Circular No. 165/2012/TT-BTC amends and supplements certain provisions of Circular No. 226/2010/TT-BTC dated December 31, 2010, issued by the Ministry of Finance, concerning financial safety indicators and measures for dealing with securities trading organizations that fail to meet these indicators.

CIRCULAR

Amending and supplementing certain Articles of Circular No. 226/2010/TT-BTC dated December 31, 2010 of the Ministry of Finance stipulating financial safety indicators and measures for dealing with securities trading organizations that do not meet financial safety indicators failing to meet financial safety indicators

_____________________ 

Pursuant to the Securities Law dated June 29, 2006;

Pursuant to the Law Amending and Supplementing Certain Provisions of the Securities Law dated November 24, 2010;

Pursuant to the Enterprise Law dated November 29, 2005;

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

Pursuant to Decree No. 118/2008/NĐ-CP dated November 27, 2008, of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Part I. 

The Minister of Finance hereby issues the Circular amending and supplementing certain Articles of Circular No. 226/2010/TT-BTC dated December 31, 2010 stipulating financial safety indicators and measures for dealing with securities trading organizations that do not meet financial safety indicators:

Article 1. Amending and supplementing certain Articles of Circular No. 226/2010/TT-BTC dated December 31, 2010 stipulating financial safety indicators and measures for dealing with securities trading organizations that do not meet financial safety indicators as follows:

1. Supplement Clause 4 of Article 3 of Circular No. 226/2010/TT-BTC as follows:

"4. The financial safety ratio report for June must be reviewed by the auditing organization approved for auditing securities trading organizations (hereinafter referred to as the approved auditing organization) according to Vietnam Auditing Standard No. 910. The financial safety ratio report for December and the financial safety ratio report used to prove that the securities trading organization meets the conditions to be removed from supervision or special supervision must be audited by the approved auditing organization according to Vietnam Auditing Standard No. 800 and other relevant auditing standards. The securities trading organization must establish a system of information and internal control to record, monitor, and update all financial information and detailed information necessary for preparing and reviewing, auditing financial safety ratio reports. The Board of Directors (management board) of the securities trading organization shall be responsible for preparing and presenting the financial safety ratio report in accordance with the relevant provisions of this Circular."

2. Amend Clause 2 of Article 10 of Circular No. 226/2010/TT-BTC as follows:

"2. The State Securities Commission shall issue a warning and decision to place the securities trading organization under supervision as provided for in Article 12 of this Circular or under special supervision as provided for in Article 14 of this Circular. Within twenty-four (24) hours from the date of issuance of the decision, the State Securities Commission, the Stock Exchange, and the securities trading organization shall publish information about the decision on their respective websites."

3. Amend and supplement Clause 1 of Article 11 of Circular No. 226/2010/TT-BTC as follows:

"a) Monthly, the securities trading organization must submit to the State Securities Commission the financial safety ratio report according to the form prescribed in Appendix 5 of this Circular. The report must be submitted together with an electronic file within ten (10) days from the end of the month.

b) The securities trading organization must submit to the State Securities Commission and simultaneously publish on its website the financial safety ratio report for June and December according to the form prescribed in Appendix 5 of this Circular after it has been reviewed or audited by the approved auditing organization. These reports must be submitted to the State Securities Commission and published at the same time as the publication of the semi-annual reviewed financial statements and annual audited financial statements."

4. Amend and supplement Article 12 of Circular No. 226/2010/TT-BTC as follows:

"1. The State Securities Commission shall issue a decision to place the securities trading organization under supervision in the following cases:

a) The available capital ratio is between 120% and 150% in all reporting periods over three (03) consecutive months; or

b) The available capital ratio, which has been reviewed or audited by the approved auditing organization, is between 120% and 150%; or

c) The financial safety ratio report, where the approved auditing organization issues a non-acceptance opinion (or contrary opinion), refuses to issue an opinion (or cannot issue an opinion), or an exception opinion on some indicators of the report, such that if the excluded effects are deducted from the available capital, the available capital ratio will be between 120% and 150%.

2. The supervision period shall not exceed twelve (12) months from the date the securities trading organization is placed under supervision.

3. The securities trading organization may be removed from supervision when the available capital ratio reaches 180% or higher in three (03) consecutive months, with the available capital ratio at the final reporting period being audited by the approved auditing organization."

5. Amend and supplement Article 14 of Circular No. 226/2010/TT-BTC as follows:

"1. The State Securities Commission shall issue a decision to place the securities trading organization under special supervision in the following cases:

a) The available capital ratio is below 120%, including cases where the available capital ratio is calculated by the company itself and the available capital ratio after being reviewed or audited by the approved auditing organization; or

b) Failure to overcome the supervision status within the twelve (12) month period specified in Clause 2 of Article 12 of this Circular; or

c) Failure to submit the financial safety ratio report in two (02) consecutive reporting periods, or failure to publish information about the financial safety ratio report that has been reviewed or audited by the approved auditing organization as prescribed in Article 11 of this Circular; or

d) The financial safety ratio report, where the approved auditing organization issues a non-acceptance opinion (or contrary opinion), refuses to issue an opinion (or cannot issue an opinion), or an exception opinion on some indicators of the report, such that if the excluded effects are deducted from the available capital, the available capital ratio will be below 120%.

2. The special supervision period shall not exceed four (04) months from the date the securities trading organization is placed under special supervision."

3. A securities business organization shall be removed from special supervision when its available capital ratio reaches one hundred eighty percent (180%) or more for three (03) consecutive months, with the available capital ratio at the final reporting period being audited by an approved auditing organization.

4. After the expiration of the special supervision period as stipulated in Clause 2 of this Article, if the securities business organization still fails to rectify the special supervision status and has consolidated losses (the undistributed profit indicator on the balance sheet) reaching fifty percent (50%) or more of the charter capital, it shall be suspended from operations. The procedures and formalities for implementing the suspension of operations shall be carried out in accordance with the guidelines of the State Securities Commission in compliance with regulations issued by the Ministry of Finance.

5. After the expiration of the special supervision period as stipulated in Clause 2 of this Article, if the securities business organization still fails to rectify the special supervision status and has consolidated losses (the undistributed profit indicator on the balance sheet) below fifty percent (50%) of the charter capital or fails to ensure the payment of all debts and other property obligations as prescribed by laws on enterprises and laws on enterprise bankruptcy, the State Securities Commission shall require the securities business organization to temporarily suspend operations.

6. Within twenty-four (24) hours from the time of requesting the securities business organization to temporarily suspend operations, the State Securities Commission shall publish information about this matter on its electronic information website.

7. Within fifteen (15) days from the date of receiving the written request of the State Securities Commission regarding the temporary suspension of operations, the securities business organization must publish information about the temporary suspension of operations, issues related to licensed securities business activities during the suspension period on its electronic information website and that of the Stock Exchange, while simultaneously completing the procedures for suspending operations in accordance with laws on enterprises and regulations on the establishment, organization, and operation of securities business organizations issued by the Ministry of Finance.

8. The temporary suspension of operations of the securities business organization as provided for in Clause 5 of this Article shall continue until:

a) The securities business organization has an available capital ratio meeting the requirements set forth in Clause 3 of this Article; or

b) The securities business organization merges, consolidates with another securities business organization, or dissolves, goes bankrupt in accordance with laws on enterprises, laws on enterprise bankruptcy, and regulations on the establishment, organization, and operation of securities business organizations issued by the Ministry of Finance."

6. Supplement Clause 4 of Article 16 of Circular No. 226/2010/TT-BTC as follows:

"4. During the period when the securities business organization temporarily suspends operations as stipulated in Clause 5 of Article 14 of this Circular:

a) The securities business organization shall not enter into new, extend economic contracts related to licensed securities business activities and terminate securities business activities according to the following principles:

- For securities companies: shall not open trading accounts for new customers, implement the settlement of service brokerage contracts (trading account opening contracts) and transfer customer accounts to replacement securities companies upon customer requests and relevant legal provisions (for brokerage business); shall not provide margin stock trading services and other financial services related to securities business; shall not enter into new, extend investment advisory contracts (for investment advisory business), underwrite issuance contracts (for underwriting issuance business); terminate proprietary securities trading activities, settle proprietary trading accounts according to the guidelines of the State Securities Commission (for proprietary securities business);

- For fund management companies: shall not raise funds to establish new funds, new securities investment companies; shall not increase the charter capital of managed funds, current securities investment companies; shall not enter into new, extend investment management contracts, investment advisory contracts; hand over management responsibilities and entrusted assets to replacement fund management companies upon customer requests, investor meetings, and other relevant legal provisions if applicable;

b) The securities business organization must still pay off all outstanding taxes and other financial obligations to the state;

c) For contracts already signed with customers, employees still in effect, the securities business organization shall continue to pay off debts and financial obligations, fulfill all commitments and obligations in accordance with the terms of the signed contracts in compliance with civil law, laws on enterprises, laws on securities, and other relevant laws, except where customers, employees, and creditors have agreed otherwise; settle economic contracts immediately after fulfilling the obligations of the securities business organization;

d) The securities business organization shall continue to implement the remediation plan as stipulated in Articles 13 and 15 of this Circular and fully comply with laws on securities and the securities market; ensure the rights and legitimate interests of customers and investors in accordance with the law;

đ) The Stock Exchange, Securities Depository Center shall temporarily terminate the membership status of the securities business organization until the end of the temporary suspension period;

e) The State Securities Commission does not approve the expansion of the scope and territory of operations, nor the addition of securities trading businesses for organizations engaged in such activities; it does not approve the provision of margin securities trading services and other financial services; it does not approve investment activities and transactions that require approval from the State Securities Commission under the laws on securities and the securities market, except for transfer transactions, mergers, consolidations, capital increases, and reductions in securities trading businesses.

7. Repeal Appendix 5 issued together with Circular No. 226/2010/TT-BTC and replace it with the Appendix issued together with this Circular.

Article 2. This Circular takes effect from December 1, 2012. All previous regulations contrary to this Circular are abolished.

Article 3. Any amendments or supplements to this Circular shall be decided by the Minister of Finance./.