Circular No. 130/2004/TT-BTC guiding the implementation of certain provisions of Decree No. 161/2004/NĐ-CP dated September 7, 2004 of the Government on administrative penalties for violations in the securities and securities market sector.

CIRCULAR

Guidelines for Implementing Certain Provisions of Decree No. 161/2004/NĐ-CP

dated September 7, 2004, of the Government on Administrative Sanctions for Violations in the Securities and Securities Market Sector

trong lĩnh vực chứng khoán và thị trường chứng khoán

Pursuant to the Administrative Offense Handling Law dated July 2, 2002;

Pursuant to Decree No. 134/2003/NĐ-CP dated November 14, 2003, of the Government detailing certain provisions of the Administrative Offense Handling Law dated July 2, 2002;

Pursuant to Decree No. 161/2004/NĐ-CP dated September 7, 2004, of the Government on Administrative Sanctions for Violations in the Securities and Securities Market Sector;

Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003, of the Government, stipulating the functions, tasks, and powers of the Ministry of Finance;

The Ministry of Finance issues guidelines for implementing certain provisions of Decree No. 161/2004/NĐ-CP dated September 7, 2004, of the Government on Administrative Sanctions for Violations in the Securities and Securities Market Sector as follows:

I. GENERAL PROVISIONS

1. Scope of Application

1.1. Administrative sanctions for violations in the securities and securities market sector shall be applied to individuals and organizations of Vietnam and foreign countries (hereinafter referred to collectively as individuals and organizations) who intentionally or negligently violate the provisions of laws on securities and the securities market but do not constitute criminal offenses and are subject to administrative sanctions under the law. For foreign individuals and organizations, if international treaties to which Vietnam is a party provide different provisions, such provisions shall apply.

1.2. Administrative violations in the securities and securities market sector include:

a) Violations of regulations on public securities issuance activities;

b) Violations of regulations on listing securities on the Stock Exchange Center, Securities Trading Center;

c) Violations of regulations on securities trading;

d) Violations of regulations on securities business operations, registration, custody, settlement, and payment of securities transactions;

đ) Violations of reporting and information disclosure regulations;

e) Violations that obstruct inspection and supervision or fail to implement recommendations of inspection and supervision organizations.

2. Application of Administrative Sanctions

2.1. Forms of administrative sanctions and measures to remedy consequences are applied according to Article 7 of Decree No. 161/2004/NĐ-CP dated September 7, 2004, of the Government on Administrative Sanctions for Violations in the Securities and Securities Market Sector (hereinafter referred to collectively as Decree No. 161/2004/NĐ-CP).

2.2. The decision-maker must base their decision on the administrative violation in the securities and securities market sector, the form and level of sanction prescribed in Chapter II of Decree No. 161/2004/NĐ-CP, and the mitigating and aggravating circumstances prescribed in Article 6 of Decree No. 161/2004/NĐ-CP to determine the application of the form of sanction, the level of fine, including supplementary sanctions or remedial measures corresponding to the degree and nature of the violation.

2.3. The application of fines, even when applying mitigating or aggravating circumstances, must not be lower than or exceed the prescribed fine range. Determination of the midpoint of the fine range is carried out according to the provisions of Article 24 of Decree No. 134/2003/NĐ-CP dated November 14, 2003, of the Government detailing certain provisions of the Administrative Offense Handling Law.

2.4. For a single violation, only one of the two main forms of punishment, warning or fine, may be applied. Supplementary sanctions cannot be applied independently but must be applied together with the main form of punishment.

3. Mitigating and Aggravating Circumstances

3.1. Mitigating and aggravating circumstances in the securities and securities market sector are prescribed in Article 6 of Decree No. 161/2004/NĐ-CP.

3.2. Some mitigating and aggravating circumstances are specifically guided as follows:

a) For some mitigating circumstances, such as: actively preventing further violations, reducing damage; voluntarily remedying consequences; voluntarily compensating losses caused by administrative violations, shall be reviewed and decided by the competent authority for administrative sanctions; violations due to lack of knowledge; due to material or spiritual dependence, being incited, enticed, or coerced, must have grounds and evidence to prove.

b) For some aggravating circumstances, such as: repeated violations refer to cases where multiple administrative violations in the securities and securities market sector are committed but were not previously administratively sanctioned; recidivism refers to cases where administrative sanctions were previously imposed but before the period during which they are considered not to have been administratively sanctioned, continue to commit administrative violations in the same sector.

II. VIOLATIONS

Some violations prescribed in Decree No. 161/2004/NĐ-CP are specifically guided as follows:

1. Point a - Clause 1 - Article 8: "The securities issuance registration dossier submitted to the State Securities Commission contains false or misleading information," refers to the act of the issuer or the issuing advisory organization providing inaccurate information or concealing the truth in the issuance registration dossier regarding financial statements, subscribed charter capital, decisions of the shareholders' meeting approving the issuance, prospectus, and issuance guarantee commitments.

2. Point b - Clause 1 - Article 8: "Using information outside the prospectus to solicit the market before obtaining permission to issue securities to the public," refers to the act of the issuer and related parties using information outside the prospectus or inaccurate information compared to the prospectus content to advertise or solicit about the issued securities before obtaining permission to issue securities to the public.

3. Clause 2 - Article 8: "The organization issuing securities, the organization advising on the issuance of securities, and the auditing organization participating in preparing the public offering registration documents engage in fraudulent practices in the registration documents," refers to intentionally creating inaccurate figures regarding the subscribed registered capital, financial status, and production and business operation results of the organization applying for registration. These figures affect the State Securities Commission's decision to issue a certificate of registration for the issuance of securities and investors' assessment and investment decisions in securities.

4. Point a - Clause 1 - Article 9: "The application for listing permission submitted to the State Securities Commission contains false information or conceals the truth," refers to the listed organization, the organization advising on listing, providing inaccurate information or concealing the truth in the application for listing permission concerning financial reports; subscribed registered capital; decisions of the shareholders' meeting and board of directors on listing shares and bonds; prospectus; underwriting commitments; number of shareholders outside the issuer and their shareholding ratio.

5. Clause 2 - Article 8: "The listed organization, the organization advising on listing, and the auditing organization participating in preparing the listing application documents engage in fraudulent practices in the listing application documents," refers to intentionally creating inaccurate figures regarding the subscribed registered capital, financial status, and production and business operation results of the organization applying for listing permission. These figures affect the State Securities Commission's decision to grant listing permission and investors' assessment and investment decisions in securities.

6. Point b - Clause 3 - Article 10: "Securities transactions without changing ownership of securities," refers to an investor opening multiple trading accounts or having others open trading accounts on their behalf and conducting purchases and sales of securities to create fictitious securities transactions in the market, but in reality, there is no change in the ownership of the securities.

7. Point c - Clause 3 - Article 10: "Colluding to buy and sell securities to create artificial supply and demand," refers to investors who, although not intending to buy or sell securities, want to create artificial supply-demand conditions for securities in the market, therefore agreeing and coordinating on buying and selling the same type of securities: buyer-seller agreement; type of securities traded; price, volume, time of placing orders for securities transactions.

8. Point g - Clause 3 - Article 10: "Selling securities in any form when not owning securities at the time of transaction," refers to an investor selling securities when they do not own them or own fewer securities than the quantity sold.

9. Point b - Clause 2 - Article 18: "Failing to report or reporting untimely when extraordinary events occur that may seriously impact financial capability and business operations, securities services: refers to securities companies failing to submit a written report to the State Securities Commission, Stock Exchange Center, and Stock Exchange within 24 hours from the occurrence of events stipulated in Clause 4, Article 56 of Decree 144/2003/NĐ-CP dated November 28, 2003 issued by the Government; fund management companies failing to submit a written report to the State Securities Commission, Stock Exchange Center, and Stock Exchange within 24 hours from the occurrence of events stipulated in Clause 1, Article 57 of Decree 144/2003/NĐ-CP dated November 28, 2003 issued by the Government; depository organizations failing to report or reporting untimely when extraordinary events occur as prescribed by law.

10. Clause 1 - Article 20 provides for "Conduct opposing, not providing fully and promptly documents, materials, certificates, data aimed at delaying, evading requests of inspection teams or inspectors while performing their duties," refers to not providing or deliberately prolonging the time to provide documents and materials according to the requirements of the inspection team; not arranging, not arranging promptly or arranging people not responsible to work with the inspection team; not providing accurate information, reports, certificates, accounting books, and other documents and materials according to the requirements of the inspection team; other delaying, evading or opposing conduct as prescribed by law.

III. AUTHORITY AND PROCEDURES FOR ADMINISTRATIVE PENALTIES

1. Authority to impose administrative penalties

1.1. The person authorized to impose administrative penalties as stipulated in Clause 1, Article 21 of Decree 161/2004/NĐ-CP is the Director of the State Securities Commission's Inspectorate.

1.2. The person authorized to impose administrative penalties as stipulated in Clause 2, Article 21 of Decree 161/2004/NĐ-CP is the Inspector of the State Securities Commission.

1.3. The Chairperson of People's Committees at all levels is the person authorized to impose administrative penalties as stipulated in Clause 3, Article 21 of Decree 161/2004/NĐ-CP, and must notify the State Securities Commission in writing within three working days from the date of the penalty decision.

2. Decision on penalty

2.1. The penalty decision must be signed by the person authorized to impose administrative penalties and stamped.

2.2. In cases where an organization or individual commits multiple types of administrative violations, the person authorized to impose administrative penalties shall issue only one penalty decision. In cases where multiple organizations or individuals commit the same administrative violation, the person authorized to impose administrative penalties shall base the decision on the nature and severity of each organization or individual's violation to issue separate penalty decisions for each organization or individual regarding the violation.

2.3. In cases where the form and level of punishment exceed the authority of the person imposing the penalty, that person must transfer the entire file and documents related to the violation to the person with authority to impose the penalty within five working days from the completion of the violation file.

3. Suspension of Violation Conduct

During the inspection and supervision process, if violations of administrative regulations in the securities and securities market sector are discovered, the authorized authority to impose administrative penalties within the inspection team must issue an immediate order to cease such administrative violations according to Article 23 of Decree 161/2004/NĐ-CP. If members of the inspection and supervision team do not have the authority to issue a decision to halt the violation, the Head of the inspection and supervision team must immediately report in writing to the authorized authority to issue a decision to halt the violation.

4. Transfer of cases to the authorized authority to impose administrative penalties

4.1. State management agencies and law enforcement agencies, during the inspection, supervision, and investigation of individuals and organizations, if they discover administrative violations in the securities and securities market sector but these violations fall outside their authority to impose penalties, must transfer the entire case file and propose handling measures in writing to the Ministry of Finance (Securities Commission) for resolution. The file includes: the administrative violation record (original), evidence, documents, data, physical evidence... related to administrative violations in the securities and securities market sector collected during the inspection, supervision, and investigation.

4.2. In cases where administrative violations in the securities and securities market sector are transferred by state management agencies and law enforcement agencies, the Securities Commission has the responsibility:

a) To accept all files and documents regarding the administrative violation case. In cases where the files and documents, or the administrative violation records transferred from other agencies do not comply with the procedures stipulated in Article 24 of Decree 161/2004/NĐ-CP or the content of the records does not conform to the provisions of Article 25 of Decree 161/2004/NĐ-CP and this Circular, the Securities Commission will return the files and documents to the agency that issued the administrative violation record and request them to make necessary amendments and supplements.

b) After reviewing, if it is found that the files, documents, and evidence are insufficient to impose administrative penalties, the Securities Commission may conduct inspections, verifications, supplement evidence, and issue decisions on administrative penalties if there is sufficient basis to prove and conclude the administrative violation.

5. Administrative penalty case files in the securities and securities market sector

After the authorized authority to impose penalties issues a decision on administrative penalties, the inspection and supervision team or inspector must complete the administrative penalty case file to hand over to the supervisory and inspection department to monitor compliance with the Penalty Decision, including:

- Administrative violation record (original);

- Administrative penalty decision (original);

- All relevant files and documents concerning the violation;

- Record of confiscation of contraband items and means of administrative violations (if any);

- Any necessary additional documents.

6. Procedure and formalities for imposing administrative penalties

When imposing administrative penalties in the securities and securities market sector, the authorized authority to impose penalties must strictly follow the procedure and formalities for imposing administrative penalties as prescribed in the Administrative Violation Handling Ordinance dated July 2, 2002, Government Decree No. 134/2003/NĐ-CP dated November 14, 2003 detailing certain provisions of the Administrative Violation Handling Ordinance, Decree 161/2004/NĐ-CP, and the guidelines in this Circular.

IV. IMPLEMENTATION

This Circular takes effect fifteen days after its publication in the Official Gazette.

The Securities Commission guides and directs organizations and individuals involved in specialized securities inspections to thoroughly implement and strictly adhere to the regulations on imposing administrative penalties.

During implementation, any difficulties or obstacles should be promptly reported to the Ministry of Finance for consideration and resolution./.