Circular No. 226/2010/TT-BTC stipulates financial safety indicators and measures for dealing with securities business organizations that fail to meet financial safety indicators.

CIRCULAR

Specifies financial safety indicators and measures for handling organizations engaged in securities business that do not meet financial safety indicators.

Measures for organizations engaged in securities business that do not meet financial safety indicators.

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Based on the Securities Law dated June 29, 2007;

Pursuant to the Enterprise Law dated November 29, 2005;

Based on the Civil Code dated June 14, 2005;

Based on 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;

Based on Decree No. 163/2006/NĐ-CP dated December 29, 2006 of the Government stipulating the establishment, implementation of security transactions to ensure civil obligations and the handling of secured assets;

The Ministry of Finance stipulates financial safety indicators and measures for handling organizations engaged in securities business that do not meet financial safety indicators as follows:

PART I

GENERAL PROVISIONS

Article 1. Scope and objects regulated

This Circular guides the determination of financial safety indicators for securities companies and fund management companies operating in Vietnam (hereinafter referred to as organizations engaged in securities business) and measures for handling cases where they do not meet financial safety indicators.

Article 2. Interpretation of Terms

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

1. Market risk value is the value corresponding to the level of loss that may occur when the market price of owned assets moves unfavorably.

2Payment risk value is the value corresponding to the level of loss that may occur when a counterparty fails to pay or transfer assets on time according to the agreement.

3. - The book value of the security is determined according to the Accounting System of the State Bank and the guidance document of the State Bank on the accounting treatment of foreign securities investment operations. Operational risk is the value corresponding to the level of loss that may occur due to technical errors, system errors, and procedural errors, human errors during operations, or due to insufficient operating capital arising from investment losses, or other objective reasons.

4. Total risk value is the sum of market risk value, payment risk value, and operational risk value.

5. Available capital is the shareholders' equity that can be converted into cash within ninety (90) days.

6. Available capital ratio is the percentage ratio between the available capital value and the total risk value.

7. PAYMENT GUARANTEE is the commitment to assume responsibility for fulfilling financial obligations to ensure the payment of a third party.

8. Issuance guarantee period is the period from the date the issuance guarantee obligation arises under a firm commitment until the payment date to the issuer according to the commitment.

9. Net position with respect to a security at a point in time is the quantity of securities held by the organization engaged in securities business, adjusted by reducing the number of securities lent out and increasing the number of securities borrowed in accordance with the provisions of the law.

10. Net settlement position with respect to a counterparty at a point in time is the value of the loan, receivable after adjusting the debts, payable to that counterparty.

11. Group of organizations, individuals related to an organization or an individual means organizations, individuals in the following cases:

a) Is the parent company, subsidiary, joint venture, associated company of that organization;

b) Is an economic organization in which that individual holds 30% of the registered capital or more;

c) Father, adoptive father, mother, adoptive mother, spouse, children, adopted children, siblings of that individual.

2. Industrial emission testing must ensure timeliness, accuracy, objectivity, compliance with procedures, and adherence to legal provisions.

1. Organizations engaged in securities business are responsible for calculating financial safety indicators and are liable for the accuracy of the calculation results.

2. Asset and capital items used to calculate the available capital value and risk values must be updated to the calculation date.

3. Organizations engaged in securities business are not required to calculate the value of various risks for asset items that have been deducted from the available capital in accordance with Article 5 of this Circular.

Chapter II

FINANCIAL SAFETY INDICATORS

Section 1

AVAILABLE CAPITAL

Article 4. Available Capital

1. Available capital is determined according to the provisions set out in Appendix 5 attached to this Circular, specifically as follows:

a) a) The investment capital of the owner, excluding redeemable preferred shares (if any);

b) Share premium surplus;

c) Supplementary Capital Reserve Fund;

d) Development Investment Fund;

e) Financial Provision Fund;

f) Other funds established from the owner's capital in accordance with the provisions of the law;

g) Accumulated profits and undistributed post-tax profits before setting aside provisions as prescribed by law;

h) Fifty percent (50%) of the additional value of fixed assets revalued in accordance with the provisions of the law (in the case of increased valuation), or subtracting the entire reduced value (in the case of decreased valuation);

i) Exchange rate differences;

j) Minority shareholders' interests;

k) Deductions as prescribed in Article 5 of this Circular;

l) Additions as prescribed in Article 6 of this Circular.

2. The available capital prescribed in Clause 1 of this Article must be adjusted to reduce treasury shares (if any). the provisions set out in Clause 1 of this Article must be adjusted by reducing treasury shares (if any).

Article 5. Deductible Items

1. The entire portion of the reduced value of investment items, excluding securities prescribed in Clause 5 of this Article, based on the difference between the book value and the market price determined in accordance with Appendix 2 attached to this Circular.

2. Other deductible items are specified as follows in Appendix 5 issued together with this Circular:

a) Indicators in long-term assets, except for cases prescribed in Clause 3 of this Article;

b) Indicators in short-term assets including:

- Securities prescribed in Clause 5 of this Article at the Financial Investment Short-Term indicator;

- Advance payments;

- Receivables with remaining collection period or payment term exceeding ninety (90) days;

- Advances with remaining repayment period exceeding ninety (90) days;

- Other short-term assets, except for cases prescribed in Clause 3 of this Article.

c) Any exclusions (if any) on audited financial statements that have not been deducted from available capital as prescribed in points a and b of this clause. In the event that the auditing organization confirms that the exclusions have ended, the securities trading organization does not need to deduct this amount.

3. The reduction from available capital as prescribed in points a and b of Clause 2 of this Article does not include the following indicators:

a) Assets required to determine market risk in accordance with Clause 2 of Article 8 of this Circular, except for securities prescribed in Clause 5 of this Article;

b) Investment depreciation provision;

c) Bad debt provision;

d) Customer deposits related to securities transactions;

e) Customer deposits related to settlement and offsetting of securities transactions.

4. When determining the asset indicators to be deducted from available capital as prescribed in point a and b of Clause 2 of this Article, the securities trading organization may adjust the deduction by reducing the smallest value of the following values:

a) For assets used to guarantee the obligations of the securities trading organization itself or a third party, when calculating the deduction, the smallest value among the following values shall be reduced: the market value of such assets determined in accordance with Appendix 2 of this Circular (if applicable), the book value, the remaining obligation value;

b) For assets guaranteed by customer assets, when calculating the deduction, the smallest value among the following values shall be reduced: the secured asset value determined in accordance with Clause 6 of Article 9 of this Circular, the book value.

5. The following securities in the Financial Investment indicator, both short-term and long-term, must be deducted from available capital:

a) Securities issued by organizations related to the securities trading organization in the following circumstances:

- Being the parent company, subsidiary, joint venture, or associated company of the securities trading organization;

- Being the subsidiary, joint venture, or associated company of the parent company of the securities trading organization.

b) Securities with remaining restricted transfer period exceeding ninety (90) days, calculated from the calculation date.

Article 6. Additional Items

1. The entire portion of the increased value of investments, excluding securities as specified in Clause 5, Article 5 of this Circular, based on the difference between the original cost and the market price determined according to Appendix 2 attached to this Circular.

2. Debt items that can be converted into Shareholders' Equity include:

a) Convertible bonds and preferred shares issued by securities trading organizations satisfying all the following conditions:

- Having an initial term of at least five (05) years;

- Not being secured by assets of the securities trading organization;

- The securities trading organization may only repurchase before maturity upon request of the holder or repurchase on the secondary market after notifying the Securities Commission in accordance with Clause 5, 6 of this Article;

- The securities trading organization may suspend interest payments and carry forward accrued interest to the next year if making such payments would result in a loss for the business results of the year;

- In the event of liquidation or dissolution of the securities trading organization, the holder shall only be paid after the securities trading organization has settled all secured and unsecured creditors;

- Any increase in interest rates, including increases added to the reference rate, may only be implemented after five (05) years from the date of issuance and adjusted once during the entire period before conversion into common shares;

- Registered for additional available capital in accordance with Clause 4 of this Article.

b) Other debt instruments satisfying all the following conditions:

- Being a debt item where, in all cases, the creditor is only paid after the securities trading organization has settled all secured and unsecured creditors;

- Having an initial term of at least ten (10) years;

- Not being secured by assets of the securities trading organization;

- The securities trading organization may suspend interest payments and carry forward accrued interest to the next year if making such payments would result in a loss for the business results of the year;

- The creditor may only be repaid early by the securities trading organization after notifying the Securities Commission in accordance with Clause 5, 6 of this Article;

- Any increase in interest rates, including increases added to the reference rate, may only be implemented after five (05) years from the date of signing the loan agreement and adjusted once during the entire term of the loan.

- Registered for additional available capital in accordance with Clause 4 of this Article.

3. Limitations when calculating additional items for Available Capital:

a) The value of items specified in point a, b, Clause 2 of this Article must be reduced gradually according to the following principle:

- During the last five (05) years before the payment due date or conversion into common shares, for each year closer to the conversion or payment due date, the value of items specified in point a, b, Clause 2 of this Article must be deducted by 20% of the initial value;

- Within the last four (04) quarters before the payment due date or conversion into common shares, there will be an additional deduction of 25% per quarter from the remaining value after the deduction as specified above.

b) The total value of items specified in Clause 2 of this Article used to supplement Available Capital shall not exceed fifty percent (50%) of Shareholders' Equity.

4. Securities trading organizations must register to supplement the debt items specified in Clauses 2 and 3 of this Article with the Securities Commission as part of Available Capital. The registration dossier includes:

a) Registration form according to the model in Appendix 6 of this Circular regarding the use of convertible bonds, preferred shares, and debt items to supplement Available Capital;

b) Minutes of meetings, Resolutions of the Board of Directors, Board of Members, Decisions of the owner regarding the use of debt items that can be converted into Shareholders' Equity to supplement Available Capital;

c) Certified copies of loan agreements or equivalent documents. Loan agreements or equivalent documents must contain commitments from both parties with complete and appropriate contents in accordance with Clauses 2 and 3 of this Article.

5. Securities trading organizations may repurchase convertible bonds, preferred shares, or prepay registered debt items used to supplement Available Capital under the following circumstances:

a) The Available Capital ratio after repurchasing convertible bonds, preferred shares, or prepaying registered debt items used to supplement Available Capital does not fall below 180%;

b) If the securities trading organization fails to meet the condition specified in point a of this clause, the securities trading organization must have new sources of capital to ensure maintaining the minimum Available Capital ratio of not less than 180%.

6. Securities trading organizations must report to the Securities Commission at least fifteen (15) days before repurchasing convertible bonds, preferred shares, or prepaying registered debt items used to supplement Available Capital. The reporting dossier includes:

a) Documents as specified in point a, Clause 4 of this Article;

b) Documents as specified in points b, c, Clause 4 of this Article for convertible bonds, preferred shares, and new debt items used to supplement Available Capital, replacing the convertible bonds, preferred shares to be repurchased, and the debt items to be prepaid (if any).

Section 2

RISK VALUES

Article 7. Value of Operational Risk

1. The operational risk of a securities business organization shall be determined by 25% of the operating maintenance costs of the securities business organization for the twelve (12) consecutive months up to the nearest month, or 20% of the Statutory Capital as prescribed by law, whichever is greater.

2. The operating maintenance costs of a securities business organization shall be determined by the total expenses incurred during the period, minus:

a) Depreciation expenses;

b) Short-term investment value reduction reserves;

c) Long-term investment value reduction reserves;

d) Bad debt reserves.

3. In cases where a securities business organization has been operating for less than one (01) year, the operational risk shall be determined by three (03) times the average monthly operating maintenance costs from the time the securities business organization commenced operations, or 20% of the Statutory Capital, whichever is greater.

Article 8. Value of Market Risk

1. At the end of each trading day, the securities business organization must determine the market risk value for the assets of the securities business organization as specified in Clause 2 of this Article.

2. Market risk must be determined for the following assets:

a) Securities on the proprietary trading account (for securities companies with proprietary trading activities), securities trading account (for fund management companies, securities companies without proprietary trading activities), including the number of securities in the process of transferring from the seller;

b) Securities supported from other individuals or organizations according to the provisions of the law, including securities borrowed for itself by the securities business organization, securities borrowed on behalf of other individuals or organizations;

c) Securities of customers that the securities business organization accepts as collateral, subsequently used, repledged, pledged, or lent to a third party in accordance with the provisions of the law;

d) Money, cash equivalents, transferable instruments, negotiable instruments belonging to the securities business organization;

e) Securities for which the securities business organization guarantees issuance under a firm commitment but have not yet been fully distributed and settled during the guarantee period.

3. The securities and assets specified in Clause 2 of this Article do not include the following types:

a) Treasury shares;

b) Securities specified in Clause 5 of Article 5 of this Circular;

c) Bonds, debt instruments, negotiable instruments in the money market that have matured.

4. The formula for determining the market risk value for assets specified in Points a, b, c, d of Clause 2 of this Article is as follows:

b) The market risk coefficient is determined according to Appendix 1 attached to this Circular;

c) The asset price is determined according to Appendix 2 attached to this Circular.

5. Market risk value of each asset as stipulated in Clause 4 of this Article will need to be increased additionally in the case when the securities business organization invests too much in such assets, except securities currently within the period issuing guarantee under a firm commitment form, government bonds, bonds guaranteed by the Government. The market risk value is adjusted upward according to the following principle:

a) Increase by 10% if the value of this investment constitutes between 10% and 15% Shareholder Capital of the securities business organization;

b) Increase by 20% if the value of this investment constitutes between 15% and 25% Shareholder Capital of the securities business organization;

c) Increase by 30% if the value of this investment constitutes 25% or more Shareholder Capital of the securities business organization.

6. Securities business organizations must increase dividends, interest, or premium values if they arise (for securities), or loan interest (for deposits and cash equivalents, transferable instruments, negotiable instruments) when determining the asset price to calculate the market risk value.

7. The market risk value for unsold securities from Issuance Guarantee Contracts under a firm commitment form is calculated as follows:

a) The trading price is determined according to Appendix 2 attached to this Circular. In the case of a public offering for the first time, including the initial auction of shares, bond auction, the trading price equals the book value per share of the issuer at the latest point in time, or the starting price (if the book value cannot be determined), or face value (for bonds);

b) The market risk coefficient is determined according to Appendix 1 attached to this Circular;

c) The issuance risk coefficient is determined based on the remaining time until the end of the distribution period as stipulated in the contract, but not exceeding the permissible distribution period under the law, as follows:

- Until the last day of the distribution period, if the remaining time is over sixty (60) days: the issuance risk coefficient is 20%;

- Until the last day of the distribution period, if the remaining time is from sixty (60) to thirty (30) days: the issuance risk coefficient is 40%;

- Until the last day of the distribution period, if the remaining time is less than thirty (30) days: the issuance risk coefficient is 60%;

- During the period from the end of the distribution period to the settlement date for the issuer: the issuance risk coefficient is 80%.

d) After the final settlement date for the issuer, the securities business organization must determine the market risk value for unsold securities as stipulated in Clause 4 of this Article.

e) The collateral asset value of customers is determined according to Clause 6 of Article 9 of this Circular.

Article 9. Settlement Risk Value

1. By the end of the trading day, the securities business organization must determine the settlement risk value for the following contracts and transactions:

a) Time deposits at credit institutions, loans to other organizations and individuals;

b) Securities lending and borrowing contracts in accordance with the provisions of the law;

c) Securities sale repurchase contracts in accordance with the provisions of the law;

d) Securities purchase resale contracts in accordance with the provisions of the law;

e) Margin loan securities purchase contracts in accordance with the provisions of the law;

f) Underwriting guarantee contracts signed with other organizations within the underwriting syndicate in the form of a firm commitment where the securities business organization is the lead underwriter;

g) Overdue receivables, including matured bonds, negotiable instruments, matured debt instruments that have not been paid, receivables of the securities business organization from customers in the securities brokerage business;

h) Assets overdue for transfer, including securities in the business operations of the securities business organization, customer securities in the securities brokerage business.

2. For the contracts specified in points a, b, c, d, and e of Clause 1 of this Article, the settlement risk value before the due date for transferring securities, money, and liquidating the contract shall be determined as follows:

a) The settlement risk factor by counterparty is determined based on the creditworthiness level of the transaction counterparty according to the principle stipulated in Appendix 3 attached hereto;

b) The value of assets with potential settlement risk is determined according to the principle stipulated in Appendix 4 of this Circular. The value of assets with potential settlement risk must be adjusted to increase dividends, interest payments, and the value of preemptive rights if they arise (for securities), or loan interest, and other additional fees (for credit facilities).

3. For the contracts specified in point f of Clause 1 of this Article, the settlement risk value is determined as 30% of the remaining value of the outstanding underwriting guarantee contracts.

4. For overdue receivables and securities not transferred on time as specified in points g and h of Clause 1 of this Article, including securities and money not received from the transactions and contracts that have matured as specified in points a, b, c, d, and e of Clause 1 of this Article, the settlement risk value shall be determined according to the following principles:

 

a) The settlement risk factor by time period is determined based on the overdue payment period according to the principle stipulated in Appendix 3 attached hereto;

b) The value of assets with potential settlement risk is determined as follows:

- For securities buying and selling transactions for customers or for the securities business organization itself: it is the market value of the contract calculated according to the principle stipulated in Appendices 2 and 4 of this Circular;

- For margin loan securities purchases, sale repurchase transactions, purchase resale transactions, securities lending and borrowing transactions: the value of assets with potential settlement risk is determined according to the principle stipulated in Appendix 4 of this Circular;

- For overdue receivables, matured bonds, matured debt instruments: it is the receivable amount calculated according to the face value, plus unpaid interest, related costs, and minus any previously received payments (if any).

5. The securities business organization may adjust and reduce the value of the collateral provided by the counterparty or customer when determining the value of assets with potential settlement risk as specified in Clause 1 of this Article if these contracts and transactions meet all of the following conditions:

a) The counterparty or customer has collateral to fulfill their obligations, and the collateral is money, cash equivalents, negotiable instruments, tradable financial instruments listed or traded on the Stock Exchange, government bonds, and bonds guaranteed for issuance by the Ministry of Finance;

b) The securities business organization has the right to dispose, manage, use, and transfer the collateral in case the counterparty does not fully and timely fulfill their payment obligations as agreed in the contracts.

6. The value of the collateral subject to reduction as specified in Clause 5 of this Article is determined as follows:

a) The asset price is determined according to the principle stipulated in Appendix 2 attached hereto;

b) The market risk factor is determined according to the principle stipulated in Appendix 1 attached hereto.

7. When determining the settlement risk value, the securities business organization can net off the value of assets with potential settlement risk in bilateral transactions if all of the following conditions are met:

a) The settlement risk relates to the same counterparty;

b) The settlement risk arises from the same type of transaction as specified in Clause 1 of this Article;

c) Bilateral netting has been agreed upon in writing by both parties.

8. The settlement risk value must be increased in the following cases:

a) Increase by 10% if the value of the loan to an organization, individual, and related organizations and individuals (if any) exceeds 10% but does not exceed 15% of the Shareholders' Equity;

b) Increase by 20% if the value of the loan to an organization, individual, and related organizations and individuals (if any) exceeds 15% but does not exceed 25% of the Shareholders' Equity;

c) Increase by 30% if the value of the loan to an organization, individual, and related organizations and individuals (if any), or an individual and related parties (if any) exceeds 25% of the Shareholders' Equity.

9. In the event that the counterparty has completely lost the ability to pay, the entire loss calculated according to the contract value must be deducted from the Available Capital.

Section 3

RATIO OF AVAILABLE CAPITAL AND REPORTING REGIME OF THE SECURITIES BUSINESS ORGANIZATION

SECURITIES TRADING

Article 10. Available Capital Ratio and Warning Levels

1. The available capital ratio shall be determined according to the following principle:

2. The State Securities Commission shall issue warnings and decisions to place securities trading organizations under control as prescribed in Article 12 of this Circular or special supervision as prescribed in Article 14 of this Circular when the available capital ratio falls below certain levels. Such decisions shall not be made public except where the State Securities Commission deems it necessary to protect customer interests.

Article 11. Reporting System on Available Capital Ratio

1. Regular Reporting System

Securities trading organizations must report to the State Securities Commission on their available capital ratio monthly according to the reporting form prescribed in Appendix 5 of this Circular. The report must be accompanied by an electronic information file within ten (10) days from the end of the month.

2. Irregular Reporting System

a) From the time the available capital ratio falls below 180%, securities trading organizations must report to the State Securities Commission on their available capital ratio twice a month (on the 15th and 30th of each month) according to the reporting form prescribed in Appendix 5 of this Circular. The report must be accompanied by an electronic information file within three working days after the 15th and 30th of each month.

b) From the time the available capital ratio falls below 150%, securities trading organizations must report to the State Securities Commission on their available capital ratio once a week according to the reporting form prescribed in Appendix 5 of this Circular. The report must be accompanied by an electronic information file before 4:00 PM every Friday.

c) From the time the available capital ratio drops below 120%, securities trading organizations must report daily to the State Securities Commission on their available capital ratio according to the reporting form prescribed in Appendix 5 of this Circular. The report must be accompanied by an electronic information file before 4:00 PM every day.

3. Securities trading organizations may implement the regular reporting system as prescribed in Clause 1 of this Article when their available capital ratio reaches and exceeds 180% for three consecutive reporting periods.

Chapter III

MEASURES FOR NON-COMPLIANCE WITH FINANCIAL SAFETY STANDARDS

MEETING FINANCIAL STABILITY CRITERIA

Section 1

REPORT ON THE OPERATIONS OF CURRENCY EXCHANGE AGENTS

Article 12. Supervision

1. The State Securities Commission shall issue a decision to place securities trading organizations under supervision when the available capital ratio fluctuates between 120% and 150% for all reporting periods over three (03) consecutive months.

2. The supervision period shall not exceed twelve (12) months. In cases deemed necessary, upon request from the securities trading organization, the State Securities Commission may extend the supervision period, however, not exceeding six (06) months.

3. Securities trading organizations shall be removed from the supervision status when their available capital ratio reaches and exceeds 180% for three (03) consecutive reporting periods.

Article 13. Remediation Plan for Supervision

1. Within a maximum of fifteen (15) days from the date the State Securities Commission issues a decision to place securities trading organizations under supervision, such organizations must submit to the State Securities Commission a detailed report on their financial situation, causes, and remediation plan.

2. The remediation plan for improvement must be developed for two (02) consecutive years, with a roadmap, conditions, deadlines, and detailed implementation plans monthly and quarterly. The State Securities Commission has the right to require securities trading organizations to adjust the remediation plan at any time if it deems it unfeasible, unsuitable for market conditions, or non-compliant with legal regulations.

3. The remediation plan includes the following measures:

a) Selling high-risk assets; limiting or ceasing purchases of treasury shares;

b) Collecting debts; selling back shares, equity contributions to creditors;

c) Reducing operating costs and management expenses; restructuring management structures, personnel, and reducing staff;

d) Narrowing scope and geographical areas of operations; closing some branches and transaction offices; withdrawing some securities trading activities;

e) Ceasing dividend payments and profit distributions; implementing capital increases in accordance with legal regulations;

f) Merging or consolidating with securities trading organizations in the same industry and type in accordance with legal regulations;

g) Other measures that do not contravene legal regulations.

Section 2

SPECIAL SUPERVISION"

Article 14. Special Supervision

1. The State Securities Commission shall issue a decision to place a securities business organization under special supervision when it fails to meet one of the following situations:

a) The available capital ratio decreases below 120%;

b) The securities business organization is unable to rectify the supervision status within the time limit prescribed in Clause 2, Article 12 of this Circular.

2. The period of special supervision shall not exceed six (06) months, starting from the date the securities business organization is placed under special supervision according to the provisions of Clause 1 of this Article.

3. A securities business organization may be removed from the special supervision status when its available capital ratio reaches and exceeds 150% for all reporting periods over a continuous three (03) month period.

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 incurs consolidated losses exceeding fifty percent (50%) of the charter capital, its operations will be suspended. The procedures for suspending operations shall be carried out in accordance with the guidelines of the State Securities Commission, consistent with regulations issued by the Ministry of Finance.

Article 15. Remediation Plan for Special Supervision Status

1. Within a maximum period of one (01) week from the date the State Securities Commission issues a decision to place a securities business organization under special supervision, the securities business organization must submit to the State Securities Commission a detailed report on its financial situation, causes, and remediation plan.

2. The remediation plan shall be implemented as prescribed in Clauses 2 and 3 of Article 13 of this Circular..

Section 3

RESPONSIBILITIES OF THE RELATED PARTIES

Article 16. Responsibilities of Individuals and Securities Business Organizations Placed Under Supervision and Special Supervision

1. The Board of Directors, Board of Members, General Director (Director) of a securities business organization under supervision and special supervision shall have the responsibility to:

a) Develop a remediation plan and organize its implementation;

b) Continue to manage, supervise, and operate the business and ensure the safety of assets of the securities business organization in compliance with the law;

c) Be responsible for matters related to the organization and operation of the securities business organization before, during, and after the supervision and special supervision periods;

d) Support and create conditions for other organizations to fulfill their responsibilities as prescribed in this Circular and perform other tasks as required in writing by the State Securities Commission.

2. Before 16:00 every Friday, the securities business organization must report to the State Securities Commission on the progress of implementing the remediation plan and the results achieved.

3. During the supervision and special supervision period:

a) The securities business organization shall not pay dividends to shareholders, distribute profits to contributing members; award bonuses to Board of Directors members, Board of Members members, supervisory board members, General Director (Director), Deputy General Director (Deputy Director), Chief Accountant, employees, and persons related to the securities business organization;

b) The securities business organization shall not convert unsecured debts into secured debts guaranteed by the assets of the securities business organization;

c) The securities business organization shall not purchase treasury shares or repurchase equity contributions from contributing members;

d) The securities business organization shall not enter into new, extend, or continue to execute margin trading contracts, stock loan contracts, buy-to-cover transactions, or lend to customers without collateral; nor shall it sign guarantee issuance contracts in the form of a firm commitment;

e) The securities business organization shall not establish additional trading offices, branches, representative offices, expand operating areas, or add securities business activities;

f) The securities business organization shall not participate in establishing subsidiaries, joint ventures, joint operations, real estate investments; limit investments in high-risk assets or engage in business activities that increase risk value, reduce available capital.

Article 17. Responsibilities of other related organizations

1. The Securities Exchange, the Securities Depository Center, depositary members, supervisory banks, settlement banks, and other relevant organizations shall be responsible for providing the State Securities Commission with full and timely information and documents related to transactions, investment activities, and business operations of securities trading organizations placed under supervision or special supervision, upon request in writing from the State Securities Commission.

2. The Securities Exchange, the Securities Depository Center, supervisory banks, depositary banks, and related securities trading organizations shall be responsible for guiding, supporting, and providing securities services to customers of securities trading organizations placed under supervision or special supervision, upon request in writing from the State Securities Commission.

Chapter IV

IMPLEMENTATION

Article 18. Implementation Organization

1. This Circular takes effect from April 1, 2011.

2. From the date this Circular takes effect, securities trading organizations shall determine and report financial safety indicators according to the provisions of Chapters I and II of this Circular. Twelve (12) months after the date this Circular takes effect, securities trading organizations shall determine, report financial safety indicators, and must comply with regulations on supervision, special supervision, and measures for handling as stipulated in Chapter III of this Circular.

3. Within its scope of functions and responsibilities, the State Securities Commission shall guide and inspect securities trading organizations in implementing this Circular.

4. Abolish the provisions determining and reporting available capital in previous guiding documents that differ from the provisions of this Circular.

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