Circular No. 10/2016/TT-NHNN guiding certain contents prescribed in Decree No. 135/2015/NĐ-CP dated December 31, 2015 of the Government on foreign direct investment

CIRCULAR

Guidelines on certain provisions stipulated in Decree No. 135/2015/NĐ-CP

dated December 31, 2015 of the Government regarding indirect investment abroad

concerning indirect investment abroad

  _____________________

Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to Law on Credit Institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Investment Law number 67/2014/QH13 dated November 26, 2014;

Pursuant to the Foreign Exchange Law No. 28/2005/PL-UBTVQH11 dated December 13, 2005 and Law No. 06/2013/PL-UBTVQH13 dated March 18, 2013 amending and supplementing certain articles of the Foreign Exchange Law;

Pursuant to Decree No. 135/2015/NĐ-CP dated December 31, 2015 of the Government regarding indirect investment abroad;

Pursuant to Decree No. 156/2013/NĐ-CP dated November 11, 2013, of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Department of Foreign Exchange Management;

The Governor of the State Bank of Vietnam issues this Circular guiding certain provisions stipulated in Decree No. 135/2015/NĐ-CP dated December 31, 2015 of the Government regarding indirect investment abroad.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides certain provisions stipulated in Decree No. 135/2015/NĐ-CP dated December 31, 2015 of the Government regarding indirect investment abroad (hereinafter referred to as Decree No. 135/2015/NĐ-CP).

Article 2. Applicability

1. Investors as prescribed in Clause 1, Article 2 of Decree No. 135/2015/NĐ-CP.

2. Other organizations and individuals related to indirect investment abroad activities.

Article 3. Explanation of Terms

In this Circular, the following terms are understood as follows:

1. Permitted credit institutions are commercial banks and foreign bank branches permitted to provide foreign exchange services in Vietnam in accordance with the law.

4. A direct investment indirect foreign currency self-operating account is a foreign currency settlement account opened by a self-operating organization at one permitted credit institution for transactions related to self-operating direct investment indirect foreign activities (hereinafter referred to as a self-operating account).

5. A direct investment indirect foreign currency entrusted account is a foreign currency settlement account opened by an entrusted organization at one permitted credit institution for transactions related to entrusted direct investment indirect foreign activities (hereinafter referred to as an entrusted account).

6. An account for implementing stock option programs issued abroad is a foreign currency settlement account opened by an organization implementing stock option programs at one permitted credit institution for transactions related to the implementation of stock option programs issued abroad (hereinafter referred to as an implementation program account).

7. The total annual self-operating limit is the maximum amount of foreign currency that self-operating organizations can use annually to carry out self-operating direct investment indirect foreign activities.

8. The total annual entrusted limit is the maximum amount of foreign currency that entrusted entities can accept annually to carry out entrusted direct investment indirect foreign activities.

Article 4. Investment tools permitted for indirect investment abroad

1. Self-operating organizations and entrusted organizations are allowed to make indirect investments abroad in the following investment tools:

a) Shares listed on foreign securities exchanges;

b) Securities investment fund certificates;

c) Government bonds and bills, including government treasury bills and commercial paper issued by organizations rated by international credit rating agencies: Standard & Poor's, Moody's Investors Service, and Fitch Ratings.

2. The activities of buying and selling deposit certificates of self-operating organizations that are commercial banks and comprehensive financial companies shall be carried out in accordance with the provisions of the Law on Credit Institutions and guiding documents of the State Bank of Vietnam (hereinafter referred to as the State Bank).

Article 5. Safe investment ratio of self-operating commercial banks and comprehensive financial companies

1. The safe investment ratio of self-operating commercial banks and comprehensive financial companies is 7% of their own capital, excluding investment and business activities of their overseas branches.

2. Indirect investments abroad by commercial banks and comprehensive financial companies must not exceed the safe investment ratio specified in Clause 1 of this Article, while ensuring compliance with current laws regarding limits and safety ratios in the operations of commercial banks and comprehensive financial companies.

3. In cases where the safe investment ratio is exceeded due to a reduction in own capital, commercial banks and comprehensive financial companies must:

a) Report to the State Bank immediately upon the occurrence of a situation where the safe investment ratio is exceeded due to a reduction in own capital;

b) Take necessary measures to increase own capital; handle overseas investments and repatriate invested funds to ensure compliance with the safe investment ratio stipulated in Clause 1 of this Article within a maximum period of three months from the first month exceeding the safe investment ratio;

c) Cease transferring investment capital abroad according to the limit confirmed by the State Bank for registration in the year.

Article 6. Documents, procedures, and formalities for requesting the Prime Minister's approval for indirect investment abroad for other investment cases

1. Documents for requesting the Prime Minister to consider and approve indirect investment abroad for other investment cases as prescribed in Article 9 of Decree No. 135/2015/NĐ-CP:

a) Application form for permission to carry out indirect investment abroad (according to Form 01 attached hereto);

b) A copy issued from the original book or a certified copy or a copy accompanied by the original for comparison purposes of the business registration certificate or establishment decision or equivalent legal documents. In case the applicant submits a copy accompanied by the original for comparison, the person responsible for comparison shall confirm the accuracy of the copy compared to the original;

c) A document from the competent authority of the economic organization approving the investment policy for indirect investment abroad attached with the indirect investment plan abroad (specifying total investment capital, investment purpose, investment form, investment tool, source of funds for implementation, investment term, credit institution where the foreign currency settlement account is expected to be opened for indirect investment abroad).

2. Procedures and formalities for requesting the Prime Minister to consider other investment cases as prescribed in Article 9 of Decree No. 135/2015/NĐ-CP:

a) Investors submit directly or through postal service six sets of application documents for permission to invest indirectly abroad in Vietnamese language to the State Bank. In case the submitted documents are incomplete or invalid, the State Bank will issue a document requesting the investor to amend and supplement the documents within five working days from the date of receipt of the documents;

d) Within five working days from the date of receipt of the Prime Minister's directive, the State Bank issues a notification document for investors to implement indirect investment abroad activities.

3. Capital transfers abroad, capital and legitimate income transfers back to Vietnam for other investment cases approved by the Prime Minister must be conducted through one foreign currency settlement account of the investor opened at one credit institution permitted according to the approved indirect investment plan abroad by the Prime Minister.

Chapter II

CHAPTER PROGRAM ON STOCK AWARDS ISSUED ABROAD

Article 7. Indirect Investment Objectives Abroad in the Form of Participation in Stock Award Programs Issued Abroad

Vietnamese citizens working at foreign organizations in Vietnam may engage in indirect investment abroad through participation in stock award programs issued abroad.

The implementation of stock award programs issued abroad must comply with the following principles:

1. Stock award programs issued abroad targeting Vietnamese citizens as participants can only be implemented through the organization conducting the program and after registration confirmation by the State Bank.

2. Foreign currency obtained from selling stocks, stock purchase rights, dividends, and other lawful income of Vietnamese citizens must be transferred to Vietnamese citizens through the account specified in Article 12 of this Circular.

3. Compliance with foreign exchange management regulations, tax obligations, and other relevant legal provisions.

1. Direct awards in the form of stocks.

2. Awards in the form of stock purchase rights with preferential conditions.

1. To receive and own awarded stocks; sell awarded stocks abroad; receive dividends and other lawful income through the organization implementing the stock award program.

2. To receive stock purchase rights; exercise stock purchase rights abroad and own awarded stocks; receive dividends and other lawful income; sell stock purchase rights abroad through the organization implementing the stock award program.

3. To use their own foreign currency on the account; deduct salary, bonuses, or other lawful sources of income to purchase foreign currency to pay for the purchase of awarded stocks at permitted credit institutions through the organization implementing the stock award program.

4. To receive proceeds from selling awarded stocks abroad, selling stock purchase rights abroad in foreign currency through the organization implementing the stock award program.

1. The organization implementing the stock award program shall submit directly or send via postal service one set of registration documents for the stock award program issued abroad in Vietnamese to the State Bank. The documents include:

a) Registration document for the stock award program issued abroad (in accordance with Appendix No. 02 issued together with this Circular);

b) Documents proving the legal status of the foreign organization;

c) A copy of the investment registration certificate or office operation registration certificate or branch/subsidiary establishment permit of the foreign organization in Vietnam or other equivalent legal documents;

d) Detailed documentation describing the content of the stock award program issued abroad;

đ) List of Vietnamese citizens participating in the stock award program issued abroad.

2. In cases where the submitted documents are incomplete or invalid, within five working days from the date of receipt of the documents, the State Bank will issue a document requesting the investor to amend and supplement the documents.

3. Within fifteen working days from the date of receipt of complete and valid documents, the State Bank will confirm the registration of the implementation of the stock award program issued abroad targeting Vietnamese citizens as participants.

4. In cases where the organization implementing the stock award program ceases operations in Vietnam, before ceasing operations in Vietnam, the organization implementing the stock award program must sell awarded stocks, stock purchase rights, and transfer all proceeds to Vietnamese citizens participating in the stock award program issued abroad.

1. After being confirmed by the State Bank of Vietnam for registration to implement the stock bonus issuance program abroad, the organization implementing the stock bonus program must open one account to implement the program to conduct transactions of receipts and payments as prescribed in Clauses 2 and 3 of this Article.

2. Transactions of receipts:

a) Receipts of foreign currency from selling stocks abroad;

b) Receipts of foreign currency from selling rights to purchase stocks abroad;

c) Dividends and other lawful income related to the stock bonus issuance program abroad;

d) Receipts from foreign currency accounts of Vietnamese employees participating in the stock bonus issuance program abroad;

đ) Receipts of foreign currency purchased from authorized credit institutions for Vietnamese employees participating in the stock bonus issuance program abroad.

3. Transactions of payments:

a) Payments for purchasing stocks abroad;

b) Payments for selling foreign currency to authorized credit institutions to transfer to the Vietnamese dong accounts of Vietnamese employees participating in the stock bonus issuance program abroad;

c) Payments for transferring to foreign currency accounts of Vietnamese employees participating in the stock bonus issuance program abroad;

d) Other expenses such as fees and charges (if any).

Chapter III

DOCUMENTS, PROCEDURES FOR ISSUING AND REVOKING CERTIFICATES OF REGISTRATION FOR INDIRECT FOREIGN INVESTMENT BY COMMERCIAL BANKS AND COMBINED FINANCIAL COMPANIES

AND CERTIFICATES OF REGISTRATION FOR ACTIVITIES OF RECEIVING DELEGATED INDIRECT FOREIGN INVESTMENT BY COMMERCIAL BANKS

COMMERCE, UNIVERSAL FINANCIAL COMPANIES, CERTIFICATE

REGARDING REGISTRATION OF ACTIVITY TO ACT AS AGENT FOR INDIRECT INVESTMENT ABROAD

FOR COMMERCIAL BANKS

Article 13. Documents, procedures for issuing certificates of registration for indirect foreign investment

1. The application documents for issuing certificates of registration for indirect foreign investment must be prepared in Vietnamese, including:

a) Application form for issuing certificates of registration for indirect foreign investment (in accordance with Form 03 attached to this Circular);

d) Report on compliance with regulations on safety limits in banking operations for the year immediately preceding the year of submission of the application;

đ) Internal regulations on managing self-operated indirect foreign investment activities, including provisions on control mechanisms, internal auditing, risk identification, and risk management related to self-operated indirect foreign investment activities;

a) Commercial banks and combined financial companies wishing to engage in self-operated indirect foreign investment activities shall submit directly or send by post five sets of application documents as stipulated in Clause 1 of this Article to the State Bank of Vietnam. In cases where the application documents are incomplete or invalid, within five working days from the date of receipt of the application documents, the State Bank of Vietnam will issue a written request for the commercial bank or combined financial company to amend and supplement the application documents;

b) Within thirty-five days from the date of receipt of complete and valid application documents as prescribed in this Circular, the State Bank of Vietnam will consider issuing or refusing to issue certificates of registration for indirect foreign investment to commercial banks and combined financial companies. In case of refusal, the State Bank of Vietnam will notify in writing and specify the reasons.

Article 14. Documents, Procedures, and Formalities for Revoking Certificates of Registration for Indirect Foreign Investment

1. In cases where a request for revocation of certificates of registration for indirect foreign investment is voluntarily submitted:

a) Commercial banks and consolidated finance companies shall directly submit or send via postal service one (1) set of documents requesting the revocation of certificates of registration for indirect foreign investment in Vietnamese to the State Bank, including:

i) A request form for revoking certificates of registration for indirect foreign investment (in accordance with Appendix No. 04 issued together with this Circular);

ii) An approval document from the competent authority according to the charter of commercial banks and consolidated finance companies regarding the termination of indirect foreign investment activities, accompanied by a report on the results of handling ongoing indirect foreign investments;

2. In cases where the revocation of certificates of registration for indirect foreign investment is mandatory:

a) Commercial banks and consolidated finance companies will be required to have their certificates of registration for indirect foreign investment revoked if there is deceit or forgery of information related to the application for certificates of registration for indirect foreign investment;

b) Immediately upon receiving a formal written opinion from the competent authority regarding deceit or forgery of information related to the application for certificates of registration for indirect foreign investment of commercial banks and consolidated finance companies, the State Bank will issue a decision to revoke the certificate of registration for indirect foreign investment.

3. From the date of receipt of the decision to revoke the certificate of registration for indirect foreign investment, commercial banks and consolidated finance companies are responsible for:

a) Submitting the original certificate of registration for indirect foreign investment to the State Bank within five (5) working days;

b) Announcing the revocation decision on their electronic information website within twenty-four (24) hours;

c) Not continuing to transfer funds abroad within the limit confirmed by the State Bank; not continuing to implement indirect foreign investments; not extending existing indirect foreign investments;

d) Implementing the handling of indirect foreign investments according to the approved plan and reporting the results to the State Bank within a maximum of sixty (60) days from the effective date of the State Bank's decision to revoke the certificate of registration for indirect foreign investment (except in cases of voluntary requests for revocation of certificates of registration for indirect foreign investment).

Article 15. Documents, procedures, and formalities for issuing certificates of registration for indirect investment trust management activities abroad

1. The application documents for issuing certificates of registration for indirect investment trust management activities abroad must be prepared in Vietnamese:

a) An application form for issuing certificates of registration for indirect investment trust management activities abroad (in accordance with Form 05 attached to this Circular);

d) Internal regulations on managing indirect investment trust management activities abroad, including provisions on identifying and managing risks related to trust management for indirect investments abroad;

đ) A report on compliance with limits and safety guarantee ratios in trust management activities of commercial banks in the year immediately preceding the submission of the application;

a) Commercial banks wishing to conduct trust management activities shall submit five (5) sets of application documents directly or through postal service to the State Bank of Vietnam in accordance with Clause 1 of this Article. In case the submitted documents are incomplete or invalid, the State Bank of Vietnam will issue a written request for corrections and supplements within five (5) working days from the date of receipt of the documents;

b) Within thirty-five (35) days from the date of receiving complete and valid documents, the State Bank of Vietnam will consider issuing or refusing to issue certificates of registration for indirect investment trust management activities abroad to commercial banks. In case of refusal, the State Bank of Vietnam will notify in writing and specify the reasons.

Article 16. Documents, procedures, and formalities for revoking certificates of registration for indirect investment trust management activities abroad

1. In cases where commercial banks voluntarily request to revoke certificates of registration for indirect investment trust management activities abroad:

a) Commercial banks shall submit one (1) set of application documents in Vietnamese requesting the revocation of certificates of registration for indirect investment trust management activities abroad to the State Bank of Vietnam, which includes:

i) An application form for revoking certificates of registration for indirect investment trust management activities abroad (in accordance with Form 06 attached to this Circular);

ii) Approval documents from authorized bodies according to the charter of commercial banks regarding the cessation of indirect investment trust management activities abroad, accompanied by reports on the handling of ongoing indirect investments abroad.

2. In cases where certificates of registration for indirect investment trust management activities abroad are compulsorily revoked:

a) Commercial banks will have their certificates of registration for indirect investment trust management activities abroad compulsorily revoked if they engage in fraud or forgery of information related to the application documents for issuing certificates of registration for indirect investment trust management activities abroad;

b) Upon receiving official written opinions from competent authorities regarding fraudulent or forged information related to the application documents for issuing certificates of registration for indirect investment trust management activities abroad of commercial banks, the State Bank of Vietnam will issue a decision to revoke certificates of registration for indirect investment trust management activities abroad.

3. From the date of receiving the decision to revoke certificates of registration for indirect investment trust management activities abroad, commercial banks are responsible for:

a) Submitting the original certificate of registration for indirect investment trust management activities abroad to the State Bank of Vietnam within five (5) working days;

b) Announcing the decision to revoke certificates of registration for indirect investment trust management activities abroad on their electronic websites within twenty-four (24) hours;

c) Not signing new or extending existing trust management contracts for indirect investments abroad;

d) Not continuing to transfer funds abroad within the confirmed trust management limit by the State Bank of Vietnam; not continuing to implement indirect investments abroad, nor extending existing investments;

đ) Liquidating trust management contracts, closing trust management accounts, and transferring all remaining balances and investment instruments to the clients according to their instructions;

e) Reporting to the State Bank of Vietnam on the handling of client assets invested abroad within a maximum period of sixty (60) days from the date of the decision to revoke certificates of registration for indirect investment trust management activities abroad issued by the State Bank of Vietnam (except in cases where the commercial bank voluntarily requests the revocation of the certificate of registration for indirect investment trust management activities abroad).

Chapter IV

OPENING AND USING OWN ACCOUNTS,

TRUST MANAGEMENT ACCOUNTS

Article 17. Opening a Self-Operation Account

1. After being issued a certificate of registration for indirect investment abroad, the self-operation organization must open one (1) self-operation account to conduct transactions of receipts and payments as prescribed in Article 18 of this Circular.

2. In cases where the self-operation organization is a securities investment fund or a securities investment company conducting indirect investment abroad through a fund management company, the fund management company must open one (1) self-operation account to conduct transactions of receipts and payments related to the self-operation activities of indirect investment abroad by the securities investment fund and the securities investment company. In cases where the fund management company manages multiple securities investment funds and securities investment companies, the fund management company must open separate self-operation accounts for each securities investment fund and securities investment company.

3. In cases where the self-operation organization is a commercial bank, it may open one (1) self-operation account at that commercial bank or at another permitted credit institution to conduct transactions of receipts and payments as prescribed in Article 18 of this Circular.

4. In cases of changing the permitted credit institution for opening a self-operation account, the self-operation organization may open one (1) self-operation account at another permitted credit institution, then transfer the entire balance from this account to the new account and close the old account. Procedures for opening and closing self-operation accounts shall be carried out in accordance with the State Bank's regulations on opening and using settlement accounts at permitted credit institutions. The self-operation organization may only conduct transactions of receipts and payments on the newly opened account as prescribed in Article 18 of this Circular after closing the previously opened self-operation account.

Article 18. Using a Self-Operation Account

The self-operation organization may use the self-operation account to conduct transactions of receipts and payments including:

1. Receipt transactions:

a) Receiving foreign currency from the foreign currency settlement account of the self-operation organization;

b) Purchasing foreign currency from a permitted credit institution to carry out self-operation indirect investment abroad;

c) Receiving foreign currency transferred back from the sale of investment instruments abroad;

d) Receiving dividends and other lawful income related to self-operation indirect investment abroad.

2. Payment transactions:

a) Paying foreign currency abroad to purchase permitted investment instruments for indirect investment abroad;

b) Paying foreign currency to settle expenses incurred abroad related to self-operation indirect investment abroad;

c) Selling foreign currency to permitted credit institutions;

d) Transferring funds to the foreign currency settlement account of the self-operation organization;

đ) Other lawful payments related to self-operation indirect investment abroad.

Article 19. Opening a Trustee Account

1. After being issued a certificate of registration for trustee activities of indirect investment abroad, the trustee organization must open one (1) trustee account to conduct transactions of receipts and payments as prescribed in Article 20 of this Circular.

2. In cases where the trustee organization is a commercial bank, it may open one (1) trustee account at that commercial bank or at another permitted credit institution to conduct transactions of receipts and payments as prescribed in Article 20 of this Circular.

3. In cases of changing the permitted credit institution for opening a trustee account, the trustee organization may open one (1) trustee account at another permitted credit institution, then transfer the entire balance from this account to the new account and close the previously opened account. Procedures for opening and closing trustee accounts shall be carried out in accordance with the State Bank's regulations on opening and using settlement accounts at permitted credit institutions. The trustee organization may only conduct transactions of receipts and payments on the newly opened account as prescribed in Article 20 of this Circular after closing the previously opened trustee account.

4. When carrying out trustee activities of indirect investment abroad, a commercial bank may enter into contracts with overseas depositary organizations to deposit the client's asset portfolio abroad.

Article 20. Use of Trust Account

The trust organization may use the trust account to conduct transactions for receipts and payments including:

1. Receipt transactions:

a) Receiving foreign currency from the foreign currency settlement account of the entrusting organization;

b) Receiving foreign currency transferred back from selling investment instruments abroad;

d) Receiving dividends and other lawful revenues related to the indirect overseas investment entrusted activities of the entrusting organization.

2. Payment transactions:

a) Paying out foreign currency to purchase permitted investment instruments abroad;

b) Paying foreign expenses arising from the indirect overseas investment entrusted activities of the trust organization;

c) Selling foreign currency to permitted credit institutions;

d) Transferring funds to the foreign currency settlement account of the entrusting organization;

đ) Other lawful payment transactions related to the indirect overseas investment entrusted activities of the trust organization.

Chapter V

DETERMINATION OF SELF-OPERATION LIMITS, TRUST LIMITS; FILES,

PROCEDURES, REGULATIONS FOR REGISTRATION AND CONFIRMATION OF SELF-OPERATION LIMITS,

TEMPORARY SELF-OPERATION LIMITS, TRUST LIMITS, TEMPORARY TRUST LIMITS FOR INDIRECT FOREIGN INVESTMENTS

AGENT SERVICES, TEMPORARY LIMIT ON ACCEPTING AGENT SERVICES FOR INDIRECT INVESTMENT

ABROAD INDIRECTLY

Article 21. Determination of self-operation limits and trust limits for indirect foreign investments

1. The total annual limit for indirect foreign investments includes the total self-operation limit, the total trust limit, and the total limit for indirect foreign investments for other cases.

2. Based on the annual self-operation limit and the basis for confirming the registration of the self-operation limit for self-operation organizations as stipulated in Clause 1 of Article 27 of Decree No. 135/2015/NĐ-CP, the State Bank shall confirm the registration of the self-operation limit for each self-operation organization.

3. Based on the annual trust limit and the basis for confirming the registration of the trust limit for trust organizations as stipulated in Clause 1 of Article 28 of Decree No. 135/2015/NĐ-CP, the State Bank shall confirm the registration of the trust limit for each trust organization.

4. Capital size and asset size for determining the self-operation limit:

a) For commercial banks and comprehensive financial companies that are self-operation organizations, the capital size for determining the self-operation limit is the equity capital of such self-operation organizations;

b) For securities companies and fund management companies that are self-operation organizations, the capital size for determining the self-operation limit is the ownership capital of such self-operation organizations;

c) For stock investment funds and securities investment companies that are self-operation organizations, the determination of the self-operation limit is based on the asset size (net asset value) of such stock investment funds and securities investment companies;

d) For insurance business enterprises that are self-operation organizations, the capital size for determining the self-operation limit is the portion of capital allowed to be invested indirectly abroad according to the laws on insurance business;

đ) For State Capital Investment Corporation, the capital size for determining the self-operation limit is the portion of capital approved by the competent authority for indirect foreign investment according to the laws.

5. Capital size and asset size for determining the trust limit:

a) For commercial banks that are trust organizations, the capital size for determining the trust limit is the equity capital of such trust organizations;

b) For fund management companies that are trust organizations, the asset size for determining the trust limit is the portfolio size including money, securities, and other assets entrusted to the fund management company according to the laws on securities and relevant laws.

6. The maximum amount of foreign currency annually that self-operation organizations and trust organizations can use for indirect foreign investments and trust indirect foreign investments is the net amount of foreign currency transferred abroad (the amount transferred abroad minus the amount transferred back) not exceeding the self-operation limit and the trust limit confirmed by the State Bank.

7. During the period when the Prime Minister has not approved the total annual indirect foreign investment limit, self-operation organizations and trust organizations requiring indirect foreign investments can have their temporary self-operation limits and temporary trust limits reviewed and confirmed by the State Bank according to the files, procedures, and regulations stipulated in Articles 23 and 25 of this Circular.

Article 22. Documents, Procedures, and Formalities for Registering and Confirming the Self-trading Limit

1. The self-trading limit registration documents must be prepared in Vietnamese and include:

a) A self-trading limit registration form (in accordance with Form 07 attached to this Circular);

b) An audited financial report of the immediately preceding year before the year of self-trading limit registration;

c) A document from the competent authority of the self-trading organization regarding the approval of the indirect foreign investment trading plan for the year of self-trading limit registration;

d) A report on income and expenditure from the self-trading account, confirmed by the authorized credit institution where the self-trading organization opens its self-trading account; the implementation status of the self-trading limit for the immediately preceding year and the temporary self-trading limit for the current year (this does not apply to the case of a self-trading organization registering the self-trading limit for the first time).

2. Procedures and formalities for confirming the self-trading limit registration:

a) The self-trading organization sends one set of self-trading limit registration documents via postal service or directly submits them to the State Bank before April 15 each year;

1. During the period when the Prime Minister has not yet approved the total annual indirect foreign investment limit, if there is a need to continue indirect foreign investment activities, the self-trading organization must submit a temporary self-trading limit registration form (in accordance with Form 08 attached to this Circular) via postal service or directly to the State Bank before March 31 each year to register for a temporary self-trading limit.

Article 24. Documents, Procedures, and Formalities for Registering and Confirming the Entrusted Investment Limit

1. The entrusted investment limit registration documents must be prepared in Vietnamese and include:

a) An entrusted investment limit registration form (in accordance with Form 09 attached to this Circular);

b) An audited financial report of the immediately preceding year before the year of entrusted investment limit registration;

c) A report on income and expenditure from the entrusted investment account, confirmed by the authorized credit institution where the account is opened; the implementation status of the entrusted investment limit for the immediately preceding year and the temporary entrusted investment limit for the current year (this does not apply to the case of an entrusted investment organization registering the entrusted investment limit for the first time).

2. Procedures and formalities for registering the entrusted investment limit:

a) The entrusted investment organization sends one set of entrusted investment limit registration documents via postal service or directly submits them to the State Bank before April 15 each year;

1. During the period when the Prime Minister has not yet approved the total annual indirect foreign investment limit, if there is a need to carry out entrusted investment activities, the entrusted investment organization must submit a temporary entrusted investment limit registration form (in accordance with Form 10 attached to this Circular) via postal service or directly to the State Bank before March 31 each year to register for a temporary entrusted investment limit.

Chapter VI

RESPONSIBILITIES OF AUTHORIZED CREDIT INSTITUTIONS AND INVESTORS

AUTHORIZED CREDIT INSTITUTIONS, INVESTORS

Article 26. Responsibilities of licensed credit institutions

1. Request customers to provide relevant documents and certificates when implementing the opening and use of proprietary accounts, entrusted accounts, and accounts for programs.

3. Adhere to reporting requirements as stipulated in Article 36 of this Circular.

Article 27. Responsibilities of investors

1. Comply with the provisions of this Circular and other relevant Vietnamese laws when conducting indirect investment abroad.

2. When conducting transactions on proprietary accounts, entrusted accounts, proprietary organizations, and entrusted organizations have the responsibility to:

a) Declare the content of income and expenditure transactions related to proprietary activities and entrusted indirect investments abroad according to the requirements and guidance of licensed credit institutions;

b) Present and supplement documents, materials, and certificates as required by licensed credit institutions.

3. Adhere to reporting systems as stipulated in Articles 32, 33, and 34 of this Circular.

1. Organizations implementing stock option programs, Vietnamese citizens participating in such programs issued abroad have the responsibility to comply with the provisions of this Circular and other relevant Vietnamese laws.

2. When conducting transactions on program accounts, organizations implementing stock option programs have the responsibility to:

a) Declare the content of income and expenditure transactions related to the implementation of stock option programs issued abroad according to the requirements and guidance of licensed credit institutions;

3. Adhere to reporting systems as stipulated in Article 35 of this Circular.

Chapter VII

RESPONSIBILITIES OF RELATED UNITS

STATE BANK OF VIETNAM

a) Studying and reporting to the Governor of the State Bank of Vietnam on submitting to the Prime Minister for consideration and decision on cases of indirect foreign investments as stipulated in Article 9 of Decree No. 135/2015/NĐ-CP and as stipulated in this Circular;

b) Establishing the total annual limit for indirect foreign investments, reporting to the Governor of the State Bank of Vietnam on submitting to the Prime Minister for approval of the total annual limit for indirect foreign investments as stipulated in Article 26 of Decree No. 135/2015/NĐ-CP.

2. Process files related to the registration of temporary proprietary limits, proprietary limits for proprietary organizations; the registration of temporary entrusted limits, entrusted limits for entrusted organizations.

3. Compile reports from units as stipulated in this Circular, submit to the Governor for coordination with the Ministry of Finance to aggregate data and evaluate indirect foreign investments by investors annually, report to the Prime Minister on the implementation of indirect foreign investments by investors as stipulated in Decree No. 135/2015/NĐ-CP.

1. Take the lead and coordinate with the Foreign Exchange Management Department and related units under the State Bank of Vietnam in reviewing and submitting to the Governor for consideration:

a) Issuing and revoking certificates of registration for indirect foreign investment for self-operating organizations that are commercial banks and comprehensive financial companies;

b) Issuing and revoking certificates of registration for indirect foreign investment trust management activities for trust management organizations that are commercial banks.

2. Inspect and supervise indirect foreign investment activities in accordance with the provisions of the law and check the implementation of the provisions of this Circular within its authority.

3. Handle and recommend handling of violations according to the provisions of the law.

4. Coordinate with the Foreign Exchange Management Department on issues related to:

a) Studying and reporting to the Governor of the State Bank of Vietnam on matters to be submitted for approval.

b) Establishing the annual total limit for indirect foreign investment.

Article 31. Responsibilities of Units under the State Bank of Vietnam

Based on their assigned functions and tasks, units under the State Bank of Vietnam shall cooperate with the Foreign Exchange Management Department and the Banking Inspection and Supervision Agency on the contents stipulated in Articles 29 and 30 of this Circular.

Chapter VIII

REPORTING SYSTEM

Article 32. Reporting System for Self-Operating Organizations

1. Quarterly, no later than the 20th day of the first month of the following quarter immediately after the reporting quarter, self-operating organizations shall report to the State Bank of Vietnam on the situation of self-operating indirect foreign investment according to the form at Appendix 11 issued together with this Circular.

2. Annually, no later than January 30 of the year following the reporting year, self-operating organizations shall report to the State Bank of Vietnam on the situation of self-operating indirect foreign investment in the reporting year and the anticipated investment needs for the next year according to the form at Appendix 12 issued together with this Circular.

Article 33. Reporting System for Entrusted Organizations

1. Quarterly, no later than the 20th day of the first month of the following quarter immediately after the reporting quarter, entrusted organizations shall report to the State Bank of Vietnam on the situation of entrusted indirect foreign investment according to the form at Appendix 13 issued together with this Circular.

2. Annually, no later than January 30 of the year following the reporting year, entrusted organizations shall report to the State Bank of Vietnam on the situation of entrusted indirect foreign investment in the reporting year and the anticipated entrusted investment needs for the next year according to the form at Appendix 14 issued together with this Circular.

Article 34. Reporting System for Indirect Foreign Investment Cases as Specified in Article 9 of Decree No. 135/2015/NĐ-CP

1. Quarterly, no later than the 20th day of the first month of the following quarter immediately after the reporting quarter, investors shall report to the State Bank of Vietnam on the situation of indirect foreign investment according to the form at Appendix 15 issued together with this Circular.

2. Annually, no later than January 30 of the year following the reporting year, investors shall report to the State Bank of Vietnam on the situation of indirect foreign investment in the reporting year according to the form at Appendix 15 issued together with this Circular.

Quarterly, no later than the 20th day of the first month of the following quarter immediately after the reporting quarter, organizations implementing stock award programs shall report to the State Bank of Vietnam on the situation of implementing stock award programs issued abroad for Vietnamese citizens according to the form at Appendix 16 issued together with this Circular.

Article 36. Reporting Requirements for Credit Institutions

The permitted credit institution where the self-operating organization opens a self-operating account, the entrusted organization opens an entrusted account, and the organization implements a stock option program opens an account to implement the program must report the income and expenditure situation on the self-operating account, the income and expenditure situation on the entrusted account, and the income and expenditure situation on the account implementing the program according to the current regulations of the State Bank of Vietnam on reporting and statistical systems applicable to credit institutions and foreign bank branches.

Chapter IX

IMPLEMENTING PROVISIONS

Article 37. Effective Date

1. This Circular takes effect from August 13, 2016.

2. Credit institutions that have been permitted by the State Bank of Vietnam to invest in foreign investment instruments before the date this Circular takes effect shall continue to implement their investment plans as approved by the State Bank of Vietnam.

Article 38. Organization of implementation

The Director of the Office, the Head of the Department of Foreign Exchange Management, the Heads of relevant units under the State Bank of Vietnam, the Governors of the State Bank of Vietnam branches in provinces and centrally-administered cities, the Chairmen of the Board of Directors, the Chairmen of the Board of Members, and the General Managers (Directors) of credit institutions and foreign bank branches are responsible for organizing the implementation of this Circular./.