Decree No. 48/1998/ND-CP on securities and the securities market

DECREE OF THE GOVERNMENT

VSecurities and the securities market

 

THE GOVERNMENT

Pursuant to the Law on the Organization of the Government dated September 30, 1992;

To create a favorable environment for the issuance and trading of securities, to encourage the mobilization of long-term domestic and foreign capital sources, to ensure that the securities market operates in an organized, safe, transparent, fair, and efficient manner, and to protect the legitimate rights of investors;

AMENDMENTS AND SUPPLEMENTS TO CERTAIN ARTICLES OF THE REGULATIONS ON SECURITIES REGISTRATION, SAFEKEEPING, NETTING, AND SETTLEMENT ISSUED TOGETHER WITH DECISION NO. 60/2004/QD-BTC DATED JULY 15, 2004 OF THE MINISTER OF FINANCE ARE AS FOLLOWS:

 

DECREE:

PART I
GENERAL PROVISIONS

Article 1. Scope of application

This Decree stipulates the issuance of securities to the public, securities transactions, and related services in the securities market on the territory of the Socialist Republic of Vietnam.

Article 2. Explanation of terms

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

1. Securities are certificates or book entries confirming the lawful rights and interests of the securities holder in the assets or capital of the issuer. Securities include:

a) Shares;

b) Bonds;

c) Investment fund certificates;

d) Other types of securities.

2. Issuing securities to the public means offering transferable securities under the conditions specified in Clause 5, Article 6; Clause 2, Article 8 of this Decree.

3. The issuer is a legal entity issuing securities to the public in accordance with the provisions of this Decree.

4. A prospectus is a statement by the issuer providing information about its financial situation, business operations, and plans for using the proceeds from the issuance, to help the public evaluate and make decisions to purchase securities.

5. Listing securities means allowing securities meeting certain criteria to be traded on the centralized trading market.

6. Securities brokerage is the intermediary or representative activity of buying and selling securities for clients to earn commission.

7. Proprietary trading is the activity of a securities company buying and selling securities for itself.

8. Distributing securities is the sale of securities through agents or underwriting based on contracts.

9. Underwriting securities is the activity of an organization providing guarantees to assist the issuer in completing procedures before offering securities, purchasing securities from the issuer to resell, or purchasing remaining unsold securities.

10. Securities transactions are the buying and selling of securities on the centralized trading market.

11. Securities investment advisory services involve analyzing and recommending actions related to securities, or publishing and distributing analytical reports related to securities.

12. Portfolio management involves managing a client's capital through the purchase, sale, and holding of securities for the client's benefit.

13. A securities company is a joint-stock company or limited liability company permitted to engage in one or more types of securities business.

14. Available capital is cash and liquid assets capable of being converted into cash within a specific period.

15. A securities investment fund is a fund formed from the contributions of investors entrusted to a fund management company to manage and invest at least 60% of the fund's asset value in securities.

16. Depositing securities is the act of holding and preserving securities for customers and assisting customers in exercising their rights over securities.

17. Registering securities is recording ownership rights, other rights, and obligations related to the holder of securities through a system of information stored in securities deposit accounts.

18. A securities deposit account is an account used to record the deposit, withdrawal, or transfer of securities; recording the delivery and receipt of securities.

19. The centralized trading market is a location or information system where securities are bought and sold, or it serves as a reference point for executing securities transactions.

20. Related parties are individuals or organizations related to each other in the following cases:

a) Parent companies and subsidiaries (if any);

b) Companies and their managers;

c) Groups of people who have agreed by contract to cooperate in acquiring a company or influencing its decision-making process;

d) Parents, spouses, children, and full siblings.

21. Securities professionals are individuals licensed by the State Securities Commission to participate in securities business activities.

22. Investors are those who own securities, or who buy or intend to buy securities for themselves.

23. Securities holders are individuals or organizations currently controlling securities. Holders may be the owners of the securities or representatives of the owners.

24. Bondholders' representative is a legal entity authorized to hold bonds and represent the interests of bondholders.

25. Minority shareholders are those holding less than 1% of voting shares of the issuer.

26. Major shareholders are those holding 5% or more of voting shares of the issuer.

 

PART II
ISSUING SECURITIES TO THE PUBLIC

Article 3. Issuance of securities

1. Issuing securities to the public for listing on the centralized trading market must be approved by the State Securities Commission, except for the issuance of government bonds.

2. Issuing securities outside the scope specified in Clause 1 of this Article shall be carried out in accordance with current regulations.

Article 4. Form and face value of securities

1. Securities issued to the public can be registered or bearer, in the form of certificates or book entries.

2. Securities issued must be denominated in Vietnamese Dong.

3. The face value of shares and investment fund certificates is uniformly set at 10,000 Vietnamese Dong, while the minimum face value of bonds is 100,000 Vietnamese Dong.

Article 5. Distribution of securities

Securities issued to the public must be distributed through agency or underwriting methods.

Article 6. Conditions for Initial Public Offering of Shares

The issuer must meet the following conditions when issuing shares to the public for the first time:

1. The minimum charter capital is 10 billion Vietnamese dong;

2. Profitable operations for at least two consecutive years;

3. Board members and General Manager (Managing Director) have business management experience;

4. There is a feasible plan for using funds raised from the share issuance;

5. At least 20% of the issuer's equity must be sold to more than 100 investors outside the issuer; if the issuer's equity is 100 billion dong or more, this minimum ratio is 15% of the issuer's equity;

6. Founding shareholders must hold at least 20% of the issuer's equity and maintain this level for at least three years from the end date of the issuance;

7. If the total par value of issued shares exceeds 10 billion dong, there must be a guarantor for the issuance.

Article 7. Conditions for Additional Share Issuance

When the issuer issues additional shares to the public to increase capital, in addition to meeting the provisions set out in Clauses 1, 2, 3, 4, 5, and 7 of Article 6 of this Decree, it must also meet the following conditions:

1. The additional issuance must be at least one year after the previous issuance;

2. The value of the additional issued shares must not exceed the total value of the shares currently in circulation.

Article 8. Conditions for Bond Issuance

The issuer must meet the following conditions when issuing bonds to the public:

1. Comply with the provisions set out in Clauses 1, 2, 3, and 4 of Article 6 of this Decree;

2. At least 20% of the total value of the requested bond issuance must be sold to more than 100 investors; if the total value of the requested bond issuance is 100 billion dong or more, this minimum ratio is 15% of the total bond value;

3. There must be a guarantor for the issuance, except in cases where the issuer is a credit institution;

4. Commitment to fulfill obligations to investors;

5. Appoint a representative for bondholders.

Article 9. Application Documents for Issuance Permit

1. The application documents for obtaining a permit to issue shares to the public include:

a) Application for permission to issue;

b) Business Registration Certificate;

c) Company Charter;

d) Shareholders' Meeting Resolution on the issuance of shares;

e) Prospectus;

g) List of Board members and General Manager (Managing Director);

h) Financial statements for the last two consecutive years, certified by an approved auditing organization;

i) Enterprise valuation report by the competent authority, if it is a state-owned enterprise undergoing privatization;

k) Guarantee issuance commitment (if applicable).

2. The application documents for obtaining a permit to issue bonds to the public include:

a) The documents specified in Points a, b, c, e, g, h, and i of Clause 1 of this Article;

b) Board of Directors Resolution;

c) Guarantee issuance commitment of the guarantor;

d) Commitment to fulfill obligations of the bond issuer;

e) Contract between the bond issuer and the representative of bondholders.

Article 10. Conditions for Guarantee Issuance

1. The guarantor for the public issuance of securities must be a securities company that meets the following conditions:

a) Has a license for guarantee issuance activities;

b) Is not related to the issuer.

2. The guarantor may only guarantee the issuance of a total value of securities not exceeding four times the difference between current assets and short-term liabilities of the guarantor.

Article 11. Procedures and Time Limit for Issuance Permit

The application documents for obtaining a permit to issue securities to the public shall be submitted to the State Securities Commission. Within 45 days from the date of receipt of complete issuance permit application documents, the State Securities Commission shall grant or refuse to grant the permit. In case of refusal, the State Securities Commission must provide a clear explanation in writing.

Article 12. Use of Information Before Issuance Permission

During the period when the State Securities Commission is reviewing the issuance permit application documents, the issuer, the guarantor, and related parties may only use the information truthfully and accurately in the prospectus submitted to the State Securities Commission to conduct market surveys.

Article 13. Announcement of Issuance

Within five days from the date of receipt of the issuance permit, the issuer has the obligation to announce the issuance in five consecutive issues of a central newspaper and a local newspaper where the issuer's headquarters is located. The issuer, guarantor, or representative may only use the information in the issuance permit application documents approved by the State Securities Commission for issuance.

Article 14. Offering Period

The issuer must issue securities according to the approved plan within 90 days from the effective date of the issuance permit. Beyond this period, all unsold securities cannot be further issued to the public.

Article 15. Suspension of Issuance

1. The issuance permit holder will be suspended from issuance if the State Securities Commission discovers discrepancies or inaccurate information in the prospectus that could affect investment decisions and cause damage to investors. The issuer must amend and supplement according to the requirements of the State Securities Commission and publicly announce these amendments.

2. In the event of suspension of issuance, investors have the right to cancel their purchase orders for securities or return securities already purchased; in this case, the issuer and related organizations must refund the money to buyers within 30 days from the date of issuance suspension.

Article 16. Revocation of Issuance Permit

1. The issuance permit will be revoked in the following cases:

a) The deficiencies mentioned in Clause 1 of Article 15 are not corrected and supplemented according to the prescribed procedures and deadlines;

b) Not meeting the conditions stipulated in Clause 5 of Article 6; Clause 2 of Article 8 of this Decree.

2. In the event of revocation of the issuance permit, the issuer must immediately inform the security investors; if investors request, the issuer must recall the issued securities and refund the money to investors within 30 days from the date of permit revocation.

Article 17. Issuance license fee

The issuer must pay to the State Securities Commission an issuance license fee equal to 0.02% of the total issuance value but not exceeding 50 million VND.

Article 18. Reporting System

1. Within ten days after the end of the issuance period, the issuer must report to the State Securities Commission on the results of the issuance.

2. The issuer must comply with periodic reporting requirements regarding financial status and business operations as prescribed by law and by the State Securities Commission.

3. The issuer must promptly report to the State Securities Commission and publicly disclose information that may affect the price of its securities.

4. In cases where necessary to protect investors' rights, the State Securities Commission has the authority to require the issuer to report on its business operations.

5. Financial reports of the issuer must comply with national laws on accounting and auditing. Where an issuer holds fifty percent or more of another organization's share capital, such financial reports must include the financial reports of the organization holding shares.

Article 19. Protection of investor rights

The Board of Directors and General Director (Chief Executive Officer) of the issuer have the responsibility to protect the interests of all shareholders and investors, and must:

1. Clearly disclose information about voting rights, rights to subscribe for securities, rights to convert securities, and other rights for all shareholders;

2. Establish and implement rules for public disclosure regarding share ownership by directors, managers, major shareholders, and related parties concerning the issuer's securities;

3. Comply with the provisions of Chapter VIII of this Decree.

 

CHAPTER III
CONCENTRATED TRADING MARKET

Article 20. Market organization form

The concentrated trading market is organized progressively from the Securities Trading Center to the Stock Exchange.

The Securities Trading Center and Stock Exchange are established by decision of the Prime Minister.

Article 21. Securities Trading Center

1. The Securities Trading Center is a service entity with revenue, subordinate to the State Securities Commission, having legal personality, office, seal, and separate accounts; the operating budget of the Securities Trading Center is provided by the State Budget.

2. The Securities Trading Center has the function of managing, directing, and supervising securities trading activities at the Center.

3. The Prime Minister authorizes the Chairman of the State Securities Commission to appoint and dismiss the Director of the Securities Trading Center, and to issue regulations governing the organization and operation of the Securities Trading Center.

Article 22. Securities Trading

1. Securities issued in accordance with Articles 6, 7, 8, and 50 of this Decree and government bonds may be traded at the Securities Trading Center.

2. Securities trading at the Securities Trading Center shall be conducted according to the trading regulations of the Securities Trading Center.

3. Only members of the Securities Trading Center may buy and sell securities through the trading system at the Securities Trading Center.

4. The Securities Trading Center shall handle registration, settlement, and custody of securities traded at the Securities Trading Center.

Article 23. Stock Exchange

1. The Stock Exchange is a financially independent legal entity subject to supervision and management by the State Securities Commission.

2. The Stock Exchange has a Board of Directors consisting of nine members: one Chairman, two Vice Chairmen, one of whom also serves as the General Manager; two members representing securities companies; two members representing the public; two members representing the Government.

3. The Chairman and Vice Chairmen of the Board of Directors, the General Manager, and Government representatives are appointed and dismissed by the Prime Minister upon recommendation of the Chairman of the State Securities Commission. Securities company representatives and public representatives are selected and appointed and dismissed by the Chairman of the State Securities Commission.

4. Only member securities companies of the Stock Exchange may trade securities at the Stock Exchange.

Article 24. Duties and powers of the Securities Trading Center and Stock Exchange

The Securities Trading Center and Stock Exchange have the following main duties and powers:

1. Organizing, managing, and directing securities trading;

2. Managing and directing the securities trading system;

3. Providing services to support securities buying and selling; securities custody services;

4. Implementing securities registration;

5. Implementing settlement for securities transactions;

6. Publicly disclosing information on securities trading activities;

7. Inspecting and supervising securities trading activities;

8. Collecting listing fees, membership fees, transaction fees, information service fees, and other service fees as prescribed by law;

9. Implementing reporting, statistical, accounting, and auditing systems as prescribed by the state.

Article 25. Members of the Securities Trading Center and Stock Exchange

1. Securities companies with brokerage and proprietary trading licenses may register as members of the Securities Trading Center and Stock Exchange (hereinafter referred to as members).

2. Members must appoint representatives to conduct transactions at the Securities Trading Center and Stock Exchange.

3. Members may not buy or sell securities outside the Securities Trading Center and Stock Exchange.

Article 26. Rights and obligations of members of the Securities Trading Center and Stock Exchange

Members of the Securities Trading Center and Stock Exchange have the following rights and obligations:

1. Comply with regulations on securities business operations of the Securities Trading Center and Stock Exchange;

2. Be subject to inspection and supervision by the Securities Trading Center and Stock Exchange;

3. Pay membership fees, transaction fees, contributions to the settlement support fund, and other service fees as prescribed by law;

4. Report to the Securities Trading Center, the Stock Exchange on the operational situation, financial status, and significant events affecting its operations and the interests of investors as prescribed by the State Securities Commission;

5. Promptly report to the Securities Trading Center, the Stock Exchange upon discovering any violations of laws related to securities and the securities market;

6. Utilize the trading system and services provided by the Securities Trading Center, the Stock Exchange;

7. Charge fees for providing services to customers in accordance with the law;

8. Be permitted to withdraw from membership after approval by the Securities Trading Center, the Stock Exchange;

Article 27. Settlement Fund

1. The Securities Trading Center, the Stock Exchange shall establish a Settlement Fund to settle transactions on behalf of members when they temporarily lack the ability to settle transactions. This fund shall be contributed by members in accordance with regulations set forth by the State Securities Commission.

2. The scope, extent, and method of settlement support shall be stipulated by the State Securities Commission.

3. The assets of the Settlement Fund must be separate from the assets of the Securities Trading Center, the Stock Exchange.

Article 28. Financial System

The Securities Trading Center implements the financial regime of a public service entity with revenue and may establish funds as prescribed by the Government.

 

PART IV
a. A document from the Chairman of the Board of Directors requesting the Governor of the State Bank to approve the establishment of a securities company;

Article 29. Objectives and Content of Operating Licenses

1. A securities company must be a joint-stock company or a limited liability company that meets the conditions specified in Article 30 of this Decree; financial institutions, insurance companies, or holding companies wishing to engage in securities business must establish an independent securities company. The State Securities Commission issues operating licenses to securities companies.

2. Securities companies may conduct one or more of the following types of business:

a) Brokerage;

b) Proprietary trading;

c) Portfolio management;

d) Underwriting;

e) Securities investment advisory.

Article 30. Conditions for Issuing Operating Licenses

Companies granted operating licenses for securities business must meet the following conditions:

1. Have a business operation plan consistent with economic and social development goals and the development of the securities industry;

2. Possess adequate physical and technical facilities for conducting securities business;

3. Have the statutory capital according to each type of business as follows:

a) Brokerage 3 billion VND

b) Proprietary trading 12 billion VND

c) Portfolio management 3 billion VND

d) Underwriting 22 billion VND

e) Securities investment advisory 3 billion VND

In cases where a securities company applies for licenses for multiple types of business, the statutory capital is the total statutory capital of the types of business for which the securities company is licensed;

4. The General Director (Managing Director), business personnel (excluding accounting, administrative clerical, and cashier staff) of securities companies must hold a securities business practice license issued by the State Securities Commission.

Article 31. Application Documents for Operating Licenses

Application documents for operating licenses for securities business include:

1. Application for a license;

2. Company establishment permit (if applicable);

3. Company charter;

4. Valid documents proving that the company meets the conditions specified in Article 30 of this Decree;

5. Estimated capital for business operations in the first 12 months of activity.

Article 32. Procedures and Fees for Issuing Operating Licenses

1. Applications for operating licenses for securities business are submitted to the State Securities Commission. Within 90 days from the date of receipt of complete application documents for operating licenses for securities business, the State Securities Commission will issue or refuse to issue a license. If refusing to issue a license, the State Securities Commission must provide a clear explanation in writing.

2. Securities companies must pay a licensing fee equal to 0.2% of the statutory capital.

Article 33. Amendments and Supplements to Operating Licenses

1. Securities companies already granted operating licenses for securities business wishing to supplement or change their securities business activities, merge, or split the company must go through procedures to reapply for or obtain supplementary licenses.

2. Changes in headquarters, company name, opening or closing branches, changes in General Director (Managing Director) or Deputy Managing Director of securities companies, and other changes must be reported and approved by the State Securities Commission.

Article 34. Publicizing Operating Licenses

Before commencing operations, securities companies must publish notices in accordance with the law and display their operating licenses at all locations where the company conducts business.

Article 35. Available Capital of Securities Companies

Securities companies engaged in brokerage and proprietary trading must maintain a minimum available capital of 8% of total debt continuously. The State Securities Commission specifies the methods for determining available capital.

Article 36. Establishment of Supplementary Capital Reserve Funds

Securities companies must allocate annual net profits to supplement the registered capital in accordance with the law.

Article 37. Reporting System

1. Securities companies must comply with periodic reporting requirements as prescribed by law and guidelines from the State Securities Commission. The balance sheet and annual performance report must be audited.

2. When extraordinary events occur that could significantly impact financial capability and business operations, securities companies must report to the State Securities Commission.

3. Securities companies must preserve and retain transaction contracts and documents for the duration required by law.

Article 38. Rights and Obligations of Securities Companies

Securities companies have the following rights and obligations:

1. Enter into written contracts with clients regarding securities buying and selling, portfolio management, underwriting, and securities custody services;

2. Must collect comprehensive information about clients' financial situations and investment objectives;

3. Manage clients' securities assets separately from the company's own securities assets;

4. May only accept client trading orders at the company's headquarters;

5. Prioritize executing client buy or sell orders before those of the company;

6. Protect client information confidentiality.

7. Charging for service provision. The level of fees shall be determined by the State Securities Commission after consultation with the Ministry of Finance;

8. Implement accounting and financial regulations as prescribed by law;

9. Comply with other securities trading regulations issued by the State Securities Commission.

Article 39. Suspension of operations and revocation of license

1. A securities company may be suspended from conducting securities business for up to sixty days in the following cases:

a) Ceasing securities business operations without prior written approval from the State Securities Commission;

b) Violating the provisions of Articles 35, 36, 37, and 38 of this Decree.

2. A securities company's license may be revoked in the following cases:

a) After the suspension period specified in Clause 1 of this Article has expired, it still fails to rectify the violation;

b) Not commencing operations within twelve months from the date of obtaining the license;

c) Voluntarily requesting to terminate securities business operations, dissolution, or bankruptcy;

d) No longer meeting the conditions for obtaining a securities business operation license as stipulated in Article 30 of this Decree;

e) Violating the provisions of Articles 69, 70, 71, 72, and 73 of this Decree.

3. A securities company that is suspended or has its license revoked must complete all transactions and fulfill previously committed contracts. The State Securities Commission may designate another securities company to complete the transactions and contracts of the suspended or license-revoked company; in such case, a de facto agency relationship is established between the two companies.

Article 40. Conditions for Issuing a Business License

An individual applying for a business license for securities trading must meet the following conditions:

1. Having full legal capacity and civil conduct capacity;

2. Meeting ethical standards and professional qualifications;

3. Possessing sufficient professional certificates in securities issued by the State Securities Commission.

Article 41. Procedures and Fees for Issuing a Business License

1. The application dossier for a business license for securities trading shall be regulated by the State Securities Commission.

2. The time limit for responding to applications for issuing or refusing a business license for securities trading is thirty days, counted from the date of receipt of a complete and valid dossier.

3. The fee for issuing a business license shall be regulated by the State Securities Commission.

Article 42. Restrictions on Securities Trading Professionals

Securities trading professionals are prohibited from:

1. Working or investing capital in two or more securities companies simultaneously;

2. Serving as director, member of the Board of Directors, or shareholder owning more than five percent of voting shares in an issuer organization;

3. Lending their securities trading business license.

Article 43. Revocation of Business License

A securities trading professional's business license may be revoked in the following cases:

1. No longer meeting the conditions for issuing a securities trading business license as stipulated in Article 40 of this Decree;

2. Violating the provisions of Articles 42, 69, 70, 71, 72, and 73 of this Decree.

 

CHAPTER V
SECURITIES INVESTMENT FUNDS AND FUND MANAGEMENT COMPANIES

Article 44. Participants

1. Participants in the activities of a securities investment fund include the fund management company, supervisory bank, and investors.

2. The fund management company manages the securities investment fund.

3. The supervisory bank performs custody and registration of the fund's assets and monitors the fund management company to protect the interests of investors.

4. Investors contribute capital to the securities investment fund and benefit from the fund's investments.

Article 45. Fund Management Company

1. A fund management company must obtain a business license from the State Securities Commission.

2. To obtain a business license for a fund management company, it must:

a) Be a joint-stock company or limited liability company established in accordance with the law, with a minimum statutory capital of five billion VND;

b) Have a team of staff trained in securities, with facilities and technical capabilities to ensure compliance with the fund management activities as prescribed by the State Securities Commission;

c) Have managers of the fund management company and fund managers who have been granted a securities trading business license by the State Securities Commission.

3. The application dossier for a business license for a fund management company includes:

a) Application form for permit issuance;

b) Certificate of establishment of the company (if applicable);

c) Company Charter;

d) Other documents as prescribed by the State Securities Commission.

Article 46. Procedures and Time Limit for Issuing a Business License for a Fund Management Company

The application dossier for a business license for a fund management company shall be submitted to the State Securities Commission. Within ninety days from the date of receipt of a complete application dossier for a business license for a fund management company, the State Securities Commission shall issue or refuse the license. In case of refusal, the State Securities Commission must provide a written explanation of the reasons.

Article 47. Rights and Obligations of Fund Management Companies

A fund management company has the following rights and obligations:

1. Apply for permission to establish, dissolve a securities investment fund;

2. Select and implement the investment objectives of the securities investment fund;

3. Pay dividends and interest from the fund's assets to investors;

4. May manage one or more securities investment funds;

5. Conduct securities investment advisory activities when permitted by the State Securities Commission;

6. Engage in other activities for the benefit of investors;

7. Receive fees and bonuses as stipulated in the fund's charter.

Article 48. Restrictions on Activities of a Fund Management Company

1. A fund management company may only invest the securities investment fund's capital in securities or other assets consistent with the fund's charter.

2. A fund management company is not allowed to use the capital and assets of a securities investment fund to invest more than fifteen percent of the total value of circulating securities of an issuer, and may not invest more than ten percent of the total value of a securities investment fund's assets in circulating securities of an issuer.

3. A fund management company is not allowed to use the capital and assets of all securities investment funds under its management to invest more than forty-nine percent of the total value of circulating securities of an issuer.

4. The fund management company shall not be permitted to use the capital and assets of the securities investment fund to lend or guarantee any loan, nor shall it be permitted to borrow to finance the fund, except for short-term borrowing to cover necessary expenses.

5. The fund management company must comply with other restrictions prescribed by law to ensure the interests of investors and issuers of securities.

Article 49. Issuance and Revocation of Business License

The issuance and revocation of business licenses for managing companies and investment funds shall be carried out in accordance with Articles 40, 41, 42, and 43 of this Decree.

Article 50. Application for Fund Establishment Permit

To establish a fund and issue fund certificates, the fund management company must submit an application for permission to the State Securities Commission, including:

1. Application for permission;

2. Charter of the fund;

3. Management and supervision contract of the fund;

4. Prospectus.

Article 51. Procedures and Time Limit for Issuing Fund Establishment Permit

The application for establishing a securities investment fund shall be submitted to the State Securities Commission. Within 45 days from the date of receipt of the complete application for establishing a securities investment fund, the State Securities Commission shall issue or refuse to issue the permit. In case of refusal to issue the permit, the State Securities Commission must provide a clear explanation in writing.

Article 52. Fees to be Paid

The fund management company must pay the following fees to the State Securities Commission:

1. A fee for issuing the operating license of the fund management company equal to 0.2% of the statutory capital.

2. A fee for issuing the establishment permit of a securities investment fund equal to 0.02% of the total value of issued certificates, but not exceeding 50 million dong.

Article 53. Issuance of Fund Investment Certificates

The issuance of fund investment certificates shall be carried out in accordance with Articles 12 and 13 of this Decree.

Article 54. Suspension of Issuance of Fund Investment Certificates and Revocation of Fund Establishment Permit

The suspension of issuance of fund investment certificates shall be carried out in accordance with Article 15 of this Decree. The revocation of the permit to establish a securities investment fund shall be carried out in accordance with point a, clause 1 and clause 2 of Article 16 of this Decree.

Article 55. Conditions for Supervisory Banks

The supervisory bank must meet the following conditions:

1. Being granted a license for establishment and operation by the State Bank of Vietnam;

2. Being granted a license for securities custody operations by the State Securities Commission;

3. Being independent from the fund management company;

4. Not owning any assets of the securities investment fund.

Article 56. Responsibilities of Supervisory Banks

1. The supervisory bank has the responsibility to:

a) Safeguard the assets of the securities investment fund and must separate the assets of the securities investment fund from other assets;

b) Inspect, supervise, and ensure that the investment decisions of the fund management company comply with the law and the charter of the fund, protecting the rights of investors.

2. The supervisory bank is entitled to receive fees as stipulated in the fund's charter.

Article 57. Rights of Investors

Investors benefit from the investment activities of the securities investment fund but do not directly exercise rights and obligations towards the assets in the fund's investment portfolio.

Article 58. Financial Accounting System and Reporting

1. The fund management company must implement accounting and financial systems in accordance with the provisions of the law.

2. The fund management company and the supervisory bank must comply with reporting requirements as prescribed by the State Securities Commission.

Article 59. Suspension of operations and revocation of license

1. The fund management company may be suspended from operations for a maximum of 60 days in the following cases:

a) Ceasing operations without a legitimate reason and without written approval from the State Securities Commission;

b) Violating the provisions of Articles 48 and 58 of this Decree;

c) No longer meeting the conditions stipulated in Clause 2 of Article 45 of this Decree;

2. The fund management company will have its operating license revoked in the following cases:

a) After the suspension period expires, still failing to rectify violations;

b) Not commencing operations within twelve months from the date of obtaining the license;

c) Voluntarily ceasing operations, dissolving, or going bankrupt;

d) Violating the provisions of Articles 69, 70, 71, 72, and 73 of this Decree.

3. If the supervisory bank breaches commitments in the management and supervision contract, it will be handled according to Article 64 of this Decree.

 

Chapter VI
REGISTRATION, NETTING SETTLEMENT, AND SECURITIES DEPOSITORY

Article 60. Registration, Netting Settlement, and Depository

1. The registration, netting settlement, and depository of securities shall be carried out in accordance with the regulations of the State Securities Commission.

2. Before issuing securities to the public, the issuer must register the securities at the Stock Exchange Center or the Stock Exchange.

3. Securities issued before the effective date of this Decree wishing to be traded at the Stock Exchange Center or the Stock Exchange must re-register in accordance with the regulations of the State Securities Commission.

Article 61. Contents of Registration, Netting Settlement, and Depository Activities

The activities of registration, netting settlement, and depository of securities include:

1. Registration of securities;

2. Netting settlement of securities transactions;

3. Custody of security certificates;

4. Recording and bookkeeping of securities through opening securities depository accounts for customers;

5. Execution of securities transfer and settlement;

6. Other services authorized by customers holding deposited securities.

Article 62. Conditions for securities custody activities

1. An organization engaging in securities custody must be a bank or securities company that meets the capital, physical facilities, technical, and professional requirements as stipulated by the State Securities Commission and must be granted a securities custody operation license by the State Securities Commission.

2. An organization granted a securities custody operation license may participate in registration, settlement activities at the Securities Trading Center and the Stock Exchange.

Article 63. Responsibilities of the Ministry of Science and Technology Management of customer assets

1. Organizations engaged in securities custody, the Securities Trading Center, and the Stock Exchange must manage each customer's assets separately from their own assets.

2. Customer assets managed by organizations engaged in securities custody, the Securities Trading Center, and the Stock Exchange shall not be considered as their own assets and shall not be used to settle their debts.

Article 64. Suspension and revocation of securities custody operation licenses

1. A securities custody organization will be suspended from conducting securities custody operations if it violates the provisions set forth in Articles 56, 58, 60, 62, and 63 of this Decree.

2. A securities custody organization will have its securities custody operation license revoked if it has been suspended from conducting securities custody operations and fails to rectify the violations within the prescribed time limit.

Article 65. Registration, settlement, and custody fees

Types of fees related to registration, settlement, and securities custody activities shall be regulated by the State Securities Commission after consultation with the Ministry of Finance.

 

Chapter VII
PARTICIPATION OF FOREIGN ENTITIES

Article 66. General Principles

Foreign organizations and individuals participating in the purchase, sale, or business of securities in Vietnam must comply with the provisions of this Decree and Vietnamese laws.

Article 67. Investment and Joint Ventures

1. Foreign organizations and individuals are permitted to buy and sell securities on the Vietnamese securities market. Foreign securities companies wishing to conduct securities business in Vietnam must establish a joint venture with a Vietnamese partner pursuant to a license issued by the State Securities Commission.

2. The Prime Minister shall specify the holding ratios of foreign organizations and individuals in securities, and the contribution ratios of foreign organizations in joint ventures with Vietnamese partners.

3. Foreign investment funds wishing to invest in the Vietnamese securities market must obtain a license from the State Securities Commission after approval by the Prime Minister.

Article 68. Representative Office

Foreign securities companies establishing representative offices in Vietnam must obtain a license from the State Securities Commission.

 

Chapter VIII
PROHIBITED AND RESTRICTED ACTIVITIES

Article 69. Short Selling

All organizations and individuals are prohibited from selling securities in any form when they do not own such securities at the time of transaction.

Article 70. Insider Trading

The following organizations and individuals are prohibited from directly or indirectly buying or selling securities while the issuer has not publicly disclosed information that could affect the price of securities:

1. The issuer of securities and related parties;

2. Employees of the issuer of securities and related parties;

3. Major shareholders of the issuer of securities and related parties;

4. Auditors and related parties of the auditing firm designated to audit the issuer of securities;

5. Staff members of the State Securities Commission, the Securities Trading Center, the Stock Exchange, and related parties; staff members of other agencies who have access to internal information.

Article 71. False Information

1. Organizations and individuals are prohibited from publishing or disseminating false information.

2. During the period when the State Securities Commission is reviewing the application for permission to issue securities, the issuer, the guarantor of issuance, and related parties are not allowed to advertise, offer for sale, or engage in promotional activities that mislead investors about the securities intended for issuance.

Article 72. Participation in Credit and Securities Lending Activities

Securities companies and securities practitioners are not allowed to engage in credit and securities lending activities.

Article 73. Market Manipulation

Organizations and individuals are prohibited from directly or indirectly engaging in the following activities:

1. Colluding with others to buy or sell a type of security in order to create artificial supply and demand;

2. Conducting transactions without transferring ownership of the securities;

3. Continuously buying securities at high prices or continuously selling securities at low prices;

4. Buying and reselling their own securities without the permission of the State Securities Commission, if they are issuers.

Article 74. Takeovers and Mergers

1. Organizations and individuals who carry out transactions changing their holding of more than 5% of voting shares or ceasing to hold 5% of voting shares of an issuer must report to the Securities Trading Center and the Stock Exchange within 24 hours.

2. Organizations and individuals and related parties intending to acquire more than 25% of voting shares of an issuer must organize a public auction in accordance with the regulations of the State Securities Commission.

 

CHAPTER IX
STATE MANAGEMENT OF SECURITIES
AND THE SECURITIES MARKET

Article 75. State management

1. The Government exercises unified state management over securities and the securities market.

2. The State Securities Commission is the agency responsible for implementing state management over securities and the securities market.

3. Relevant ministries, sectors, and provincial People's Committees under the central government have the responsibility to coordinate with the State Securities Commission to perform state management functions over securities and the securities market within their respective duties and powers.

Article 76. Content of State Management

Contents of state management include:

1. Issuing legal normative documents on securities and the securities market within their authority; developing strategies, policies, and plans for the development of the securities market;

2. Issuing and revoking various types of licenses related to the issuance, trading, and service of securities;

3. Organizing and managing centralized trading markets and auxiliary organizations.

4. Inspect, supervise and handle violations of securities and the securities market laws;

5. Provide professional training and disseminate knowledge about securities and the securities market;

6. International cooperation on securities and the securities market.

 

Chapter X
INSPECTION, SUPERVISION AND HANDLING OF VIOLATIONS

Article 77. General Principles

Organizations issuing, trading and transacting in securities, and individuals engaged in securities activities must be subject to inspection and supervision by the State Securities Commission in accordance with the provisions of the law.

Article 78. Objectives and scope of inspection and supervision

1. The objects of inspection and supervision include:

a) Issuing organizations whose securities are listed for trading on the centralized trading market;

b) Securities trading centers, stock exchanges;

c) Securities companies, underwriting organizations, investment fund management companies, securities registration organizations, securities custody organizations, securities settlement organizations, supervisory banks;

d) Securities business practitioners;

e) Organizations and individuals related to securities activities and the securities market.

2. The scope of inspection and supervision includes:

a) Securities issuance activities;

b) Securities transactions;

c) Securities trading, registration, settlement, and custody activities;

d) Information disclosure.

3. Organizations and individuals subject to inspection have the obligation to provide documents, materials, and information as required by the inspecting organization.

Article 79. Dispute Resolution

1. Disputes arising from securities issuance, trading, and transactions shall first be resolved through negotiation and mediation. Securities trading centers, stock exchanges, and the State Securities Commission may act as mediators in resolving disputes. If mediation fails, the parties may submit the dispute to an economic arbitration body or court for adjudication in accordance with the law.

2. Disputes involving foreign parties, if the parties cannot agree or are not resolved according to the provisions of international treaties to which the Socialist Republic of Vietnam is a signatory or participant, shall be resolved in accordance with Vietnamese law.

Article 80. Handling Violations

Organizations and individuals who violate the provisions of this Decree and other legal documents concerning securities and the securities market shall be disciplined, administratively sanctioned, or criminally prosecuted depending on the nature and severity of the violation, as provided by law. In cases where material damage is caused, compensation must be made in accordance with the law.

 

CHAPTER XI
IMPLEMENTING PROVISIONS

Article 81. Effectiveness

This Decree takes effect fifteen days from the date of signature.

Article 82. Guidelines for Implementation

The Chairman of the State Securities Commission and the heads of relevant ministries and sectors shall guide the implementation of this Decree.

Article 83. Responsibility for Implementation

Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of People's Committees of provinces and centrally governed cities are responsible for implementing this Decree./.