Decree No. 135/2015/ND-CP provides detailed regulations on indirect investment abroad, applicable to economic organizations and individuals with Vietnamese citizenship. The provisions include investment methods, self-operating limits and entrusted investment limits, total investment limits, registration procedures, confirmation of limits, responsibilities of state management agencies, reporting systems, and penalties for violations.

DECREE

Article 24On foreign direct investment

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Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Investment Law dated November 26 Article 2. The receipt, handling of reflections and petitions from individuals and organizations concerning administrative regulations shall be carried out in accordance with Decree No. 20/2008/NĐ-CP dated February 14, 2008 of the Government on the receipt, handling of reflections and petitions from individuals and organizations concerning administrative regulations (amended and supplemented by Decree No. 48/2013/NĐ-CP dated May 14, 2013 on amending and supplementing certain articles of decrees related to administrative procedure control and Decree No. 92/2017/NĐ-CP dated August 7, 2017 on amending and supplementing certain articles of decrees related to administrative procedure control).4;

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Organizations dated June 16, 2010;

Pursuant to the Securities Law dated June 29, 2006 and the Law amending and supplementing certain articles of the Securities Law dated November 24, 2010;ues of the Securities Law dated November 24, 2010;Pursuant to the Law on Business of Insurance dated December 9, 2000 and the Law amending certain provisions of the Law on Business of Insurance dated November 24, 2010;

Pursuant to the Foreign Exchange Law dated December 13, 2005 and the Ordinance amending and supplementing certain provisions thereof;Pursuant to the proposal of the Governor of the State Bank of Vietnam,Provincial public libraries perform tasks and powers as prescribed in Clause 2, Article 11, Article 38, and Article 39 of the Library Law and the following tasks and powers: sửa đổi một số Điều của Luật Giao thông đường thủy nội địa ngày 17 tháng 6 năm 2014;The Government promulgates this Decree prescribing foreign direct investment.This Decree prescribes detailed regulations on activities of foreign investment under the form of buying and selling securities, other negotiable instruments, or investing through securities investment funds and other financial intermediaries abroad (hereinafter referred to as indirect foreign investment).

Pursuant to Ordinance1. Investors include the following subjects:a) Economic organizations as prescribed in Clause 16, Article 3 of the Investment Law; 1. This Decree stipulates the conditions for operating debt buying and selling services within the territory of the Socialist Republic of Vietnam.THE GOVERNMENT ISSUES THIS DECREE REGULATING CONDITIONS FOR FOREIGN EXCHANGE BROKERAGE ACTIVITIES AND FOREIGN EXCHANGE SERVICE SUPPLYING ACTIVITIES INVOLVING RECEIVING AND PAYING FOREIGN CURRENCY OF ECONOMIC ORGANIZATIONS

b) Vietnamese citizens eligible to participate in the stock option program issued abroad.2. State management agencies participating in managing indirect foreign investment activities as prescribed in this Decree.

3. Other organizations and individuals related to indirect foreign investment activities.4. Economic organizations with foreign invested capital (as prescribed in Clause 1, Article 23 of the Investment Law) shall not implement indirect foreign investment as prescribed in this Decree.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

1. Indirect foreign investment is an activity of foreign investment under the form of buying and selling securities, other negotiable instruments, or investing through securities investment funds and other financial intermediaries abroad.

Article 2. Applicability

2. Investment instrument is a type of security or other negotiable instrument permitted for investment abroad as prescribed by the State Bank of Vietnam.

3. Self-operated indirect foreign investment is the act of an organization being allowed to self-operate in purchasing and selling securities and other negotiable instruments abroad or investing through securities investment funds and other financial intermediaries abroad for itself.

4. Entrusted indirect foreign investment is the act of an economic organization (hereinafter referred to as the entrusting organization) transferring foreign currency capital to an organization permitted to accept entrusted investment within the country (hereinafter referred to as the entrusted organization) to carry out indirect foreign investment through an entrusted investment agreement.

5. Entrusted investment agreement is a written agreement between the entrusting organization and the entrusted organization regarding the entrusting organization's transfer of foreign currency capital to the entrusted organization to carry out indirect foreign investment activities.

6. Safe investment ratio is the maximum permissible ratio for indirect foreign investment, calculated as a percentage (%) of the scale of capital and assets of the self-operating organization.

7. Annual total limit for indirect foreign investment is the maximum amount of foreign currency of the economy that can be used for indirect foreign investment as prescribed in this Decree.

Article 3. Explanation of Terms

8. Self-operation limit is the maximum amount of foreign currency annually that a self-operating organization is allowed to use for indirect foreign investment.

9. Entrusted acceptance limit is the maximum amount of foreign currency annually that an entrusted organization is permitted to accept for entrusted indirect foreign investment.

10. Registration of self-operation limit is the act of a self-operating organization registering its self-operation limit with the State Bank of Vietnam.

11. Confirmation of registration of self-operation limit is the act of the State Bank of Vietnam confirming in writing that the self-operating organization has registered its self-operation limit.

12. Registration of entrusted acceptance limit is the act of an entrusted organization registering its entrusted acceptance limit with the State Bank of Vietnam.

13. Confirmation of registration of entrusted acceptance limit is the act of the State Bank of Vietnam confirming in writing that the entrusted organization has registered its entrusted acceptance limit.

14. Overseas stock option program is a program of foreign organizations rewarding stocks to employees working in foreign organizations in Vietnam.

15. Own foreign currency on account is legitimate own foreign currency of investors, not foreign currency purchased and borrowed from credit institutions, branches of foreign banks permitted to provide foreign exchange services in Vietnam.

9. The limit on accepting mandates is the maximum amount in foreign currency annually that the entrusted organization is permitted to accept for indirect investment abroad.

10. Registering the self-operating limit is the act of the self-operating organization registering its self-operating limit with the State Bank of Vietnam.

11. Confirmation of the registration of the self-operating limit is the act of the State Bank of Vietnam confirming in writing that the self-operating organization has registered its self-operating limit.

12. Registering the limit on accepting mandates is the act of the entrusted organization registering its limit on accepting mandates with the State Bank of Vietnam.

13. Confirmation of the registration of the limit on accepting mandates is the act of the State Bank of Vietnam confirming in writing that the entrusted organization has registered its limit on accepting mandates.

14. The stock option program issued abroad is a program of foreign organizations rewarding stocks to employees working in foreign organizations in Vietnam.

15. Self-owned foreign currency in the account is legitimate self-owned foreign currency of the investor, not foreign currency purchased or borrowed from credit institutions, branches of foreign banks permitted to provide foreign exchange services in Vietnam.

Article 4. Application of relevant laws, international treaties, foreign laws, and international customs

1. Activities of direct investment abroad conducted independently, or through entrusted investment abroad through domestic entrusted organizations, must comply with the provisions of this Decree and other relevant legal regulations.

2. In cases where international treaties to which the Socialist Republic of Vietnam is a party provide different provisions from those stipulated in this Decree, the provisions of such international treaties shall be applied.

Article 5. Indirect Investment Abroad by Individuals

1. An individual investor who holds Vietnamese citizenship may only carry out indirect investment abroad in the form of participating in stock bonus programs issued abroad.

2. The State Bank of Vietnam shall specify the procedures, formalities, and contents for implementing stock bonus programs of foreign organizations in Vietnam as provided for in Clause 1 of this Article;

a) Procedures, formalities, and contents for implementing stock bonus programs of foreign organizations in Vietnam as provided for in Clause 1 of this Article;

b) Methods of implementation and other related contents concerning participation in stock bonus programs by Vietnamese workers employed in foreign organizations in Vietnam.

Article 6. Methods of Indirect Investment Abroad

Economic organizations' activities of indirect investment abroad shall be carried out in the following methods:

1. Independent direct investment abroad.

2. Entrusted direct investment abroad.

Article 7. Forms of Indirect Investment Abroad

Independent organizations and entrusted organizations may engage in indirect investment abroad in the following forms:

1. Directly purchasing and selling securities and other negotiable instruments abroad.

2. Investing through the purchase and sale of foreign securities fund certificates, or entrusting investment to other intermediary financial institutions abroad.

Article 8. Investment Instruments

1. The State Bank of Vietnam shall specify the types and selection criteria for investment instruments abroad during each period.

2. Investors may only invest indirectly abroad in investment instruments specified by the State Bank of Vietnam.

3. Independent organizations and entrusted organizations that are commercial banks or comprehensive financial companies may only independently invest or accept entrusted investments abroad in investment instruments such as bonds and money market instruments specified by the State Bank of Vietnam.

Article 9. Other Investment Cases

1. Activities of indirect investment abroad carried out according to plans approved by competent authorities for economic organizations owned by the state with at least 65% of charter capital, or other economic organizations investing indirectly abroad with a total investment amount of VND 800 billion or more, not falling under any of the cases stipulated in Articles 6, 7, and 8, Clauses 4 and 5 of Article 10, and Article 13 of this Decree, shall be decided by the Prime Minister.

2. The State Bank of Vietnam shall take the lead and coordinate with relevant agencies to submit to the Prime Minister for consideration and decision on the cases of indirect investment abroad as stipulated in Clause 1 of this Article.

3. The State Bank of Vietnam shall guide the procedures for indirect investment abroad for cases permitted by the Prime Minister as stipulated in Clause 1 of this Article.

Article 10. Sources of capital for indirect foreign investment

1. Self-trading organizations (excluding commercial banks and comprehensive financial companies) may use their own foreign currency on accounts and foreign currency purchased from credit institutions and foreign bank branches permitted to provide foreign exchange services in Vietnam within the self-trading limit confirmed by the State Bank of Vietnam to carry out indirect foreign investment.

2. Trust organizations (excluding commercial banks and comprehensive financial companies) may only use their own foreign currency on accounts to carry out indirect foreign investment through trust arrangements with entrusted organizations.

3. Commercial banks and comprehensive financial companies must balance their own foreign currency sources to carry out indirect foreign investment based on ensuring compliance with regulations on foreign currency status, limits, and safety ratios in banking operations.

4. Investors shall not use domestic loans in Vietnamese dong from credit institutions and foreign bank branches to purchase foreign currency for indirect foreign investment.

5. Investors shall not use domestic and foreign foreign currency loans for indirect foreign investment.

Article 11. Opening accounts for self-trading indirect foreign investment and accepting trust indirect foreign investment

1. Opening foreign currency accounts for self-trading indirect foreign investment:

a) Self-trading organizations must open one foreign currency indirect foreign investment capital account at one commercial bank or foreign bank branch permitted to provide foreign exchange services in Vietnam to conduct transactions related to self-trading indirect foreign investment activities (this does not apply to securities investment companies and securities investment funds conducting indirect foreign investment through fund management companies).

b) In cases where securities investment funds and securities investment companies conduct indirect foreign investment through fund management companies, the fund management company must open one foreign currency indirect foreign investment capital account at one commercial bank or foreign bank branch permitted to provide foreign exchange services in Vietnam separately for each securities investment fund and securities investment company to conduct transactions related to self-trading indirect foreign investment activities of the securities investment fund and securities investment company.

2. Opening foreign currency accounts for accepting trust indirect foreign investment:

a) Entrusted organizations must open one foreign currency entrusted indirect foreign investment capital account at one commercial bank or foreign bank branch permitted to provide foreign exchange services in Vietnam to conduct transactions related to entrusted indirect foreign investment activities.

b) Entrusted organizations must manage separately the entrusted investment funds of each investor and manage separately the entrusted investment funds of investors from the self-trading indirect foreign investment funds.

3. Opening foreign currency accounts abroad:

a) Self-trading organizations and entrusted organizations may open foreign currency accounts abroad to conduct transactions related to indirect foreign investment activities according to the regulations of the host country.

b) Self-trading organizations and entrusted organizations may only open foreign currency accounts abroad as stipulated in Point a Clause 3 of this Article after obtaining investment registration certificates for indirect foreign investment, approval documents for indirect foreign investment, trust investment activity registration certificates, and confirmation of self-trading and entrusted limits by the State Bank of Vietnam.

4. The State Bank of Vietnam shall specify the procedures for opening and using accounts to carry out self-trading indirect foreign investment and accepting trust indirect foreign investment as provided in Clauses 1 and 2 of this Article.

Article 12. Transfer of indirect foreign investment capital outwards, transfer of capital, profits, and legitimate income from indirect foreign investment activities back to Vietnam

1. Self-trading organizations may only transfer indirect foreign investment capital outwards after being confirmed by the State Bank of Vietnam on the registration of self-trading limit.

2. Entrusted organizations may only transfer entrusted indirect foreign investment capital outwards after being confirmed by the State Bank of Vietnam on the registration of entrusted limit.

3. The transfer of self-trading indirect foreign investment capital outwards, and the transfer of capital, profits, and legitimate income from self-trading indirect foreign investment activities outwards back to Vietnam must be conducted through the indirect foreign investment capital account specified in Clause 1, Article 11 of this Decree.

4. The transfer of entrusted indirect foreign investment capital outwards, and the transfer of capital, profits, and legitimate income back to Vietnam must be conducted through the entrusted indirect foreign investment capital account specified in Clause 2, Article 11 of this Decree.

Chapter II

SELF-TRADE INDIRECT FOREIGN INVESTMENT OUTWARDS

Article 13. Entities permitted to engage in self-trade indirect foreign investment outwards

Organizations permitted to engage in self-trade indirect foreign investment outwards include:

1. Securities companies, fund management companies.

2. Securities investment funds through fund management companies (hereinafter referred to as securities investment funds), securities investment companies.

3. Insurance business enterprises.

4. Commercial banks.

5. Comprehensive financial companies.

6. State Capital Investment Corporation.

Article 14. Conditions for approval to engage in self-trade indirect foreign investment outwards, issuance of indirect foreign investment registration certificate

1. Conditions for engaging in self-trade indirect foreign investment outwards:

a) To engage in self-trade indirect foreign investment outwards, self-trading organizations must be issued an indirect foreign investment registration certificate by the competent authority (this does not apply to the State Capital Investment Corporation, securities investment funds, and securities investment companies);

b) To engage in self-trade indirect foreign investment outwards, self-trading organizations that are securities investment funds and securities investment companies must be approved by the competent authority to invest indirectly outwards.

2. To be issued an indirect foreign investment registration certificate, securities companies, fund management companies, and insurance business enterprises must meet the following conditions:

a) Showing profit for five consecutive years prior to the year of submitting the application for the indirect foreign investment registration certificate, as reflected in audited financial statements without any significant adverse opinion as stipulated by the Ministry of Finance. Financial statements must be audited by independent auditing organizations approved by the Ministry of Finance and published according to the regulations on independent auditing for public interest entities;

b) Fulfilling all financial obligations to the State, having no tax arrears with the state budget;

c) Having internal procedures, control mechanisms, internal audit, risk identification, and risk management related to self-trade indirect foreign investment outwards activities;

d) Adhering to current laws and regulations regarding capital, financial safety indicators, and investment limits for securities companies, fund management companies, and insurance business enterprises;

đ) Having material resources, technical capabilities, and personnel to ensure compliance with the regulations on self-trade indirect foreign investment outwards;

e) Adhering to legal regulations on the management and use of state-owned capital (for economic organizations with state-owned capital).

3. To be approved to invest indirectly outwards, securities investment funds and securities investment companies must meet the following conditions:

a) The charter of securities investment funds and securities investment companies must provide for indirect foreign investment outwards;

b) Fund management companies managing securities investment funds and securities investment companies investing indirectly outwards must have internal procedures, control mechanisms, internal audit, risk identification, and risk management related to indirect foreign investment outwards activities; meet financial safety indicators as stipulated by the Ministry of Finance; have material resources, technical capabilities, and personnel to ensure compliance with the regulations on indirect foreign investment outwards.

In the case where a securities investment company manages its own capital for indirect foreign investment outwards, it must comply with the provisions at Point c and Point đ of Clause 2 of this Article.

c) Foreign assets of securities investment funds and securities investment companies must be deposited with an organization licensed to operate deposit services under foreign law and has signed a deposit agreement with the deposit bank and supervisory bank in Vietnam of the securities investment fund and securities investment company.

4. To be issued an indirect foreign investment registration certificate, self-trading organizations that are commercial banks and comprehensive financial companies must meet the following conditions:

a) Permission to operate foreign exchange on the international market;

b) Showing profit for five consecutive years prior to the year of submitting the application for the indirect foreign investment registration certificate, as reflected in audited financial statements without any significant adverse opinion as stipulated by the Ministry of Finance. Financial statements must be audited by independent auditing organizations not included in the list of auditing organizations not allowed to audit credit institutions and foreign bank branches published by the State Bank of Vietnam;

c) Fulfilling all financial obligations to the State, having no tax arrears with the state budget;

d) Having internal procedures, control mechanisms, internal audit, risk identification, and risk management related to self-trade indirect foreign investment outwards activities;

đ) Having material resources, technical capabilities, and personnel to ensure compliance with the regulations on self-trade indirect foreign investment outwards;

e) Adhering to current regulations of the State Bank of Vietnam on limits and guarantees for financial safety in banking operations;

g) Adhering to legal regulations on the management and use of state-owned capital (for commercial banks and comprehensive financial companies with state-owned capital).

5. The State Capital Investment Corporation shall carry out indirect investment abroad in accordance with the regulations of the Government.

Article 15. Competence, procedures, and formalities for issuing and revoking certificates of registration for indirect foreign investment, and approvals for indirect foreign investment

1. The Ministry of Finance shall implement:

a) Detailed provisions on the procedures and formalities for issuing and revoking certificates of registration for indirect foreign investment for self-operating organizations that are securities companies, fund management companies, and insurance businesses;

b) Consideration and issuance, revocation of certificates of registration for indirect foreign investment for securities companies, fund management companies, and insurance businesses engaged in self-operating indirect foreign investment activities;

c) Detailed provisions on the form, procedures, and formalities for issuing and revoking approvals for indirect foreign investment of self-operating organizations that are stock investment funds and securities investment companies.

2. The State Bank of Vietnam shall implement:

a) Detailed provisions on the procedures and formalities for issuing and revoking certificates of registration for indirect foreign investment for self-operating organizations that are commercial banks and comprehensive financial companies;

b) Consideration and issuance, revocation of certificates of registration for indirect foreign investment for commercial banks and comprehensive financial companies.

Article 16. Safe Investment Ratio

1. Indirect foreign investment activities of securities companies, securities investment companies, fund management companies, stock investment funds, insurance businesses, and the State Capital Investment Corporation must ensure compliance with the safe investment ratio as prescribed by the Ministry of Finance and relevant laws.

2. Indirect foreign investment activities of commercial banks and comprehensive financial companies must ensure compliance with the safe investment ratio as prescribed by the State Bank of Vietnam and relevant laws.

Article 17. Registration of Self-Operation Limits

1. Self-operating organizations must register their self-operation limits with the State Bank of Vietnam.

2. Self-operating organizations may only engage in indirect foreign investment after being confirmed in writing by the State Bank of Vietnam regarding their self-operation limit registration and can only conduct indirect foreign investment within the self-operation limit confirmed by the State Bank of Vietnam.

Chapter III

DELEGATED INVESTMENT, ACCEPTING DELEGATED INVESTMENT ABROAD

Section 1

DELEGATED INVESTMENT ABROAD

Article 18. Entities Permitted to Delegate Investment Abroad

Economic organizations may only engage in indirect foreign investment through delegated investment to entities permitted to accept delegated investment as stipulated in Article 21 of this Decree, except for the entities specified in Clause 4 of Article 19 of this Decree.

Article 19. Principles of Delegated Investment Abroad

1. Delegating organizations may only delegate indirect foreign investment into investment instruments as prescribed in Article 8 of this Decree.

2. Delegated indirect foreign investment must be established in a delegation investment contract, which must clearly specify the amount delegated, the term of delegation, the investment instrument, and the rights and obligations of the parties in accordance with this Decree and other relevant laws.

3. The currency used for delegated indirect foreign investment must be foreign currency.

4. In cases where a self-operating organization has been issued a certificate of registration for indirect foreign investment by the competent authority and such certificate remains valid, the self-operating organization shall not conduct delegated indirect foreign investment through a receiving organization.

Article 20. Conditions for Entrusting Indirect Investment Abroad

To be eligible to entrust indirect investment abroad, economic organizations must meet the following conditions:

1. Achieve profit for five consecutive years immediately preceding the year of entrusting indirect investment abroad, as shown in financial reports audited independently by independent auditing organizations without any significant disclaimer as stipulated by the Ministry of Finance (this does not apply to securities investment funds and securities investment companies).

2. Fulfill all financial obligations to the State and have no tax arrears with the state budget.

3. Provide documentation proving that the foreign currency on the account for entrusting indirect investment abroad is self-owned foreign currency.

4. Have an indirect investment abroad plan approved by the competent authority of the economic organization (general meeting of shareholders, board of directors, board of members, or equivalent) or another competent authority according to the law.

5. Comply with legal regulations on managing and using state capital (for cases where the entrusting entity is an economic organization with state capital ownership).

Section 2

RECEIVING TRUSTED INDIRECT INVESTMENT ABROAD

Article 21. Subjects Permitted to Receive Entrusted Indirect Investment Abroad

The following subjects are permitted to receive entrusted indirect investment abroad:

1. Fund management companies.

2. Commercial banks.

Article 22. Principles for Receiving Entrusted Indirect Investment Abroad

1. Activities of receiving entrusted indirect investment abroad must be established in a written contract in accordance with Clause 2, Article 19 of this Decree.

2. The receiving organization may not use entrusted capital contrary to the purpose and content of the entrusted investment contract and the provisions of this Decree.

3. The receiving organization may not re-entrust to third parties within the country.

4. The receiving organization is entitled to receive trust fees based on agreements between the parties, in compliance with relevant legal provisions.

5. The receiving organization has the responsibility to inspect and guide the entrusting organization to implement entrusted indirect investment abroad in accordance with the provisions of this Decree.

Article 23. Conditions for Obtaining a Certificate of Registration for Receiving Entrusted Indirect Investment Abroad

1. To carry out activities of receiving entrusted indirect investment abroad, the receiving organization must be granted a certificate of registration for receiving entrusted indirect investment abroad by the competent authority.

2. To be considered and granted a certificate of registration for receiving entrusted indirect investment abroad, the receiving organization must meet the following conditions:

a) Achieve profit for five consecutive years immediately preceding the year of submitting the application for a certificate of registration for receiving entrusted indirect investment abroad, as shown in financial reports audited and without any significant disclaimer as stipulated by the Ministry of Finance. Financial reports must be audited by independent auditing organizations approved and announced by the Ministry of Finance in accordance with the regulations on independent auditing for public interest entities (applicable to fund management companies as receiving organizations);

b) Achieve profit for five consecutive years immediately preceding the year of submitting the application for a certificate of registration for receiving entrusted indirect investment abroad, as shown in financial reports audited and without any significant disclaimer as stipulated by the Ministry of Finance. Financial reports must be audited by independent auditing organizations not included in the list of auditing organizations not allowed to audit credit institutions and foreign bank branches published by the State Bank of Vietnam (applicable to commercial banks as receiving organizations);

c) Fulfilling all financial obligations to the State, having no tax arrears with the state budget;

d) Have internal regulations governing the activity of receiving entrusted indirect investment abroad, including content on identifying and managing risks related to the activity of receiving entrusted investment for indirect investment abroad;

đ) Have material, technical facilities, and personnel to ensure the implementation of the activity of receiving entrusted indirect investment abroad in accordance with the law;

e) Comply with current legal regulations on financial safety indicators and security ratios in the operation of the receiving organization.

Article 24. Competence, Procedure, and Formalities for Issuing and Revoking Certificates of Registration for Undertaking Indirect Investment Trustee Services Overseas

1. The Ministry of Finance shall implement:

a) Detailed provisions on the procedures and formalities for issuing and revoking certificates of registration for undertaking indirect investment trustee services overseas for trust organizations that are fund management companies;

b) Consideration of issuance and revocation of certificates of registration for undertaking indirect investment trustee services overseas for fund management companies that undertake indirect investment trustee services overseas.

2. The State Bank of Vietnam shall implement:

a) Detailed provisions on the procedures and formalities for issuing and revoking certificates of registration for undertaking indirect investment trustee services overseas for trust organizations that are commercial banks;

b) Consideration of issuance and revocation of certificates of registration for undertaking indirect investment trustee services overseas for commercial banks that undertake indirect investment trustee services overseas.

Article 25. Registration of Trust Limits

1. Trust organizations must register their trust limits with the State Bank of Vietnam.

2. Trust organizations may only undertake indirect investment trustee services overseas after being confirmed in writing by the State Bank of Vietnam regarding the registration of trust limits and may only accept trusts within the trust limit confirmed by the State Bank of Vietnam.

Chapter IV

ANNUAL TOTAL LIMIT ON INDIRECT FOREIGN INVESTMENT,

SELF-OPERATION LIMIT, TRUST LIMIT

Article 26. Annual Total Limit on Indirect Foreign Investment

1. The annual total limit on indirect foreign investment is established based on the following grounds:

a) The balance of payments situation of the previous year and forecast of the balance of payments for the year in which the total limit is established;

b) The scale of state foreign exchange reserves;

c) The situation of foreign direct investment in Vietnam and Vietnam's direct investment abroad;

d) The macroeconomic situation and monetary policy objectives for the year in which the total limit on indirect foreign investment is established.

2. The process of establishing the annual total limit on indirect foreign investment:

a) By the latest on March 15 each year, the State Bank of Vietnam, in coordination with the Ministry of Finance and the Ministry of Planning and Investment, shall establish the annual total limit on indirect foreign investment to be submitted to the Prime Minister for approval;

b) By the latest on March 31 each year, the Prime Minister shall approve the annual total limit on indirect foreign investment.

c) In cases where the Prime Minister has not approved the annual total limit on indirect foreign investment within the year, the State Bank of Vietnam may consider and confirm temporary self-operation and trust limits for self-operating organizations and investment trustees up to a maximum of 50% of the self-operation and trust limits confirmed by the State Bank of Vietnam in the previous year.

Article 27. Self-Operation Limit

1. Each year, the State Bank of Vietnam confirms the self-operation limit for self-operating organizations based on the following grounds:

a) The annual total limit on indirect foreign investment approved by the Prime Minister;

b) The capital scale of self-operating organizations that are securities companies, fund management companies, insurance businesses, commercial banks, financial holding companies, state capital investment and business corporations; the asset scale of self-operating organizations that are stock investment funds, securities investment companies;

c) The safe investment ratio of self-operating organizations as prescribed by competent state management agencies (not applicable to state capital investment and business corporations);

d) The situation of indirect foreign investment undertaken by self-operating organizations in previous years;

e) The macroeconomic situation and monetary policy objectives during each period.

2. By the latest on April 15 each year, self-operating organizations wishing to undertake indirect foreign investment must submit their application for self-operation limit directly or through postal service to the State Bank of Vietnam.

3. By the latest on May 15 each year, based on the grounds for confirming the self-operation limit under Clause 1 of this Article and valid applications from self-operating organizations, the State Bank of Vietnam shall confirm the self-operation limit for self-operating organizations. If the confirmation is not made, the State Bank of Vietnam shall provide a written explanation of the reasons.

4. The State Bank of Vietnam shall stipulate the determination of the self-operation limit, procedures, formalities, registration, and confirmation of the self-operation limit.

Article 28. Limit on Accepting Mandates

1. Annually, the State Bank of Vietnam shall confirm the registration of the limit on accepting mandates for mandate receivers based on the following grounds:

a) The annual total limit on indirect foreign investment approved by the Prime Minister;

b) The scale of capital of the mandate receiver that is a commercial bank, and the scale of entrusted assets of the mandate receiver that is a fund management company;

c) The self-operating limit that has been confirmed by the State Bank of Vietnam (if any);

d) The situation of receiving indirect investment mandates to invest abroad of the mandate receiver in previous years;

e) The macroeconomic situation and monetary policy objectives during each period.

2. By the latest on April 15 each year, organizations that need to accept indirect investment mandates to invest abroad must submit the application for registering the limit on accepting mandates directly or through postal service to the State Bank of Vietnam.

3. By the latest on May 15 each year, based on the grounds for confirming the registration of the limit on accepting mandates under Clause 1 of this Article and the valid documents of the mandate receiver, the State Bank of Vietnam shall confirm the registration of the limit on accepting mandates for the mandate receivers. In case of non-confirmation of the registration, the State Bank of Vietnam shall issue a document clearly stating the reasons.

4. The State Bank of Vietnam shall stipulate the procedures for determining the limit on accepting mandates, the registration process, and the confirmation of the registration of the limit on accepting mandates.

Chapter V

AUTHORITY OF THE PRIME MINISTER, RESPONSIBILITY OF MINISTRIES, INVESTORS AND RELATED PARTIES

MINISTRIES AND SECTORS, INVESTORS AND RELATED PARTIES

Article 29. Authority of the Prime Minister

1. Approving the total annual limit on indirect investment abroad.

2. Deciding to permit indirect investments abroad according to the provisions of Article 9 of this Decree.

Article 30. Responsibility of the State Bank of Vietnam

1. Implementing state management responsibilities according to its functions, tasks, and authority over indirect foreign investment activities as prescribed in this Decree.

2. Leading and coordinating with the Ministry of Finance and the Ministry of Planning and Investment to build the total annual limit on indirect foreign investment to be submitted to the Prime Minister for approval according to the provisions of Article 26 of this Decree.

3. Leading and coordinating with relevant agencies to submit to the Prime Minister for consideration and decision regarding indirect foreign investments as prescribed in Article 9 of this Decree.

4. Stipulating:

a) Investment instruments permitted in each period abroad;

b) Procedures and formalities for issuing and revoking certificates of registration for indirect foreign investment for commercial banks and comprehensive financial companies operating independently;

c) Procedures and formalities for issuing and revoking certificates of registration for accepting mandates to engage in indirect foreign investment for commercial banks;

d) Safe investment ratios for commercial banks and comprehensive financial companies operating independently;

đ) Procedures and formalities for registering and confirming the registration of independent operation limits and mandate acceptance limits;

e) Procedures and contents for implementing stock option programs of foreign organizations in Vietnam and methods and contents for participating in stock option programs of Vietnamese workers employed by foreign organizations in Vietnam as prescribed in Article 5 of this Decree;

g) Procedures for transferring capital abroad and transferring legitimate income back to Vietnam for cases approved by the Prime Minister to engage in indirect foreign investment as prescribed in Article 9 of this Decree;

h) Matters concerning opening and using accounts for indirect foreign investment and accounts for accepting mandates to engage in indirect foreign investment as prescribed in Article 11 of this Decree;

i) Reporting requirements for investors on their independent operation of indirect foreign investment, their situation of accepting mandates to engage in indirect foreign investment, independent operation limits, and mandate acceptance limits as prescribed in Article 35 of this Decree.

5. Managing foreign exchange for indirect foreign investment activities.

6. Inspecting and supervising the implementation of indirect foreign investment activities by investors.

7. Leading and coordinating with the Ministry of Finance to compile data, evaluate the situation of indirect foreign investment by investors, and report annually to the Prime Minister on the implementation of indirect foreign investment by investors as prescribed in this Decree.

Article 31. Responsibilities of the Ministry of Finance

1. Regulations on procedures and formalities for issuing and revoking certificates of registration for indirect foreign investment for securities companies, fund management companies, insurance businesses operating independently; regulations on forms, procedures, and formalities for issuing and revoking approvals for indirect foreign investment for securities investment funds and securities companies operating independently.

2. Regulations on procedures and formalities for issuing and revoking certificates of registration for engaging in indirect foreign investment mandates for fund management companies acting as mandate receivers.

3. Regulations on safe investment ratios for securities companies, fund management companies, securities investment companies, securities investment funds, insurance businesses, and State Capital Investment Corporation.

4. Inspecting, auditing, and supervising compliance with regulations related to independent operations of indirect foreign investment and accepting mandates to engage in indirect foreign investment by securities companies, fund management companies, securities investment funds, securities companies, insurance businesses, and State Capital Investment Corporation within its authority.

5. Regulations on reporting requirements on independent operations of indirect foreign investment for securities companies, fund management companies, securities investment funds, securities companies, insurance businesses, and State Capital Investment Corporation; situations of accepting mandates to engage in indirect foreign investment for fund management companies as prescribed in Article 35 of this Decree.

6. Coordinating with the State Bank of Vietnam:

a) Building the total annual limit on indirect foreign investment to be submitted to the Prime Minister for approval according to the provisions of Article 26 of this Decree;

b) Implementing the compilation, provision of data, evaluation of the situation of indirect foreign investment by investors, and building annual reports to the Government on the implementation of indirect foreign investment by investors.

Article 32. Responsibilities of the Ministry of Planning and Investment

1. Coordinate with the State Bank of Vietnam to develop the annual total indirect investment limit abroad for submission to the Prime Minister for approval in accordance with Article 26 of this Decree.

2. Coordinate with the State Bank of Vietnam and the Ministry of Finance in inspecting, auditing, and supervising compliance with legal provisions regarding self-operated indirect foreign investment activities, entrusted indirect foreign investment activities, and accepting entrusted indirect foreign investment activities of investors within their respective jurisdictions.

Article 33. Responsibilities of Investors

1. Comply with the provisions of this Decree, current regulations on foreign exchange management, anti-money laundering, and other relevant Vietnamese laws when conducting indirect foreign investments.

2. Bear responsibility for the legality of the foreign currency sources used for indirect foreign investments.

3. Be liable under the law for the legal capacity, financial capacity, economic efficiency, and risks associated with the capital used for self-operated indirect foreign investments and entrusted indirect foreign investments.

4. Adhere to the reporting system as stipulated in Article 35 of this Decree.

5. Fulfill the requirements of competent authorities during inspections, audits, and supervision of indirect foreign investment activities in accordance with the law.

Article 34. Responsibilities of Commercial Banks and Foreign Branches of Banks Permitted to Provide Foreign Exchange Services

When carrying out transactions related to indirect foreign investments for investors, commercial banks and foreign branches of banks permitted to provide foreign exchange services in Vietnam shall be responsible for reviewing, checking, and retaining appropriate documents and certificates corresponding to actual transactions to ensure that foreign exchange services are provided for the intended purpose and in compliance with legal provisions.

Article 35. Reporting System

1. Self-operating organizations and organizations accepting entrusted investments shall report on the implementation of self-operating limits and entrusted limits in accordance with the regulations of the State Bank of Vietnam.

2. Commercial banks and foreign branches of banks permitted to provide foreign exchange services (where investors open indirect foreign investment capital accounts and entrusted indirect foreign investment capital accounts) shall report on the opening and use of accounts in accordance with the regulations of the State Bank of Vietnam.

3. Self-operating organizations and organizations accepting entrusted investments shall report on the situation of self-operated indirect foreign investments and the situation of accepting entrusted indirect foreign investments in accordance with the regulations of the State Bank of Vietnam and the Ministry of Finance.

Article 36. Inspections, Audits, and Supervision

1. Inspections, audits, and supervision of indirect foreign investment activities as prescribed in this Decree shall be carried out in accordance with the law on inspections, audits, and supervision.

2. The State Bank of Vietnam shall conduct inspections, audits, and supervision of the implementation of self-operated indirect foreign investments by commercial banks and finance companies; and the acceptance of entrusted indirect foreign investments by commercial banks.

3. The Ministry of Finance shall conduct inspections, audits, and supervision of the implementation of self-operated indirect foreign investments by securities companies, investment securities companies, fund management companies, stock investment funds, insurance businesses, State Capital Investment Corporation; and the acceptance of entrusted indirect foreign investments by fund management companies.

Article 37. Handling of Violations

Organizations and individuals violating the provisions of this Decree shall be subject to administrative violation handling or criminal responsibility pursuit according to the law, depending on the nature and severity of the violation.

Chapter VI

IMPLEMENTING PROVISIONS

Article 38. Effective Date

This Decree takes effect from February 15, 2016.

Article 39. Responsibility for Implementation

1. The State Bank of Vietnam and the Ministry of Finance shall be responsible for guiding and organizing the implementation of this Decree.

2. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial People's Committees under the central government, and related organizations and individuals shall be responsible for organizing the implementation of this Decree./