 5% of the voting shares of an issuing organization, shall have to report to the Securities Trading Center or the Stock Exchange within 24 hours.
2. Where organizations, individuals and involving persons intend to buy and hold more than 25% of the voting shares of an issuing organization, a public bidding therefor must be organized in accordance with the regulations of the State Securities Commission.
Chapter IX
THE STATE MANAGEMENT OVER SECURITIES AND SECURITIES MARKET
Article 75.- The State management
1. The Government shall exert the uniform State management over securities and securities market.
2. The State Securities Commission shall act as an agency performing the contents of the State management over securities and securities market
3. The concerned ministries and branches and the People's Committees of the provinces and cities directly under the Central Government shall be responsible for co-ordinating with the State Securities Commission in performing the function of State management over securities and securities market within their respective tasks and powers.
Article 76.- The State management contents
The State management shall include the following contents:
1. Issuing within assigned powers legal documents on securities and securities market; formulating strategies, policies, plans for development of the securities market;
2. Granting and/or withdrawing licenses relating to the securities issuance, business and services;
3. Organizing and managing the Central Trading Market and the assisting institutions;
4. Inspecting, supervising and handling violations of the legislation on securities and securities market;
5. Providing professional training, disseminating and popularizing knowledge on securities and securities market;
6. Undertaking international co-operation on securities and securities market.
Chapter X
INSPECTION, SUPERVISION AND HANDLING OF VIOLATIONS
Article 77.- The general principles
Organizations engaged in the securities issuance, business and transactions and individuals engaged in securities activities shall be subject to the inspection and supervision by the State Securities Commission as prescribed by laws.
Article 78.- The objects and scope of inspection and supervision
1. The objects of inspection and supervision include:
a) Issuing organizations with securities traded at the Central Trading Market;
b) The Securities Trading Center and the Stock Exchange;
c) Securities firms; issuance underwriting organizations; investment fund management companies; securities registration, custody or clearing payment organizations and supervisory banks;
d) Securities business practitioners;
e) Organizations and individuals involved in securities activities and securities market.
2. The scope of inspection and supervision
a) Securities issuing activities
b) Securities transactions
c) Securities business, registration, clearing payment and custody activities;
d) Information disclosure
3. The inspected organizations and individuals shall have to furnish files, documents and information upon the requests of the inspecting organizations.
Article 79.- The settlement of disputes
1. Disputes arising from the securities issuance, business and transaction shall be settled first of all through negotiations and conciliation. The Securities Trading Center, the Stock Exchange or the State Securities Commission may act as a conciliator of the disputes. In cases of a conciliation failure, the concerned parties may refer the disputes to the economic arbitration or economic court for settlement according to laws.
2. Any dispute involving foreign parties, which the disputing parties fail to reach an agreement on or fail to settle according to the provisions of international treaties which the Socialist Republic of Vietnam has signed or acceded to, shall be settled in accordance with the Vietnamese law.
Article 80.- The handling of violations
Any organizations and/or individuals committing acts of violating the provisions of this Decree and other legal documents on securities and securities market shall, depending on the nature and seriousness of their violations, be disciplined, administratively sanctioned or examined for penal liability as prescribed by law. If material damage is caused, they shall have to compensate therefor as prescribed by law.
Chapter XI
IMPLEMENTATION PROVISIONS
Article 81.- Implementation effect
This Decree takes effect 15 days after its signing.
Article 82.- Implementation guidance
The Chairman of the State Securities Commission, the concerned ministries and the heads of the concerned branches shall guide the implementation of this Decree.
Article 83.- Implementation responsibility
The ministers, the heads of ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the People's Committees of the provinces and cities directly under the Central Government shall have to implement this Decree.
On behalf of the Government
Prime Minister
PHAN VAN KHAI