Decision No. 3686/QD-BTC Issuing Financial Management Regulations for the Ho Chi Minh City Securities Trading Corporation

Pursuant to …;

Issuing financial management regulations for the Ho Chi Minh City Stock Exchange

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 THE MINISTER OF FINANCE

Pursuant to the Enterprise Law No. 60/2005/QH11 adopted by the National Assembly on November 29, 2005;

Pursuant to the Securities Law No. 70/2006/QH11 adopted by the National Assembly on June 29, 2006;

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

Pursuant to the Government Decree No. 199/2004/NĐ-CP dated December 3, 2004 regarding financial management regulations for state-owned companies and state capital investment in other enterprises;

Pursuant to the Prime Minister's Decision No. 599/QD-TTg dated May 11, 2007 regarding the transformation of the Ho Chi Minh City Securities Trading Center into the Ho Chi Minh City Stock Exchange;

Pursuant to the Ministry of Finance's Decision No. 2644/QD-BTC dated August 6, 2007 regarding the Charter of Organization and Operation of the Ho Chi Minh City Stock Exchange;

At the proposal of the Director of the Department of Financial Affairs of Banks and Financial Institutions,

Pursuant to …;

Article 1. Attached herewith is the "Financial Management Regulations for the Ho Chi Minh City Stock Exchange."

Article 2. This Decision shall take effect from the date of signing.

Article 3. The Chairman of the Board of Directors, General Director of the Ho Chi Minh City Stock Exchange, and Heads of related units shall be responsible for implementing this Decision./.

REGULATIONS

FINANCIAL MANAGEMENT OF THE HO CHI MINH CITY STOCK EXCHANGE
(Attached to Decision No. 3686/QD-BTC dated November 22, 2007 of the Minister of Finance)

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I. GENERAL PROVISIONS

Article 1. The Ho Chi Minh City Stock Exchange (hereinafter referred to as the Stock Exchange) is a legal entity under state ownership, organized in the form of a limited liability company with one member according to the Securities Law, the Enterprise Law, the Charter of the Stock Exchange, and other relevant laws.

The State assigns capital, land, and other resources to the Stock Exchange to perform the rights and obligations stipulated in Article 37 and 38 of the Securities Law and Decision No. 599/QD-TTg dated May 11, 2007 of the Prime Minister regarding the transformation of the Ho Chi Minh City Securities Trading Center into the Ho Chi Minh City Stock Exchange.

Article 2. The Stock Exchange is an independent accounting unit operating on the principle of financial autonomy; it has its own seal and can open accounts at the State Treasury and domestic and foreign commercial banks.

Article 3. The Stock Exchange is subject to state financial management by the Ministry of Finance; the Ministry of Finance exercises the rights and obligations of the representative owner of capital and assets of the Stock Exchange.

Article 4. The Stock Exchange implements the financial system as prescribed in these Regulations; it implements reporting, statistics, accounting, and auditing systems as prescribed by the Minister of Finance.

II. MANAGEMENT AND USE OF CAPITAL AND ASSETS

Article 5. The operating capital of the Stock Exchange includes:

1. Registered Capital:

The registered capital of the Stock Exchange is 1,000 (one thousand) billion VND, consisting of:

a) Capital transferred from the Ho Chi Minh City Securities Trading Center;

b) Additional capital from the State during the course of operations;

c) Any increase in the registered capital of the Stock Exchange shall be decided by the Ministry of Finance. When there is a decision to change the level of registered capital, the Stock Exchange must promptly adjust the balance sheet and the Charter of the Stock Exchange, complete the procedures for adjusting the registered capital, and publish them in accordance with the law.

2. Self-supplemented capital from post-tax profits and other lawful sources.

3. Raised capital

a) In cases of necessity, the Stock Exchange may raise capital to develop technical infrastructure for the securities market but shall not alter the form of ownership of the Stock Exchange;

b) The Board of Directors reports to the Ministry of Finance for consideration and decision on loan contracts with a value equal to or greater than 20% of the total asset value recorded in the most recent financial report of the Stock Exchange;

c) Loan contracts with a value less than 20% of the total asset value recorded in the most recent financial report of the Stock Exchange shall be decided by the Chairman of the Board of Directors or delegated to the General Director to decide within their authority.

Article 6. Rights and obligations of the Stock Exchange in managing and using capital and funds

1. The Stock Exchange has the right to manage and use state-invested capital and other lawful sources of capital according to the principle of preserving and developing capital; it is responsible to the Ministry of Finance for the effectiveness of capital use and ensuring the interests of those related to the Stock Exchange such as members of the Stock Exchange and employees according to the terms agreed upon in contracts.

2. The Stock Exchange has the responsibility to preserve capital through measures including:

a) Purchasing insurance for the following types of assets:

- Infrastructure technology asset group including: main trading system; registration, custody, and settlement system; information system; auxiliary service system; backup system; transmission network, database, and other information technology systems.

- Other asset group: buildings, structures, machinery and equipment, transportation means.

b) Establishing provisions for difficult-to-collect receivables according to current regulations for state-owned companies; establishing compensation funds for transaction members and other provisions according to the law.

Article 7. Investment outside the Stock Exchange

1. The Stock Exchange may invest and contribute capital to other economic organizations to provide services for developing technical infrastructure and information provision within the scope of the Stock Exchange's functions and tasks with the aim of developing the securities market. Outside these areas, the Stock Exchange shall not invest or contribute capital and shall not participate in buying and selling stocks, bonds, or other securities.

2. The Stock Exchange is only allowed to use up to 20% of its actual registered capital for investment activities and investment contributions from raised capital and registered capital.

3. The Board of Directors reports to the Ministry of Finance for decisions on investment and contribution plans with a value equal to or greater than 20% of the total asset value recorded in the most recent financial report of the Stock Exchange.

4. Investment and contribution plans with a value less than 20% of the total asset value recorded in the most recent financial report of the Stock Exchange shall be decided by the Board of Directors or delegated to the General Director of the Stock Exchange to decide within their authority.

Article 8. Fixed Assets

1. Fixed assets (Tangible and Intangible Fixed Assets) of the Exchange include tangible fixed assets and intangible fixed assets. The criteria (in terms of time and value) and original cost of fixed assets are determined according to the current regulations of the State.

2. Investment in basic construction and acquisition of fixed assets of the Exchange shall be decided by the Board of Directors based on compliance with the State's regime:

a) The Board of Directors shall develop and report to the Ministry of Finance for approval the Project on basic construction and acquisition of fixed assets of the Exchange in accordance with the scale of operations during each period.

b) Based on the approved Project, the Board of Directors shall decide or delegate the General Director to decide within their authority regarding investment projects and acquisitions of fixed assets.

Article 9. Depreciation of fixed assets:

1. All existing fixed assets of the Exchange, including idle fixed assets awaiting liquidation, except those belonging to public welfare works, must be depreciated. Fixed assets that have been fully depreciated but are still in use for business activities do not need to be depreciated. The rate of depreciation of fixed assets is based on the value of the fixed assets and the depreciation period.

The time, rate of depreciation, accelerated depreciation, and depreciation expenses of fixed assets shall be implemented in accordance with the State's regulations.

2. Depreciation of fixed assets used for business activities shall be recorded as business activity expenses.

3. Depreciation of fixed assets used for management activities shall be recorded as management expenses.

4. Depreciation of idle, unused fixed assets awaiting liquidation shall be recorded as other expenses.

5. Fixed assets that have not yet been fully depreciated but are damaged or lost shall be recorded as other expenses.

Article 10. Leasing, Pledging, and Hypothecating Assets

1. The Exchange may lease, pledge, or hypothecate assets under its control in accordance with the Civil Code and other laws, on the principle of ensuring effectiveness, safety, and capital development.

2. The Board of Directors shall report to the Ministry of Finance for decision on leasing, pledging, or hypothecating contracts involving assets valued at or exceeding 20% of the total asset value recorded in the Exchange's most recent financial report.

3. Contracts for leasing, pledging, or hypothecating assets valued below 20% of the total asset value recorded in the Exchange's most recent financial report shall be decided by the Board of Directors or delegated to the General Director within their authority.

Article 11. Liquidation and Sale of Assets

1. The General Director shall decide or develop a plan to submit to the Board of Directors for decision on the liquidation or sale of substandard, deteriorated, irreparable damaged assets; obsolete technical assets without demand or ineffective use to recover capital:

a) The Board of Directors shall report to the Ministry of Finance for decision on the liquidation or sale of fixed assets valued at or exceeding 20% of the total asset value recorded in the Exchange's most recent financial report;

b) The liquidation or sale of fixed assets valued below 20% of the total asset value recorded in the Exchange's most recent financial report shall be decided by the Board of Directors or delegated to the General Director within their authority.

2. When liquidating or selling assets, the Exchange must establish a Liquidation and Sale Committee. For assets required by law to be sold through auction, the Exchange must organize an auction in accordance with the law when liquidating or selling such assets.

Article 12. Management of Accounts Receivable and Payable:

1. The Exchange is responsible for issuing Rules on managing accounts receivable and payable and handling them in accordance with the Rules; clearly defining the responsibilities of collectives and individuals in tracking, recovering, and settling accounts receivable and payable in accordance with the agreed deadlines.

2. Maintaining complete records of short-term and long-term accounts receivable and payable for each entity.

3. Before closing the independent accounting books for the annual financial report, a verification and reconciliation of accounts receivable and payable with debtors and creditors must be conducted.

Article 13. Inventory and Revaluation of Assets

1. The Exchange shall conduct inventory of assets in the following cases:

a) When closing the accounting books to prepare the annual financial report;

b) After natural disasters, enemy attacks, or any other cause causing asset fluctuations;

c) As decided by the competent state agency or the owner of the capital.

2. The Exchange shall revalue assets in the following cases:

a) Pursuant to the decision of a competent state agency;

b) Implementing ownership transfer;

c) Using assets for external investments.

3. The inventory and revaluation of assets must comply with the State's regulations. Any increases or decreases in value due to revaluation of assets shall be handled according to the State's regulations for each specific case.

Article 14. Handling Asset Losses

When suffering asset losses, the Exchange must determine the value of the lost assets, the causes, responsibilities, and handle them as follows:

1. If caused by subjective reasons, the person responsible for the loss must compensate. The Board of Directors or the General Director of the Exchange shall decide the amount of compensation in accordance with the law and bear responsibility for their decisions.

2. If the asset was insured, it shall be handled according to the insurance contract.

3. The value of the loss after being compensated by personal or collective compensation from the insurance organization and using the reserve established in expenses, if insufficient, shall be covered by the Exchange's financial reserve fund. In the event that the financial reserve fund is insufficient to cover the shortfall, the deficit shall be recorded as other expenses in the period.

III. MANAGEMENT OF REVENUE AND EXPENSES

Article 15. Revenue

Revenue and income of the Exchange is the total amount of money already received or expected to be received by the Exchange during the period from providing services, financial activities, and other activities in accordance with the accounting standards for revenue recognition issued by the State; including:

1. Business Activity Revenue

a) Transaction fees, member fees, and management fees for transaction members;

b) Listing fees and management fees for listed securities;

c) Fees for using terminal equipment;

d) Other fees

e) Revenue from service provision activities: information provision services; auction organizing services; rental services for assets, equipment, software; other service provision revenues.

f) Other business activity revenue.

The levels of fees mentioned in sub-item a, sub-item b, and sub-item c shall be implemented according to the regulations of the Ministry of Finance; the level of service provision activities mentioned in sub-item d shall be stipulated by the General Director of the Trading Center after approval by the Board of Directors.

2. Financial income: interest income from deposits, foreign exchange rate differential income, investment activity interest income, distributed profits, and other financial activity income.

3. Other income

a) Income from the sale and liquidation of fixed assets of the Trading Center;

b) Insurance compensation for asset losses; income from irrecoverable receivables that have been processed;

c) Other income.

Article 16. Cost

The operating expenses of the Trading Center include all expenses incurred related to the business operations of the Trading Center during the period, including:

1. Business operation costs:

a) Securities trading operation costs: operational costs, maintenance, and upkeep of the trading system; equipment maintenance costs; transmission rental costs; equipment and asset rental costs;

b) Costs associated with listing and managing listed securities;

c) Training expert costs, hiring expert costs for market operations;

d) Market management and supervision costs of the Trading Center;

đ) Information provision activity costs (printing, publishing, raw material costs...); property rental costs;

e) Advertising, publicity, and knowledge dissemination costs to the public;

f) Labor costs directly serving business operations;

g) Depreciation costs of fixed assets used for business operations;

h) Other costs for business operations.

2. Financial activity costs: include costs related to external investments: interest payment costs; capital raising costs, investment activity costs, foreign exchange rate differentials; other financial costs.

3. Corporate management costs

a) Depreciation costs of fixed assets used for management purposes;

b) Tool and equipment costs; raw material, fuel, and material costs;

c) Wages, salaries, meal allowances, and other wage-like payments to employees as prescribed for state-owned enterprises;

d) Scientific research, innovation, health, labor training, and management capacity enhancement costs;

đ) Outsourced service costs: electricity, water, telephone, fixed asset repair costs; auditing, legal services; asset insurance, personal accident insurance; technical document usage fees, patent fees, technical service fees; overtime pay; transportation, office supply costs; fire prevention and firefighting, travel expense costs, holiday travel allowance costs as prescribed, meeting and conference costs; other outsourced service costs;

e) Health examination organization costs; costs for female workers as prescribed; labor protection costs as prescribed by the Labor Code; trading attire costs. Costs for agency security work; environmental protection costs;

f) Social insurance, health insurance, trade union fee contributions; support costs for Party and mass organizations' activities at the Trading Center, association and industry membership fee payments; contributions for market activity supervision costs to the State Securities Commission for transaction fees, member fees, transaction member management fees, listing fees, listed securities management fees, terminal equipment usage fees as prescribed by the competent authority (if applicable);

g) Transaction, hospitality, marketing, ceremonial event costs, brokerage commission costs;

h) Various taxes, fees, and land lease payments related to the Trading Center's business operations (excluding corporate income tax);

i) Severance and unemployment assistance costs for employees as prescribed; cost provisions as prescribed;

k) Cost provisions for a compensation fund for trading members in cases where the Trading Center causes damage to trading members, except in cases of force majeure. The Trading Center’s General Director reports to the Board of Directors to issue the Management and Usage Regulations for this Fund;

The annual contribution to the fund shall be 5% of the Trading Center's annual fee revenue until the fund balance equals 5% of the Trading Center's registered capital at the same time. If unused in the fiscal year, the fund will be carried over to the next year for continued use;

l) Other management costs.

4. Other costs

a) Costs of selling and liquidating fixed assets;

b) Depreciation costs of idle, unnecessary fixed assets awaiting liquidation;

c) Penalty costs due to economic contract violations;

d) Loss processing costs remaining after compensation from other sources as stipulated in Clause 3, Article 14 of this Regulation;

đ) Other costs.

The costs specified in Clauses 1, 2, 3, and 4 of this Article shall be implemented according to the regulations applicable to state-owned enterprises. In cases not covered by laws, the Trading Center shall establish standards and norms for implementation.

Article 17. The Trading Center shall not account for costs already covered by other sources or unrelated to the following activities as operating expenses:

1. Costs for purchasing, constructing, and installing tangible and intangible fixed assets.

2. Interest costs on investment loans included in investment and construction costs, and foreign currency exchange rate differences of investments and constructions arising before the project is put into use.

3. Other costs unrelated to the Trading Center's operations, costs without valid documentation.

4. Penalties for legal violations caused by individuals not acting in the name of the Trading Center.

Article 18. The Trading Center shall conduct accounting for revenues and expenses in accordance with prescribed regulations and bear legal responsibility for the legality, validity, and accuracy of all income and expenditure items, and comply with the regulations on invoice and accounting voucher systems.

1. Economic activities must be reflected in accounting books and reports in Vietnamese Dong.

2. In cases where economic activities occur in foreign currencies, they must be converted into Vietnamese Dong according to the prescribed regulations.

IV. PROFIT AND ESTABLISHMENT OF FUNDS

Article 19. Realized Profit

The realized profit for the year is the total of business operation profits, financial activity profits, and other activity profits. Profit is the difference determined between total revenue receivable minus total reasonable and valid expenses.

Article 20. Distribution of Profit

After paying corporate income tax according to the Corporate Income Tax Law and covering previous years' losses that cannot be deducted from pre-tax profit, the Trading Center's realized profit shall be distributed as follows:

1. Allocate 10% to the financial reserve fund; the maximum balance of the financial reserve fund shall not exceed 25% of the Trading Center’s registered capital.

2. The remaining profit, after deducting the amounts specified in Clause 1 of this Article, shall be used for:

a) Allocating up to 10% to establish a bonus fund and 10% to establish a welfare fund, but the maximum allocation for both the bonus and welfare funds combined shall not exceed three months' actual salary;

b) Allocating up to 5% to establish a bonus fund for the Management Board and Executive Board of the Trading Center. The Management Board and Executive Board include the Board of Directors and the General Director (Chief Executive Officer and Deputy Chief Executive Officers). The annual allocation for this fund shall not exceed 300 million Vietnamese Dong;

d) The remaining profit shall be allocated to establish a development investment fund.

Article 21. Purpose of Using Funds

1. The development investment fund is used to supplement registered capital and invest in developing the trading system for the Trading Center.

2. The financial reserve fund is used to cover the remaining losses and damages to assets after compensations have been made by organizations or individuals causing the loss, insurance organizations, and using reserves established within expenses; covering losses (if any) as decided by the Board of Directors.

3. The Reward Fund is used for:

a) Year-end or regular bonuses for staff members of the Trading Center based on their labor productivity and work performance. The bonus amount is decided by the Board of Directors of the Trading Center upon the proposal of the General Director and the Trade Union of the Trading Center;

b) Special bonuses for individuals or groups within the Trading Center who have innovative ideas improving technical processes or business procedures leading to efficiency in business operations. The bonus amount is decided by the Board of Directors or delegated to the General Director to decide;

c) Bonuses for individuals or units outside the Trading Center who contribute effectively to business operations or management tasks of the Trading Center. The bonus amount is decided by the Board of Directors or delegated to the General Director to decide.

4. The Welfare Fund is used for:

a) Investing in constructing or repairing welfare facilities of the Trading Center, contributing capital to construct common welfare facilities within the industry or with other units according to agreed contracts;

b) Expenditure on sports, cultural, and public welfare activities for the staff collective of the Trading Center;

c) Providing regular or special hardship allowances to staff members of the Trading Center;

d) Expenditure on other welfare activities;

The use of the welfare fund is decided by the Board of Directors based on the proposal of the General Director of the Trading Center after consulting the Trade Union of the Trading Center.

5. The bonus fund for the Management Board and Executive Board is used to reward the Board of Directors and the General Director Board of the Trading Center. The bonus amount is decided by the Board of Directors based on the proposal of the Chairman of the Board of Directors, linked to the Trading Center's operational results.

V. ACCOUNTING SYSTEM, AUDITING, FINANCIAL PLANNING

Article 22. Accounting and Statistics

1. The Trading Center implements the accounting and statistical system as prescribed by the Minister of Finance, recording complete original vouchers, updating accounting books, and accurately, truthfully, and objectively reflecting all financial activities in a timely manner.

2. The fiscal year of the Trading Center begins on January 1 and ends on December 31 of each calendar year.

Article 23. Financial Reports

The Trading Center must prepare and submit financial reports and statistical reports to the Ministry of Finance and relevant state management agencies as stipulated. The Board of Directors and General Director of the Trading Center are responsible for the accuracy and truthfulness of the financial reports.

Article 24. Annual Financial Plan

The annual financial plan must be approved by the Board of Directors and submitted to the Ministry of Finance before November 15 of the preceding year, including:

a) Capital sources and capital utilization plans;

b) Revenue and expense plans, business results;

c) Labor and wage plans;

d) Investment and fixed asset procurement plans.

Article 25. Auditing and Publicizing Financial Reports

1. Annually, the Trading Center must audit its financial reports. The auditing is conducted by an independent auditing company listed among those approved for the securities sector.

2. The auditing of the Trading Center's financial reports is carried out in accordance with current laws on accounting and auditing. The results of the auditing of the Trading Center's financial reports are sent to the Ministry of Finance.

3. Within 120 days from the end of the fiscal year, the Trading Center must publicly disclose its financial reports as required by law.

VI. IMPLEMENTATION

Article 26. The Board of Directors and General Director of the Trading Center are responsible for organizing the implementation of financial management systems as stipulated in this Regulation and other laws applicable to state-owned enterprises.

To ensure organizational stability, during the entire year 2007, the Trading Center will continue to implement the salary system of self-financing public institutions as before the transition to the Trading Center model; starting from 2008, it will implement the state-owned enterprise salary mechanism according to the guidelines of the Ministry of Labor, Invalids, and Social Affairs.

Specifically, ongoing investment projects funded by the State budget will continue to be implemented under the current mechanism and specific guidelines provided by the Ministry of Finance.

During the implementation process, if there are difficulties or obstacles, the Securities Commission shall promptly report to the Ministry of Finance for consideration and specific guidance./.