Circular No. 04/1999/TT-NHNN of the State Bank of Vietnam guiding the establishment of securities companies under commercial banks

CIRCULAR

Circular No. 04/1999/TT-NHNN5 of the State Bank of Vietnam dated November 2, 1999 guiding the establishment of securities companies
Implementing Decree No. 48/1998/NĐ-CP dated July 11, 1998 of the Government on securities and the securities market, Decision No. 172/1999/QĐ-TTg dated August 19, 1999 of the Prime Minister on credit organizations establishing securities companies and participating in stock listing, the State Bank of Vietnam (hereinafter referred to as "the State Bank") guides certain points regarding the establishment of securities companies by commercial banks as follows:

by the State for Merchants

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1. Commercial banks, including state-owned commercial banks and joint-stock commercial banks of the state and people (hereinafter referred to as "commercial banks"), may establish affiliated securities companies with independent legal status and separate accounting, funded entirely by the commercial bank.

PART I

GENERAL PROVISIONS

2. The Chairman of the Board of Directors of the commercial bank shall decide to establish a securities company after receiving written approval from the State Bank.

3. The establishment of securities companies by other types of credit organizations and the establishment of securities companies by credit organizations in other forms according to the provisions of the law shall be carried out in accordance with specific regulations of the State Bank.

 CONDITIONS FOR THE ESTABLISHMENT OF SECURITIES COMPANIES

PART II

SPECIFIC PROVISIONS

Section I

Commercial banks may establish securities companies in accordance with Decision No. 172/1999/QĐ-TTg dated August 19, 1999 of the Prime Minister when meeting the following conditions:

1. Having at least five years of operation;

2. Operating profitably; overdue debts not exceeding 5% of total outstanding loans;

4. Not violating the regulations on safety ratios in banking operations and other legal provisions;

3. Efficient management board, operational system, and internal audit system;

5. Having a registered capital not lower than the statutory minimum capital as prescribed by law;

6. Possessing adequate physical and technical facilities for securities trading.

APPLICATION FOR APPROVAL TO ESTABLISH A SECURITIES COMPANY

PART II

1. The application for the State Bank's approval to establish a securities company includes:
a. A document from the Chairman of the Board of Directors requesting the Governor of the State Bank to approve the establishment of a securities company;

b. The resolution of the Shareholders' Meeting on the establishment of a securities company (for state and people joint-stock commercial banks);

c. A document approving the location of the securities company headquarters from the Chairman of the People's Committee of the province or city where the securities company headquarters will be located;

d. The project for establishing a securities company;

đ. Draft charter on the organization and operation of the securities company;

e. Balance sheet, profit and loss statement, and report on business activities in the two most recent years;

g. Presentation on physical and technical facilities and means serving securities trading.

2. Within thirty days from the date of receipt of all documents, the State Bank will consider and approve or reject the establishment of a securities company by a commercial bank. In case of rejection, the State Bank will issue a document clearly stating the reasons for non-approval.

CAPITAL FOR THE ESTABLISHMENT OF A SECURITIES COMPANY

1. Commercial banks may use their own capital to establish securities companies.

Section III

2. Commercial banks shall base their request for a license to operate one, several, or all types of securities business on the statutory minimum capital for each type of securities business as stipulated in Clause 3, Article 30 of Decree No. 48/1998/NĐ-CP dated July 11, 1998 of the Government on securities and the securities market, taking into account their own capital and business capacity.

2. Any amendments or supplements to this Circular shall be decided by the Governor of the State Bank.

3. The Director of the Office, Heads of units under the State Bank, Department Heads of Banking Departments and Non-Bank Credit Institutions, Chairmen of the Board of Directors, General Managers (Directors) of commercial banks within their respective functions shall be responsible for organizing, guiding, and implementing this Circular.

CHAPTER III

IMPLEMENTING PROVISIONS

1. This Circular shall take effect fifteen days from the date of signature.

4. During implementation, if there are any difficulties, commercial banks are requested to promptly reflect them to the State Bank (Department of Banking and Non-Bank Credit Institutions) for research and appropriate amendment and supplementation of the guidance provided.

3. The Head of the Office, Heads of units under the State Bank, Directors of Banking Departments of commercial banks and non-bank credit institutions, Chairmen of the Board of Management, General Managers (Directors) of commercial banks within their respective functions shall be responsible for organizing, guiding, and implementing this Circular.

4. In the course of implementation, if there are any difficulties, commercial banks are requested to promptly report to the State Bank (Banking Department of commercial banks and non-bank credit institutions) for research and amendment of the guidance provided to ensure appropriateness.