Circular No. 07/2016/TT-BTC Amending and supplementing certain provisions of Circular No. 210/2012/TT-BTC dated November 30, 2012 on the establishment and operation of securities companies

CIRCULAR

Amending and supplementing certain Articles of Circular No. 210/2012/TT-BTC dated November 30, 2012 guiding the establishment and operation of securities companies

Pursuant to the Securities Law dated June 29, 2006;

Pursuant to the Law amending and supplementing certain Articles of the Securities Law on November 24, 2010;

Based on the Enterprise Law dated November 26, 2014;

Pursuant to Decree No. 58/2012/NĐ-CP dated July 20, 2012 of the Government detailing and guiding the implementation of certain Articles of the Securities Law and the Law amending and supplementing certain Articles of the Securities Law;

Pursuant to Decree No. 60/2015/NĐ-CP dated June 26, 2015 of the Government amending and supplementing certain Articles of Decree No. 58/2012/NĐ-CP dated July 20, 2012 of the Government detailing and guiding the implementation of certain Articles of the Securities Law and the Law amending and supplementing certain Articles of the Securities Law;

WHEREAS, Decree No. 215/2013/NĐ-CP dated December 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the proposal of the Chairman of the State Securities Commission;

The Minister of Finance promulgates this Circular amending and supplementing certain Articles of Circular No. 210/2012/TT-BTC dated November 30, 2012 guiding the establishment and operation of securities companies.

Article 1. Amending and supplementing certain Articles of Circular No. 210/2012/TT-BTC dated November 30, 2012 guiding the establishment and operation of securities companies as follows:

1. Amending Clause 6, 7, supplementing Clause 8, 9 Article 2 as follows:

“6. Mergermeans the consolidation of two or more securities companies (hereinafter referred to as merged securities companies) into a new securities company (hereinafter referred to as the consolidated securities company), while simultaneously ceasing the existence of the merged securities companies.

7. Absorptionmeans the absorption of one or more securities companies (hereinafter referred to as absorbed securities companies) into another securities company (hereinafter referred to as the absorbing securities company) through the transfer of all assets, rights, obligations, and lawful interests to the absorbing securities company, while simultaneously ceasing the existence of the absorbed securities companies.

8. Loanrefers to a form where a securities company transfers or commits to transfer a sum of money, asset, or security to a recipient or user for a specified period according to an agreement with the principle of repayment of principal and possible interest.

9. Approved auditing organizationrefers to an auditing organization approved by the State Securities Commission to conduct audits, reviews of financial statements, financial information, and other reports of public interest entities within the securities sector.”

2. Amend Article 12 as follows:

“Article 12. Change in Registered Capital

1. Documents for requesting an increase in Registered Capital include:

a) Application for Amendment of the License for Establishment and Operation of a Securities Company (in accordance with the model attached as Appendix VII to this Circular);

b) Confirmation from the bank where the frozen account is opened regarding the additional capital or confirmation from an approved auditing organization regarding the additional capital or Financial Statements at the time after the securities company has completed the registered capital increase, which have been audited by an approved auditing organization. This provision does not apply to cases where the securities company increases its registered capital from sources belonging to the equity capital;

c) Report on changes in ownership structure before and after the increase in registered capital; documents as stipulated in Point d Clause 2 Article 30 of this Circular for cases where the increase in capital involves new shareholders or members holding five percent (5%) or more of the registered capital.

2. Documents for requesting a decrease in Registered Capital include:

a) Application for Amendment of the License for Establishment and Operation of a Securities Company (in accordance with the model attached as Appendix VII to this Circular);

b) Report on the results of purchasing and canceling shares, contributions to reduce registered capital, confirmed by an approved auditing organization or Financial Statements audited by an approved auditing organization at the time after the securities company has completed the purchase and cancellation of shares, contributions to reduce registered capital;

c) Report on changes in ownership structure before and after the reduction in registered capital.

3. Within twenty (20) days from the date of receipt of complete documents as stipulated in Clauses 1 and 2 of this Article, the State Securities Commission shall amend the License for Establishment and Operation for the securities company. In case of rejection, the State Securities Commission must provide a written response stating the reasons.”

3. Amending and supplementing Article 14 is as follows:

"Article 14. Suspension of Securities Company Operations

1. A securities company shall be suspended from operations in the following cases:

a) The application for issuance or amendment of the License for Establishment and Operation contains intentionally false information;

b) After the expiration of the warning period (supervision or special supervision) as prescribed in the regulations on financial safety indicators and measures for dealing with securities business organizations that fail to meet financial safety indicators, the securities company cannot provide evidence proving that it has overcome the warning status (the available capital ratio reaching one hundred eighty percent (180%) or higher continuously for three (03) months, with the available capital ratio at the final reporting period being audited by an approved auditing organization) and has a consolidated loss reaching fifty percent (50%) or more of the registered capital or has equity capital at the latest audited or reviewed financial statement lower than the statutory minimum for licensed business activities;

c) Operating contrary to the purpose or not in accordance with the content stipulated in the License for Establishment and Operation;

d) Failing to maintain one of the conditions for issuing the License for Establishment and Operation as prescribed in Clause 1, 2, 3, and 4 of Article 3 of this Circular;

đ) Cases of suspension as prescribed in laws on administrative penalties in the field of securities and the securities market.

2. For cases of suspension as prescribed in Points a, b, c, d Clause 1 of this Article, the State Securities Commission shall base on the form and degree of violation to issue a decision suspending one, several, or all of the securities brokerage, proprietary trading, investment advisory, underwriting, and securities custody activities, specifying the duration and scope of the suspension.”

3. During the period of suspension, the securities company shall not enter into new contracts or extend contracts related to suspended business activities; it must settle all accounts and transfer funds according to customer requests (if any); develop a remediation plan and report on the implementation of such plan as required by the State Securities Commission. In cases of suspension of proprietary trading activities, the securities company may only sell and not increase its investment holdings, except when compelled to purchase to correct transaction errors or for odd-lot transactions or to enjoy rights related to securities held in accordance with current laws.

4. Amending and supplementing Article 15 is as follows:

Article 15. Revocation of Establishment and Operation License

1. The securities company shall have its establishment and operation license revoked in the following circumstances:

a) Circumstances stipulated in Points a, b, c Clause 2 Article 70 of the Securities Law; cases of revocation as provided for in Clause 1 Article 46 of this Circular or pursuant to a court's decision to dissolve the company;

b) Failure to rectify violations specified in Points a, c, d Clause 1 Article 14 of this Circular within sixty (60) days from the date of suspension;

c) Failure to address the situation specified in Point b Clause 1 Article 14 of this Circular within six (06) months from the date of suspension;

d) The securities company has reached the end of its operational term as set forth in its articles of association or voluntarily dissolves itself;

đ) The securities company goes bankrupt;

e) The securities company is merged or absorbed.

2. During the dissolution, bankruptcy process, the securities company must ensure the following principles:

a) Members of the Board of Directors, members of the Board of Members, Shareholders, General Director or Managing Director, and the legal representative of the securities company are responsible for the truthfulness and accuracy of the dissolution documents as specified in Point h Clause 3 of this Article;

b) If the client securities account processing documents and dissolution documents are inaccurate or fraudulent, those individuals specified in Point a of this Clause shall jointly be liable for payment of outstanding debts, unpaid taxes, and unresolved employee benefits, and shall bear individual responsibility under the law for any consequences arising within five (05) years from the date of submitting the dissolution documents to the State Securities Commission.

3. Procedures for revoking the establishment and operation license in the cases specified in Points a, b, c Clause 1 of this Article shall be carried out as follows:

a) Within thirty (30) days from the date of being ordered to revoke the establishment and operation license, the State Securities Commission shall issue a decision terminating all licensed business operations of the securities company to commence the license revocation procedures;

b) Within twenty-four (24) hours from the date of receiving the State Securities Commission's decision, the securities company shall be responsible for publishing information about this decision. The securities company shall cease all licensed business operations entirely, stop signing new contracts related to the company's business activities;

c) Within seven (07) working days from the date the securities company receives the State Securities Commission's decision, the Board of Directors and Board of Members of the securities company must convene an extraordinary shareholders' meeting or board meeting to approve the dissolution, decide on a debt resolution plan for creditors and other interested parties. Within twenty-four (24) hours from the date of the shareholders' meeting or board meeting, the securities company must publish information about the company's dissolution along with the debt resolution plan for creditors and other interested parties;

d) Within fifteen (15) days from the date of receiving the State Securities Commission's decision, the securities company must report to the State Securities Commission on the plan to handle proprietary accounts, contracts signed with customers that remain valid and relate to ongoing securities business activities, and customer securities trading accounts opened at the securities company (if any). The plan shall include the following main contents:

- The time and method of announcing information and notifying each customer about the termination of all licensed securities business activities;

- The estimated time to settle customer trading accounts (close or transfer accounts) according to customer requirements, with a minimum settlement period of thirty (30) days;

- The time to stop opening new accounts;

- The estimated time to stop trading on the stock exchange;

- The time to stop customer deposit/withdrawal transactions;

- The estimated time to reconcile customer account balances before settlement;

- The plan for handling customer accounts not yet settled, disputed accounts;

- The plan for handling proprietary securities accounts;

- The plan for handling contracts signed with customers that remain valid and relate to ongoing securities business activities.

đ) Within no more than forty-five (45) days after the State Securities Commission provides comments on the plan established as stipulated in Point d of this Clause, the securities company must implement the plan in the following sequence:

- Publish information and notify each customer according to the plan;

- Settle accounts and fully return (transfer) money and securities according to customer requests;

- After the account settlement deadline, prepare a complete list of all customer accounts not yet settled, including the balance of money and securities for each account.

- Within five (05) working days from the expiration date of the account closure requested by the customer, the securities company shall report to the State Securities Commission on the situation of account closure, accounts that have not been closed out, along with the remaining balances of cash and securities for each such account, the implementation of the plan to handle proprietary trading accounts, and the status of contracts still in effect with customers related to ongoing securities business operations;

- The securities company may agree to transfer the remaining securities trading accounts of customers to another securities company.

In the case of revocation of the license for establishment and operation as stipulated in Point b Clause 2 Article 70 of the Securities Law, the State Securities Commission has the authority to designate another securities company to take over the remaining securities trading accounts of customers of the securities company whose license for establishment and operation has been revoked. In this case, the agency relationship is automatically established between the two companies.

If the legal representative of the securities company is restricted or loses their capacity for civil acts, the remaining members of the Board of Directors, Management Board, or Supervisory Board (in cases where the securities company no longer has members of the Board of Directors or Management Board) shall be responsible for appointing a member of the Board of Directors or Management Board or internal auditor to carry out procedures to fully transfer assets to customers.

e) Within five (05) working days from the completion of the transfer of all customer accounts, the securities company shall report to the State Securities Commission on the handling of remaining customer securities trading accounts. This provision does not apply to securities companies that complete the account closure process for customers within the required account closure period.

g) Within five (05) working days from the date the State Securities Commission receives and publishes the report as provided in Points đ and e of this Clause, the securities company shall implement dissolution procedures in accordance with the provisions of the Enterprise Law. The announcement will be published on the State Securities Commission's electronic information website.

h) Within seven (07) working days from the completion of the dissolution process, the legal representative of the securities company or the person designated by the securities company as provided in Point đ of this Clause must submit to the State Securities Commission the dissolution file as follows:

- A report on the results of the dissolution process, the handling of other debts and liabilities, accompanied by the original License for Establishment and Operation of the securities company;

- Documentation regarding the recovery of the seal from the police authority, documentation regarding the completion of tax obligations from the tax authority, and confirmation documentation regarding the settlement of all other debts and liabilities;

- Financial statements audited by an approved auditing organization at the time of completing the dissolution process.

i) Within seven (07) working days from the date of receiving a complete and valid dissolution application file as provided in Point h of this Clause, the State Securities Commission shall issue a decision to revoke the License for Establishment and Operation and publish the information according to the regulations.

4. The procedure for revoking the License for Establishment and Operation in the case specified in Point d Clause 1 of this Article shall be carried out as follows:

a) Within twenty-four (24) hours from the date of the Shareholders' Meeting, Management Board, or Owner's resolution to dissolve the securities company, the securities company shall be responsible for publishing information about the company's dissolution;

b) Securities companies engaged in brokerage activities shall develop a plan to handle customer securities trading accounts in accordance with the provisions of Point d Clause 3 of this Article;

c) Within ten (10) working days, the State Securities Commission shall provide comments in writing on the plan to handle customer accounts;

d) After receiving the document from the State Securities Commission, the securities company shall implement the plan to handle customer accounts according to the procedures stipulated in Point đ Clause 3 of this Article;

đ) After completing the account closure and transfer of customer accounts in accordance with the agreement with another securities company, the securities company shall submit the dissolution approval application file. The dissolution approval application file shall be prepared in one (01) original copy submitted directly to the State Securities Commission or sent via postal service, including:

- An application for approval of the company's dissolution (according to the form prescribed in Appendix VIII issued together with this Circular);

- The resolution of the Shareholders' Meeting, Management Board, or Owner regarding the company's dissolution;

- A report on the closure of customer securities trading accounts and the plan for account closure and handling of other contracts, financial rights and obligations of the Company.

e) Within seven (07) working days from the date of receipt of the file as provided in Point đ of this Clause, the State Securities Commission shall issue a Decision approving the securities company to proceed with the dissolution procedures. In case of refusal, the State Securities Commission must respond in writing and specify the reasons;

g) Within twenty-four (24) hours from the date of receipt of the decision of the State Securities Commission, the securities company shall be responsible for publishing information about the decision to approve the dissolution;

The dissolution procedures of the company shall be carried out in accordance with the laws on enterprises;

i) Within seven (07) working days from the completion of the dissolution process, the securities company shall carry out the procedures as provided in Point h Clause 3 of this Article;

k) Within seven (07) working days from the date of receiving a complete and valid dissolution file as provided in Point h Clause 3 of this Article, the State Securities Commission shall issue a decision to revoke the License for Establishment and Operation and publish the information according to the regulations.

5. The procedure for revoking the License for Establishment and Operation in the cases specified in Point đ Clause 1 of this Article shall be carried out as follows:

a) Within twenty-four (24) hours from the time the securities company receives the decision to initiate bankruptcy proceedings or the decision declaring the securities company bankrupt under the simplified procedure provided for in Clause 1 Article 105 of the Bankruptcy Law, the securities company must publish information on these decisions;

b) Within five (05) working days from the date of publication as prescribed in Point a of this Clause, securities companies engaged in brokerage business must develop a plan to handle customer trading accounts in accordance with the provisions of Point d Clause 3 of this Article;

c) The securities company shall process customer accounts in accordance with the procedures and formalities prescribed in Point đ Clause 3 of this Article;

d) The securities company shall implement bankruptcy procedures in accordance with the provisions of the Bankruptcy Law;

đ) Within thirty (30) days from the date of receipt of the decision declaring the securities company bankrupt, the State Securities Commission issues a Decision to revoke the License for Establishment and Operation of the securities company and publishes information in accordance with the regulations;

6. The procedure for revoking the License for Establishment and Operation in cases specified in Point e Clause 1 of this Article shall be carried out as follows:

The State Securities Commission issues a decision to revoke the License for Establishment and Operation of the participating securities company simultaneously with issuing a new License for Establishment and Operation of the consolidated securities company and completing the merger in accordance with the provisions of Clause 6 Article 67 of this Circular.”

5. Supplement Section 5 of Chapter III as follows:

"Section 5

FOREIGN INVESTMENT

Article 26a. Foreign Investment by Securities Companies

1. A securities company establishing a branch, representative office, or investing abroad must meet the following requirements:

a) Having a project to establish a branch, representative office, or invest abroad that has been approved in writing by the Shareholders' Meeting, Board of Directors, or Owner;

b) Meeting the financial safety requirements after deducting the capital allocated to the branch and the investment capital abroad;

c) Ensuring that the net owner's equity, after deducting the capital allocated to the branch and the investment capital abroad, does not fall below the statutory capital for the licensed business activities;

d) The scope of operations and investment fields must be within the business scope permitted by the securities company's license established in Vietnam.

2. The application for approval to establish a branch, representative office, or invest abroad by a securities company shall be submitted in one original copy directly to the State Securities Commission or sent by post, including the following documents:

a) An application for approval to establish a branch, representative office, or invest abroad by the securities company according to the form prescribed in Appendix X(a) issued together with this Circular;

b) Minutes of meetings and Resolutions of the Shareholders' Meeting, Board of Directors, or Owner regarding the establishment of branches, representative offices, or investments abroad in compliance with the Company's Articles of Association;

c) Business and investment plans abroad, including the expected investment capital, sources of investment capital, transaction partners (if any), investment fields, contents and scope of operations, business operation plans for the first three years, and other related information;

3. Within seven (07) working days from the date of receipt of a complete application as stipulated in Clause 2 of this Article, the State Securities Commission shall issue a written approval for the securities company's foreign investment. In case of refusal, the State Securities Commission must provide a written response stating the reasons for non-approval.

4. After receiving the approval from the State Securities Commission, the securities company shall carry out the establishment of branches, representative offices abroad, or foreign investments in accordance with the laws on investment and foreign exchange management.

5. Within fifteen (15) days from the date the competent authority abroad permits the establishment of a branch, representative office, or approves the investment project abroad, the securities company must report to the State Securities Commission. The reporting documents include:

a) Information about the location and personnel of the branch, representative office, investment value, opening date, accompanied by valid approvals from the competent state management authorities in Vietnam in the fields of investment and foreign exchange management;

b) Documents and files submitted to the competent state management authorities abroad, accompanied by certified copies of licenses, approvals, or equivalent documents issued by the competent authorities abroad.

6. Within fifteen (15) days from the date the securities company ceases operations at the branch, representative office, or recovers the investment abroad, the securities company must report to the State Securities Commission. The reported information includes:

a) Information about the name, address, and reasons for ceasing operations of the branch, representative office abroad;

b) The responsibilities of the securities company regarding assets, rights, obligations, and related interests of the branch, representative office abroad or investment, accompanied by certified copies of approvals or equivalent documents issued by the competent authorities abroad (if any).”

6. Amend Clause 3 Article 28 as follows:

“3. A securities company may have one (01) or more legal representatives as prescribed in its Articles of Association. The Articles of Association of the securities company shall specify the responsibilities, number, management positions, rights, and obligations of each legal representative. In case of changes to the legal representative of the securities company, the securities company shall request the State Securities Commission to amend the License for Establishment and Operation in accordance with Article 13 of this Circular. Specific cases regarding the legal representative of the securities company:

a) In the case where the securities company has one (01) legal representative, the Chairman of the Board of Management, the Chairman of the Board of Members, or the Director, General Director is the legal representative of the company. If the Company's Articles of Association do not provide otherwise, the legal representative of the company is the Chairman of the Board of Management, the Chairman of the Board of Members;

b) In case a securities company has more than one legal representative, the Chairman of the Board of Directors, the Chairman of the Board of Members, and the Director or General Director must be the legal representatives of the company. The securities company registers with the State Securities Commission either the Chairman of the Board of Directors, the Chairman of the Board of Members, or the Director or General Director as the legal representative of the company. The registered legal representative is responsible for providing documents and working with the State Securities Commission. If there is a change in the registered legal representative, the securities company must report to the State Securities Commission within twenty-four (24) hours from the occurrence of the event.

7. Amend Clause 1 of Article 30 is as follows:

“1. Transactions that alter ownership of shares or capital contributions by ten percent (10%) or more of the subscribed charter capital, transactions leading to ownership ratios exceeding or falling below the levels of ten percent (10%), twenty-five percent (25%), fifty percent (50%), and seventy-five percent (75%) of the subscribed charter capital of a securities company must be approved by the State Securities Commission, except in cases where the securities company's shares are listed or traded on the Stock Exchange and in cases of transfer pursuant to a court decision.”

8. Supplement Clause 4 Article 31 is as follows:

“4. The General Meeting of Shareholders, the Board of Members, and the Owner of a securities company shall approve the auditing organization to conduct audits of financial reports and financial safety ratios. Within the same fiscal year, a securities company may not change the approved auditing organization, except in cases where the parent company changes the approved auditing organization or the approved auditing organization is suspended or its approval for auditing is revoked.”

9. Amend and supplement Article 39 as follows:

Article 39. Increase in Charter Capital, Share Swap, and Capital Contribution Swap

1. Increase in Charter Capital

a) A securities company may not increase its charter capital before officially commencing securities business operations;

b) Forms of increasing charter capital for a limited liability securities company include:

- The owner investing additional charter capital in a single-member limited liability company, and members contributing additional charter capital in a limited liability company with two or more members;

- Raising additional investment capital from new members. In the case of a single-member limited liability company increasing its charter capital through raising additional capital contributions from others, the securities company must convert its legal form according to the provisions of Articles 64 and 65 of this Circular;

- Transferring retained earnings and other legitimate sources of capital to increase charter capital: When increasing charter capital from retained earnings and other legitimate sources belonging to the owner's equity, the company must ensure it has sufficient funds after fully establishing the required reserve accounts as stipulated by laws guiding the financial system for securities companies. The company may not use financial reserves and price differences from asset revaluation to increase charter capital;

- Converting debt into capital contribution by agreement between the company and the creditor: Debts eligible for conversion must have been disclosed in the most recent audited or reviewed financial report and approved by the owner or the Board of Members.

c) Forms of increasing charter capital for a joint-stock securities company include:

- Offering shares to existing shareholders and other entities according to the offering method approved by the General Meeting of Shareholders;

- Transferring retained earnings and other legitimate sources of capital to increase charter capital: When increasing charter capital from retained earnings and other legitimate sources belonging to the owner's equity, the company must ensure it has sufficient funds after fully establishing the required reserve accounts as stipulated by laws guiding the financial system for securities companies. The company may not use financial reserves and price differences from asset revaluation to increase charter capital. In the case of using surplus capital due to the difference between selling price and purchase cost of treasury shares, the company can only implement this after selling all treasury shares. In the case of using surplus capital due to the difference between par value and selling price in issuance rounds, the company can only implement this one year after the end of the issuance round;

- Converting debt into capital contribution by agreement between the company and the creditor: Debts eligible for conversion must have been disclosed in the most recent audited or reviewed financial report and approved by the General Meeting of Shareholders;

- The company converts convertible bonds into shares after meeting the conditions for conversion as prescribed by law.

d) Before implementing the increase in charter capital as provided in Point b, Clause 1 of this Article, the securities company must register with the State Securities Commission. The registration documents include:

- An application for increasing charter capital, specifying the form of increase and the value of the additional capital;

- The resolution of the Board of Members or the Owner regarding the increase in capital and the capital-raising plan approved by the Board of Members or the Owner of the securities company;

- A list of new members contributing capital, members contributing ten percent (10%) or more of the charter capital of the securities company, accompanied by the documents specified in Point d, Clause 2, Article 30 of this Circular (if applicable);

- The most recent audited or reviewed financial report for cases involving the transfer of retained earnings and other legitimate sources of capital to increase charter capital or cases involving restructuring debts through converting debt into capital contribution by agreement between the company and the creditor. In the case of a single-member limited liability company converting debt into capital contribution, the company must convert according to the provisions of Articles 64 and 65 of this Circular.

đ) Before implementing the increase in capital as provided in Point c, Clause 1 of this Article, the securities company must register with the State Securities Commission. The documents and procedures for implementation are as follows:

- In the case of offering shares to existing shareholders and other entities: If the company offers shares to a determined number of shareholders of one hundred (100) or more, the securities company shall implement according to the regulations on public share offerings. If the company offers shares to a determined number of shareholders under one hundred (100), the securities company shall implement according to the regulations on private share offerings.

- In the case of transferring retained earnings and other legitimate sources of capital to increase the Charter Capital: The conditions, documents, procedures, and formalities for implementation shall be carried out in accordance with the regulations on additional share issuance of public companies.

- In the case of increasing the Charter Capital to restructure debt through the conversion of debt into equity contributions by agreement between the company and its creditors: The securities company shall implement according to the regulations on private share offerings to exchange the company's debts.

- In the case of converting bonds into shares: Within three (03) working days from the completion of the bond-to-share conversion, the securities company must report to the State Securities Commission the results of the bond-to-share conversion.

2. Exchange of share capital, contribution capital, private share offerings to convert into a joint-stock company:

a) In the case of issuing shares to exchange for shares or contribution capital for the purpose of merging or consolidating with another securities company or acquiring a fund management company:

- In the case of issuing shares to exchange for shares or contribution capital for a determined number of shareholders of one hundred (100) or more: The conditions, documents, procedures, and formalities for implementation shall be carried out in accordance with the regulations on public share offerings to exchange shares under merger or consolidation contracts.

- In the case of issuing shares to exchange for shares or contribution capital for a determined number of shareholders under one hundred (100): The conditions, documents, procedures, and formalities for implementation shall be carried out in accordance with the regulations on private share offerings to exchange.

b) In the case of private share offerings to convert into a joint-stock company: The securities company must have a Decision of the Owner approving, and the Board of Members agreeing to the conversion into a joint-stock company and private share offerings to convert into a joint-stock company, accompanied by the conversion plan and the offering plan approved by the Owner and the Board of Members. The procedures and formalities for private share offerings to convert into a joint-stock company of the securities company shall be carried out in accordance with the regulations on private share offerings of public companies.

3. Within fifteen (15) days from the date of receiving valid documents regarding the increase in Charter Capital, exchange of share capital, contribution capital, and private share offerings to convert into a joint-stock company as stipulated in Point d, đ Clause 1, Clause 2 of this Article, the State Securities Commission shall respond in writing to the securities company regarding the increase in Charter Capital, exchange of shares, contribution capital, and private share offerings to convert into a joint-stock company.

4. After completing the implementation of the increase in Charter Capital, within seven (07) working days, the securities company shall carry out the procedures to adjust the License for Establishment and Operation in accordance with Article 12 of this Circular.”

10. Amend and supplement Article 40 is as follows:

“Article 40. Financial Safety Indicators

1. Securities companies must ensure financial safety indicators in accordance with the regulations on financial safety indicators and measures for dealing with securities business organizations issued by the Ministry of Finance.

2. The minimum charter capital of a securities company shall be equal to the statutory capital prescribed by the Government for each type of business activity. In case the charter capital is lower than the statutory capital (based on the most recent monthly report), within thirty (30) days from the date when the charter capital falls below the statutory capital, the Board of Directors or the Board of Members of the securities company shall have the responsibility to:

a) Develop and implement a resolution plan (to increase capital or withdraw business activities) to ensure that the value of the charter capital is at least equal to the statutory capital;

b) Submit a written report to the State Securities Commission regarding the resolution plan stipulated in Point a of this Clause and commit to implementing the plan, which must include at least the following contents:

- The value of the charter capital at the time of reporting;

- Reasons for the charter capital being lower than the statutory capital;

- Measures to ensure that the charter capital does not fall below the statutory capital and to maintain the financial safety ratio as prescribed by law.

3. Within six (06) months from the date when the charter capital of a securities company is lower than the statutory capital based on the monthly operation report, the charter capital of the securities company must be at least equal to the statutory capital. If the charter capital is still below the statutory capital after the six (06) month period, the securities company shall be subject to the following operational restrictions:

a) Not allowed to distribute profits; not allowed to establish branches, trading offices, representative offices, invest abroad; not allowed to supplement securities business activities, register for margin trading of securities;

b) In cases where the securities company is still under or has not yet overcome the conditions of supervision, special supervision, and cumulative losses reaching fifty percent (50%) of the registered capital of the company, within fifteen (15) days from the end of the six (06) month period to increase capital or withdraw securities business activities as prescribed in this Clause, the State Securities Commission shall issue a decision to suspend one or more business activities of the securities company, ensuring that the minimum charter capital is equal to the statutory capital corresponding to the remaining permitted activities. The procedures and formalities for suspending one or more activities of a securities company shall be carried out in accordance with the provisions of Article 14 of this Circular. After the suspension period ends, if the source of the charter capital of the securities company still fails to meet the statutory capital requirement, within five (05) working days, the State Securities Commission shall issue a decision to withdraw the securities business activities previously suspended.

4. Annual financial statements and reports on available capital ratios as of June 30 must be reviewed, and as of December 31 must be audited by an approved auditing organization.

5. The State Securities Commission shall be responsible for publishing information on its electronic information website about securities companies under supervision, special supervision, and other related information within twenty-four (24) hours from the date of issuing a decision to place a securities company under supervision or special supervision.

11. Amend and supplement Article 41 as follows:

“Article 41. Treasury Shares

1. Except for cases of purchasing individual shares at the request of customers, purchasing to correct errors according to the regulations of the Securities Depository Center, and purchasing shares at the request of shareholders as stipulated in Article 129 of the Enterprise Law, a joint-stock securities company may purchase up to ten percent (10%) of the issued ordinary shares as treasury shares.

2. A securities company may use undistributed profits after tax, capital surplus, and other sources belonging to the owner's equity that can be used to supplement the charter capital (excluding the financial reserve fund) as prescribed by law to purchase treasury shares. After purchasing treasury shares, the securities company must ensure that its owner's equity is not less than the statutory capital as prescribed by law.

The above indicators are based on the Financial Statements or Consolidated Financial Statements (in the case where the securities company is a parent company), which have been audited or reviewed most recently but not more than six months prior to the anticipated date of purchasing treasury shares.

3. The conditions, documents, procedures, and formalities for repurchasing and selling treasury shares of a securities company shall be carried out in accordance with the provisions applicable to public companies.

4. In the event that a securities company has completed the repurchase of treasury shares and implements their cancellation to reduce the charter capital, the securities company must adjust the reduction of the charter capital in accordance with the provisions of Clause 12 of this Circular.”

12. Supplement Clause 3 Article 42 as follows:

“3. A securities company issuing corporate bonds shall comply with the legal provisions on issuing corporate bonds and must ensure compliance with the ratios prescribed in Clause 1 and 2 of this Article. In the case of offering convertible bonds to the public, the securities company shall implement the provisions on offering convertible bonds to the public. In the case of offering convertible bonds individually, the procedure, documents, and formalities shall be carried out as follows:

a) The registration documents for offering individual convertible bonds of a securities company shall be established in one original copy submitted directly to the State Securities Commission or sent via postal service, including:

- Registration form for offering individual convertible bonds, specifying the offering value and the target audience;

- Decision of the Shareholders' Meeting approving the offering plan, the use of funds from the bond issuance round, and the conversion plan. The conversion plan must clearly state the conditions, time frame for conducting the conversion, conversion ratio, and method of calculating the conversion price;

- Commitment to fulfill the obligations of the securities company towards investors regarding the issuance conditions, payment, ensuring the legitimate rights and interests of investors, and other conditions;

- Plan for issuing shares during the maturity period of convertible bonds and compensation plan for holders of convertible bonds;

b) Within fifteen (15) days from the date of receiving complete and valid registration documents, the State Securities Commission shall notify the securities company and publish on its electronic information website confirming the receipt of complete registration documents for offering individual convertible bonds of the securities company;

c) The securities company shall carry out the offering according to the registered plan and must complete the offering round within ninety (90) days from the date the State Securities Commission issues a notification of receipt of complete registration documents for offering individual convertible bonds;

d) The securities company must open a blocked account at a commercial bank that is not related to the securities company or involved in the offering round to receive raised capital as prescribed in Clause 3 of Article 21 of the Securities Law;

đ) Within five (05) working days from the completion of the offering round, the securities company must submit a report on the results of the offering to the State Securities Commission, accompanied by confirmation from the commercial bank where the blocked account was opened regarding the amount received from the offering round;

e) Within three (03) working days from the date of receiving the report on the results of the offering, the State Securities Commission shall send a confirmation notice of the offering results to the securities company;

g) After receiving the confirmation notice of the offering results from the State Securities Commission, the issuer is required to terminate the block on the amount received from the offering round.”

13. Amended and supplemented Article 43 as follows:

“Article 43. Restrictions on Lending

1. Except for cases provided for in Clause 4 and Clause 5 of this Article, securities companies shall not lend money or securities in any form.

2. Securities companies shall not use their own funds or assets of clients to guarantee payment obligations to third parties.

3. Securities companies shall not lend in any form to Shareholders, major shareholders, members of the Supervisory Board, members of the Board of Directors, members of the Board of Members, members of the Management Board, Chief Accountants, other management positions appointed by the Board of Directors of the securities company, and persons related to these entities.

4. Securities companies that have implemented margin trading transactions in accordance with the law may lend money to customers to purchase securities through margin trading transactions in accordance with the guidelines of the Ministry of Finance.

5. Securities companies may lend securities to correct transaction errors or to lend for the purpose of implementing exchange-traded fund swap transactions or other forms as prescribed by relevant laws.

14. Amend Clause 3, Point d, e Clause 4 and supplement Point g Clause 4 Article 44 as follows:as follows:

"3. The total value of investment in corporate bonds of securities companies shall not exceed seventy percent (70%) of the company's equity. Securities companies licensed to conduct proprietary securities business may resell listed bonds in accordance with relevant regulations on bond resale."

"4. Securities companies shall not directly or entrust other organizations or individuals to implement:

d) Investing more than fifteen percent (15%) of the total number of shares or fund certificates in circulation of an unlisted organization, this provision does not apply to member fund certificates, index fund certificates, and open-ended funds;

e) Investing or contributing more than fifteen percent (15%) of the equity capital into an organization or business project;

g) Investing more than seventy percent (70%) of the equity capital into shares, contribution capital, and business projects, of which no more than twenty percent (20%) of the equity capital can be invested into unlisted shares, contribution capital, and business projects."

15. Amend Clause 4, supplement Clause 9, 10, 11 Article 45 as follows:

"4. Securities companies must arrange securities professionals with appropriate securities practice certificates for various business activities. Securities professionals engaged in brokerage and investment advisory services shall not concurrently perform tasks in departments responsible for proprietary securities business, underwriting securities business, and entrusted account management."

"9. In securities business operations, securities companies must sign contracts directly with clients through legal representatives or persons authorized by legal representatives, granting them the right to execute. Securities companies must fully bear responsibility and fulfill contracts in accordance with the provisions of the contract, complying with securities law regulations, contract law regulations, and relevant legal provisions governing securities business activities already concluded.

10. Client assets received and managed by securities companies include securities trading deposits managed by the company in accordance with Article 50 of this Circular and securities held in custody at the securities company in accordance with Article 51 of this Circular, including dedicated accounts in the name of the securities company, which are client assets, not those of the securities company. In the event of the dissolution or bankruptcy of the securities company, these assets must be returned to clients after deducting client debts owed to the securities company.

11. Securities companies and employees at securities companies shall not perform the following tasks:

a) Brokerage transactions of lending or borrowing assets between clients or between clients and third parties, except for lending securities to correct transaction errors or to implement exchange-traded fund swap transactions;

b) Investing on behalf of clients, except for entrusted management of individual investor securities trading accounts as stipulated in Article 61 of this Circular.”

16. Amend and supplement Article 68 is as follows:

“Article 68. Reporting System

1. The reporting of securities companies must be complete, timely, and accurately reflect the actual situation of the securities company.

2. Securities companies must submit periodic reports in electronic data files to the State Securities Commission according to the deadlines and regulations as follows:

a) By the fifth working day (05) of the following month, the securities company must submit the Monthly Operation Report (in accordance with the form prescribed in Appendix XXII of this Circular).

b) Within twenty (20) days from the end of the quarter, the securities company must submit the Quarterly Financial Report. In cases where the securities company is required to prepare a consolidated quarterly financial report, the securities company must submit the consolidated quarterly financial report within thirty (30) days from the end of the quarter.

c) Within forty-five (45) days from the end of the first six months of the fiscal year, the securities company must submit the Semi-Annual Financial Report and the Financial Safety Ratio Report on June 30, which has been reviewed by an approved auditing organization. In cases where the securities company is required to prepare a consolidated semi-annual financial report, the securities company must submit the consolidated semi-annual financial report that has been reviewed within sixty (60) days from the end of the first six months of the fiscal year.

d) Annual Report:

- By January 20 of the following year, the securities company must submit the Summary Report on the Company's Operations (in accordance with the form prescribed in Appendix XXIII of this Circular).

- By March 31 of the following year, the securities company must submit to the State Securities Commission the Annual Financial Report and the Financial Safety Ratio Report on December 31, which have been audited by an approved auditing company. In cases where the securities company is required to prepare a consolidated annual financial report, the securities company must submit the consolidated annual financial report that has been audited within one hundred (100) days from the end of the fiscal year.

đ) The financial reports of the securities company submitted to the State Securities Commission as stipulated in Points b, c, and d of this Clause must include all components and contents as prescribed by accounting laws for securities companies.

e) In cases where the financial report contains an audit opinion with reservations that do not detail the Item of Reservation and the reasons for reservation, the securities company must provide an explanatory document and obtain confirmation from the auditor to submit to the State Securities Commission no later than thirty (30) days from the date of submission of the report as stipulated in Points c and d of this Clause.

3. Within three (03) working days from the occurrence of the following events, the securities company must report to the State Securities Commission in writing:

a) Borrowing or investing beyond the limits specified in Articles 42 and 44 of this Circular.

b) The opening day of the main office of the securities company, branch, or trading room.

4. Reports upon request:

In case of necessity, the State Securities Commission has the right to require the securities company to submit a written report specifying the content and deadline for the report.

17. Supplement Appendix X(a), amend Appendices XI, XXII, XXIII, issued together with Circular No. 210/2012/TT-BTC dated November 30, 2012, guiding the establishment and operation of securities companies by the Minister of Finance.

18. Repeal Article 38 of Circular No. 210/2012/TT-BTC dated November 30, 2012, guiding the establishment and operation of securities companies by the Minister of Finance.

Article 2. Implementation

1. This Circular takes effect from March 15, 2016. Previous provisions contrary to this Circular are repealed.

2. Within one (01) year from the date this Circular takes effect, securities companies with net capital lower than the statutory capital requirement for permitted business activities must take necessary measures in compliance with regulations to ensure their net capital does not fall below the statutory capital requirement as stipulated in this Circular; securities companies must amend the Model Charter in accordance with Appendix XI issued together with this Circular.

3. Amendments and supplements to this Circular shall be decided by the Minister of Finance.