Circular No. 97/2020/TT-BTC guiding the operations of representative offices and branches of foreign securities companies and fund management companies in Vietnam

 

CIRCULAR

GUIDELINES FOR THE OPERATIONS OF FOREIGN SECURITIES COMPANIES' REPRESENTATIVE OFFICES AND BRANCHES IN VIETNAM

On the basis of Securities Law November 26, 2019;

Decree No. 87/2017/NĐ-CP July 26, 2017 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the proposal of the Chairman of the State Securities Commission;

The Minister of Finance issues this Circular to guide the operations of representative offices and branches of foreign securities companies and fund management companies in Vietnam.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

1. This Circular guides the operations of representative offices and branches of foreign securities companies and fund management companies in Vietnam.

2. The subjects to which this Circular applies include:

a) Representative offices and branches of foreign securities companies and fund management companies in Vietnam;

b) Individuals and organizations related to the activities of representative offices and branches of foreign securities companies and fund management companies in Vietnam.

Article 2. Interpretation of Terms

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

1. Certified copy is a copy issued from the original book or a copy certified by an authorized agency or organization, or a copy that has been verified to match the original.

2. Parent company is a securities business organization established abroad that registers to operate a representative office or establish a branch in Vietnam. The parent company is responsible under Vietnamese law for all activities and obligations arising from the representative office and branch in Vietnam.

3. Branch of a foreign securities company, fund management company in Vietnam is a subsidiary of a foreign securities company, fund management company without legal personality, established in accordance with Vietnamese law and subject to the responsibility of the parent company under Vietnamese law for its activities in Vietnam.

4. Branch Manager is the head of the branch of a foreign securities company, fund management company in Vietnam.

5. Representative office of a foreign securities company, fund management company in Vietnam is a subsidiary of a foreign securities company, fund management company without legal personality, established in accordance with Vietnamese law.

6. Head of representative office is the head of the representative office of a foreign securities company, fund management company in Vietnam.

7. Authorized representative of a foreign securities business organization is:

a) Chairman of the Board of Directors, Chairman of the Board of Members, Chairman of the Company, Chief Executive Officer or General Director of the foreign securities business organization, owner of the foreign securities business organization;

b) Persons authorized in writing by the entities specified in point a of this clause;

c) Persons having sufficient authority according to the Articles of Association of the foreign securities business organization to sign documents stipulated in this Circular and perform related tasks within the scope of their assigned authority.

8. Country of origin is the country or territory where the parent company was established and has its main office.

Article 3. Location of representative offices and branches

1. The location of representative offices and branches of foreign securities companies and fund management companies in Vietnam must be on Vietnamese territory, serving as the contact address for the representative offices and branches of foreign securities companies and fund management companies, with a defined address, telephone number, fax number, email (if applicable), and in compliance with Vietnamese laws on security, public order, labor safety, and other relevant laws.

2. Representative offices and branches of foreign securities companies and fund management companies in Vietnam shall not lend or sublet their locations.

Article 4. Transaction Language

Official transaction documents of foreign securities organizations, representative offices, branches of securities companies, and foreign fund management companies in Vietnam must be in Vietnamese or simultaneously in Vietnamese and a commonly used foreign language.

Article 5. Name of Representative Office, Branch of Securities Company, Foreign Fund Management Company in Vietnam

1. The name of the representative office, branch of securities company, foreign fund management company in Vietnam must be written using letters from the Vietnamese alphabet, the letters F, J, Z, W, numerals, and symbols.

2. The name of the representative office, branch of securities company, foreign fund management company in Vietnam must include the name of the securities company, foreign fund management company, and must comply with the following principles:

a) Comply with the provisions of the Enterprise Law, the Commercial Law, and related laws;

b) The name of the representative office shall be arranged in the order "Representative Office - name of the securities company, foreign fund management company - in province/city directly under the central government";

c) The name of the branch shall be arranged in the order "Branch - name of the securities company, foreign fund management company - in Vietnam".

3. The name of the representative office, branch of securities company, foreign fund management company in Vietnam must be displayed at the headquarters of the representative office, branch.

Article 6. Responsibilities of the Head of the Representative Office, Branch Manager

1. The head of the representative office, branch manager of the securities company, foreign fund management company in Vietnam shall be responsible before Vietnamese law and the parent company for their own activities and those of the representative office, branch within the scope authorized by the parent company.

2. The head of the representative office, branch manager of the securities company, foreign fund management company in Vietnam must authorize in writing another person in the representative office, branch to perform the rights and obligations of the head of the representative office, branch manager according to the law when leaving Vietnam after obtaining approval from the parent company. The maximum duration of authorization is 90 days. The head of the representative office, branch manager still bears responsibility for the performance of the rights and obligations delegated.

3. In case the authorization period expires as stipulated in Clause 2 of this Article and the head of the representative office, branch manager has not returned to Vietnam and there is no other authorization, the authorized person must notify the parent company. Upon receiving notification from the authorized person, the parent company is responsible for notifying the State Securities Commission about the current head of the representative office, branch manager and the appointment of a new head of the representative office, branch manager (if applicable). The authorized person has the right to continue performing the rights and obligations of the head of the representative office, branch manager within the scope of the authorization, with maximum validity for 30 days after receiving approval from the parent company.

4. The parent company must appoint a new head of the representative office, branch manager in the following cases:

a) The head of the representative office, branch manager of the securities company, foreign fund management company in Vietnam is absent from Vietnam for more than 30 consecutive days without authorizing another person to perform the rights and obligations of the head of the representative office, branch manager;

b) The head of the representative office, branch manager of the securities company, foreign fund management company in Vietnam is absent from Vietnam for more than 90 consecutive days;

c) The head of the representative office, branch manager dies, goes missing, is detained, sentenced to imprisonment, or is restricted or loses civil capacity.

5. The head of the representative office, employees of the representative office may not concurrently hold the following positions:

a) General Manager (Manager), head of the representative office, or employee of the representative office, branch of another foreign organization in Vietnam;

b) Legal representative, General Director (Director), Deputy General Director (Deputy Director), or employee working for a business established under Vietnamese law;

c) Legal representative, member of the board of directors, board of members, General Director (Director), Deputy General Director (Deputy Director) of the parent company, or other individual working for the parent company who has the authority to sign economic contracts, property transactions on behalf of the parent company without written authorization from the parent company.

6. The head of the representative office may only act on behalf of the parent company to sign contracts related to the business and investment activities of the parent company with Vietnamese economic organizations if they have a valid written authorization from an authorized representative of the parent company. The authorization letter must be prepared separately for each signing and must be sent to the State Securities Commission a copy of this authorization letter within 10 days from the date the authorization becomes effective.

Article 7. Tax and accounting obligations of representative offices and branches of foreign securities companies and fund management companies in Vietnam

1. Representative offices and branches of foreign securities companies and fund management companies in Vietnam, as well as individuals working at these representative offices and branches, shall fulfill tax obligations and financial obligations under Vietnamese laws on taxation and tax administration.

2. Branches of foreign securities companies and fund management companies in Vietnam shall fully comply with Vietnamese laws on accounting as required for domestic securities companies and fund management companies.

3. Representative offices of foreign securities companies and fund management companies in Vietnam shall conduct accounting work in accordance with current Vietnamese laws on accounting applicable to representative offices of foreign enterprises operating in Vietnam.

Article 8. Financial mechanisms of branches of foreign securities companies and fund management companies in Vietnam

Branches of foreign securities companies and fund management companies in Vietnam must implement financial mechanisms in accordance with Vietnamese laws as required for domestic securities companies and fund management companies.

Article 9. Supervision and inspection of activities of representative offices and branches of foreign securities companies and fund management companies in Vietnam

1. The State Securities Commission shall carry out supervision and inspection of the activities of representative offices and branches of foreign securities companies and fund management companies in Vietnam in accordance with current legal provisions.

2. The parent company and competent state authorities in the country where the parent company is headquartered must notify and submit the outline of the inspection content to the State Securities Commission before conducting inspections and oversight of the branch's activities in Vietnam.

3. Within thirty days from the date of receipt of the conclusion from the parent company or the competent state authority in the country, the branch of the securities company or fund management company in Vietnam shall send to the State Securities Commission the results of internal audits, internal audit conclusions, and supervisory conclusions from the parent company or the competent authority in the country regarding the branch's activities in Vietnam.

Chapter II

ACTIVITIES OF REPRESENTATIVE OFFICES OF FOREIGN SECURITIES COMPANIES AND FUND MANAGEMENT COMPANIES IN VIETNAM

Article 10. Scope of operations, rights, and obligations of representative offices and employees at representative offices

1. The scope of operations of representative offices of foreign securities companies and fund management companies in Vietnam shall be carried out in accordance with Clause 2 and 3 of Article 78 of the Securities Law.

2. Rights and obligations of representative offices of foreign securities companies and fund management companies in Vietnam:

a) Shall be permitted to open foreign currency accounts or Vietnamese dong accounts with a foreign currency base at commercial banks authorized to operate foreign exchange transactions in Vietnam, and such accounts may only be used for the activities of the representative office. The establishment, use, and closure of the account of the representative office shall be conducted in accordance with relevant laws;

b) Shall be allowed to recruit Vietnamese and foreign workers to work at the representative office in accordance with Vietnamese laws. Within thirty days from the date of hiring foreign workers to work at the representative office in Vietnam, the parent company or the representative office (in cases where it has been authorized by the parent company) must notify the State Securities Commission about the recruitment of foreign personnel along with documents confirming the approval of the competent state authorities in accordance with the Labor Code;

c) Shall have its own seal in accordance with Vietnamese laws and may only use this seal in transaction documents within the authority and functions of the representative office;

d) Shall only carry out activities within the content and duration specified in the Certificate of Registration for the operation of the representative office; shall not engage in securities trading activities in Vietnam; shall not manage assets, manage investment capital for investors, including the parent company's investment capital in Vietnam, and other securities trading activities in Vietnam;

đ) Other rights and obligations as prescribed by law.

Article 11. Official Operation Date

Within fifteen days from the official operation date, the representative office of foreign securities companies and fund management companies in Vietnam shall notify the State Securities Commission of its activities according to the form prescribed in Appendix V issued together with this Circular and the authentic documents confirming the completion of information disclosure in accordance with the Securities Law.

Article 12. Obligation to Report and Archive Documents of Representative Office

1. The representative office of foreign securities companies and fund management companies in Vietnam during its period of operation shall have the obligation to report periodic quarterly and annual activities to the State Securities Commission. The contents of the reports shall be in accordance with the form prescribed in Appendix I issued together with this Circular.

2. The deadlines for submitting the periodic reports stipulated in Clause 1 of this Article are as follows:

a) For quarterly reports: Within twenty days from the end of the quarter;

b) For annual reports: Within ninety days from the end of the year.

3. The time frame for finalizing data for the periodic reports stipulated in Clause 1 of this Article is as follows:

a) For quarterly reports: From the first day of the reporting quarter to the last day of the reporting quarter;

b) For annual reports: From January 1st of the reporting year to December 31st of the reporting year;

c) For newly established representative offices of foreign securities companies and fund management companies in Vietnam that have not yet completed a full reporting period, the reporting period shall be calculated from the date of issuance of the Certificate of Registration for Business Operations to the last day of the reporting period.

5. The representative office of foreign securities companies and fund management companies in Vietnam must store at its headquarters all relevant documents and files accurately and promptly, and update information and data related to its operations. In case of necessity, upon request by the State Securities Commission, the representative office of foreign securities companies and fund management companies in Vietnam shall have the obligation to provide information, documents, or explanations regarding issues related to its own operations and those of its parent company on the Vietnamese securities market in a timely manner.

Chapter III

ACTIVITIES OF BRANCHES OF FOREIGN SECURITIES COMPANIES AND FUND MANAGEMENT COMPANIES IN VIETNAM

Section 1

ACTIVITIES OF BRANCHES OF FOREIGN SECURITIES COMPANIES IN VIETNAM

Article 13. Organizational Structure, Governance, and Management of Branches of Foreign Securities Companies in Vietnam

1. The organizational structure, governance, and management of branches of foreign securities companies in Vietnam shall be determined by the parent company, in compliance with Vietnamese laws on the organizational structure, governance, management, and internal control of domestic securities companies.

2. Compliance officers of branches of foreign securities companies in Vietnam shall not be related to the branch manager; they must hold a bachelor's degree in finance, banking, law, accounting, or auditing. Compliance officers must possess specialized certificates in securities, including basic securities and securities market issues certificates and securities and securities market law certificates, or have foreign securities practice certificates and securities and securities market law certificates.

3. Branches of foreign securities companies in Vietnam must assign personnel holding securities practice certificates to work in the following positions:

a) Advising and explaining contracts signed with clients;

b) Signing off on securities analysis and analytical reports;

c) Providing recommendations related to buying, selling, or holding securities.

Article 14. Scope and Content of Activities of Foreign Securities Companies' Branches in Vietnam

1. Scope of Activities

The foreign securities company's branch in Vietnam shall only carry out investment advisory services for securities.

2. Content of Activities

The content of activities of foreign securities companies' branches in Vietnam includes providing analysis results, analytical reports, and recommendations to customers with or without fees in the following cases:

a) Providing reports on the analysis results of trading conditions on the securities market and giving investment recommendations;

b) Providing reports on the analysis results of public companies, listed companies, and other enterprises and giving investment recommendations;

c) Signing investment advisory service contracts with customers.

Article 15. Rights of Foreign Securities Companies' Branches in Vietnam

Foreign securities companies' branches in Vietnam have the following rights:

1. To charge service fees for investment advisory services according to agreements with customers and relevant laws.

2. To open foreign currency accounts or Vietnamese dong accounts with foreign currency origins at commercial banks permitted to operate foreign exchange business in Vietnam, and such accounts can only be used for the branch’s operations. The opening, use, and closure of foreign securities companies' branches’ accounts in Vietnam shall comply with relevant laws.

3. To recruit Vietnamese and foreign workers to work at the branch in accordance with relevant laws.

4. To have its own seal in accordance with Vietnamese law and to use this seal only in transaction documents within the branch’s authority and functions.

5. Other rights as prescribed by relevant laws.

Article 16. Obligations of Foreign Securities Companies' Branches in Vietnam

Foreign securities companies' branches in Vietnam have the following obligations:

1. To sign written contracts with customers when providing services; to provide full and truthful information to customers.

2. To collect and understand financial situations, investment objectives, and risk tolerance levels of customers; to ensure that investment advice provided by the branch to each customer must be appropriate to their financial situation, investment objectives, and risk tolerance levels, except where the customer does not provide information or provides incomplete or inaccurate information.

3. To keep confidential any information received from service users during the provision of advisory services unless the customer agrees or it is required by competent state authorities.

4. To update and retain complete customer information files, customer documents, and branch documents.

5. To use only the capital allocated for licensed business activities and not to borrow from other organizations or individuals except the parent company.

6. Not to directly or indirectly engage in the following actions: making investment decisions on behalf of customers; agreeing with customers to share profits or losses; advertising or declaring that the content, effectiveness, or methods of securities analysis offered by them are superior to those of other securities companies; providing false information to entice or invite customers to buy or sell certain types of securities, providing misleading, fraudulent, or confusing information to customers.

7. Other obligations as prescribed by relevant laws.

Section 2

ACTIVITIES OF FOREIGN FUND MANAGEMENT COMPANIES' BRANCHES IN VIETNAM

Article 17. Organizational Structure, Management, and Operation of Foreign Fund Management Company Branches in Vietnam

The organizational structure, management, and operation of foreign fund management company branches in Vietnam shall be determined by the parent company, in accordance with Vietnamese laws on the organizational structure, management, operation, and internal control of domestic fund management companies.

Article 18. Scope of Operations of Foreign Fund Management Company Branches in Vietnam

Foreign fund management company branches in Vietnam may only provide asset management services for capital raised abroad, including assets generated in Vietnam from foreign-raised capital.

Article 19. Rights of Foreign Fund Management Company Branches in Vietnam

Foreign fund management company branches in Vietnam have the following rights:

1. To use foreign-raised capital to finance projects, enterprises, loans, and implement investment contracts at the direction of entrusted customers, investment trust contracts, and the articles of association of foreign organizations and funds, ensuring compliance with foreign exchange management laws, banking laws, and other relevant laws.

2. To repatriate profits of the branch abroad in accordance with Vietnamese laws.

3. To conduct securities business activities in accordance with the License for Establishment and Operation, Vietnamese laws, and international treaties to which Vietnam is a party.

Article 20. Obligations of Foreign Fund Management Company Branches in Vietnam

Foreign fund management company branches in Vietnam have the following obligations:

1. The foreign fund management company branch in Vietnam shall not raise capital in Vietnam for management in any form.

2. In the course of managing assets, the foreign fund management company branch in Vietnam must comply with the following regulations:

a) Except where the entrusted customer has given instructions or there are provisions in the investment trust contract or the articles of association of the foreign organization, when managing assets for customers, the foreign fund management company branch must comply with the regulations on custody, separate management of assets for each customer, and transactions between investment portfolios of entrusted customers as stipulated in the laws applicable to domestic fund management companies;

b) To keep confidential customer information, transaction information, investment portfolios of customers, and other related information, except where such information is provided upon request of the State Securities Commission and competent authorities;

c) To comply with foreign exchange laws, restrictions on ownership in Vietnamese enterprises, anti-money laundering laws, and other relevant laws;

d) Not to borrow within Vietnam for customers, other organizations, or itself in any form; not to use entrusted assets or its own assets as collateral, pledge, margin, or guarantee for loans or guarantees for loans within Vietnam, including for entrusted customers, other organizations, or itself;

đ) Not to issue securities for capital raising within Vietnam;

3. In the course of reporting ownership, reporting, and disclosing information about transactions on the securities market, the foreign fund management company branch in Vietnam shall be responsible for:

a) Representing entrusted customers to fulfill the obligation to report and disclose transaction information in accordance with securities laws. The branch, together with entrusted customers, shall comply with securities laws on reporting ownership and disclosing information on the securities market applicable to related parties, major shareholders, and insiders;

b) All securities transactions in Vietnam by members of the Management Board and employees of the foreign fund management company branch in Vietnam must be reported to the internal control department of the branch before and immediately after the transaction. Reports on personal transactions must include information on the type (code) of securities, quantity, transaction price, securities company where the trading account is opened. Personal transaction reports must be stored and centrally managed in the internal control department and provided upon request of the State Securities Commission.

4. The foreign fund management company branch in Vietnam may only use allocated capital and entrusted customer capital (excluding shares in the customer's portfolio that are index funds) to make public tender offers in accordance with Article 35 of the Securities Law, subject to written approval from the entrusted customer or their authorized representative regarding the public tender offer, the purchase price, the expected amount of assets to be offered, and the method of distributing assets after the offer. The foreign fund management company branch in Vietnam shall conduct public tender offers in accordance with the public tender offer regulations under securities laws.

5. During the course of operations, the foreign fund management company branch in Vietnam and the parent company must ensure:

a) Within thirty days from the date the parent company completes its investment in subsidiaries, joint ventures, or associated companies in Vietnam, the foreign fund management company branch in Vietnam shall be responsible for notifying the State Securities Commission about these investment items; The parent company shall not participate in capital contributions, share purchases, or equity contributions to hold more than 5% of the charter capital of a fund management company in Vietnam;

b) The foreign fund management company branch in Vietnam shall not contribute capital, purchase shares, or equity contributions in fund management companies or securities companies in Vietnam, except in cases of purchasing to hold or jointly with related parties holding no more than 5% of the outstanding voting shares of listed or traded fund management companies or securities companies on the stock exchange.

6. The foreign fund management company branch in Vietnam must issue business procedures, establish and operate risk management systems in accordance with the guidelines of the State Securities Commission or use internal regulations issued by the parent company, which are appropriate to its business activities, ensuring that there are control mechanisms and risk management tied to each product and business process.

7. The foreign fund management company branch in Vietnam is responsible for organizing annual training and seminars for employees or requiring practicing employees to participate in training courses organized by the State Securities Commission (if any), ensuring that the staff are updated on skills, expertise, business procedures, and knowledge of laws.

Section 3

REPORTING REGIME, RECORD KEEPING OF DOCUMENTS AND DISCLOSURE OF INFORMATION OF FOREIGN SECURITIES COMPANIES' BRANCHES AND FOREIGN FUND MANAGEMENT COMPANIES' BRANCHES IN VIETNAM

Article 21. Reporting regime, record keeping of documents and disclosure of information of foreign securities companies' branches and foreign fund management companies' branches in Vietnam

1. The foreign securities company branch in Vietnam shall submit periodic reports on the branch's operations to the State Securities Commission as follows:

a) Monthly and annual activity reports with contents according to the forms prescribed in Appendix II and Appendix III attached hereto;

b) Quarterly financial reports, semi-annual financial reports, and annual financial reports. Semi-annual financial reports must be reviewed and annual financial reports must be audited by an approved auditing organization;

c) Reports on financial safety indicators as prescribed by laws on financial safety indicators.

2. The foreign fund management company branch in Vietnam shall submit periodic reports on the branch's operations to the State Securities Commission as follows:

a) The reports prescribed in Clause 1 of this Article, wherein the monthly and annual activity reports shall be implemented according to the form prescribed in Appendix IV attached hereto;

b) Monthly investment portfolio management reports as prescribed in Appendix VI attached hereto; annual financial reports of foreign-established investment funds currently investing in Vietnam, prepared in accordance with the laws of their home countries.

3. Time limits for submitting reports:

a) For monthly reports: Within five working days from the end of the month;

b) For quarterly reports: Within twenty days from the end of the quarter;

c) For semi-annual reports: Within forty-five days from the end of the second quarter;

d) For annual reports: Within ninety days from the end of the year.

4. Periods for closing data for the periodic reports prescribed in Clauses 1 and 2 of this Article are as follows:

a) For monthly reports: From the first day of the reporting month to the last day of the reporting month (except for figures reflecting at a specific point in time);

b) For quarterly reports: From the first day of the reporting quarter to the last day of the reporting quarter (except for figures reflecting at a specific point in time);

c) For semi-annual reports: From January 1 of the reporting period to June 30 of the reporting period (except for figures reflecting at a specific point in time);

d) For annual reports: From January 1 of the reporting year to December 31 of the reporting year (except for figures reflecting at a specific point in time);

e) For newly established foreign securities company branches and foreign fund management company branches in Vietnam whose operation period has not yet reached a full reporting period, the reporting period shall be calculated from the date of issuance of the License for Establishment and Operation to the last day of the reporting period.

6. The foreign securities company branch and foreign fund management company branch in Vietnam must report to the State Securities Commission within three working days of the occurrence of events that may significantly affect the financial capacity and operations of the branch.

7. In addition to the reporting cases stipulated in this Article, when necessary, to protect common interests and investor interests, the State Securities Commission may request the foreign securities company branch and foreign fund management company branch in Vietnam to report on other activities conducted in Vietnam by the branch or by the parent company.

8. The foreign securities company branch and foreign fund management company branch in Vietnam must report to the State Securities Commission within forty-eight hours from receiving the reporting request stipulated in Clause 7 of this Article.

9. The foreign securities company branch and foreign fund management company branch in Vietnam must keep complete, accurate, and timely records of all documents and files and update relevant information and data related to their operations. When necessary, upon request of the State Securities Commission, the foreign securities company branch and foreign fund management company branch in Vietnam have the obligation to promptly provide information, documents, or explain issues related to their operations and those of the parent company on the Vietnamese securities market.

10. The foreign securities company branch and foreign fund management company branch in Vietnam shall disclose information in accordance with laws on information disclosure and laws on the operations of securities companies and investment fund management companies.

Chapter IV

IMPLEMENTING PROVISIONS

Article 22. Effectiveness

This Circular takes effect from January 1, 2021 and replaces Circular No. 91/2013/TT-BTC dated June 28, 2013 of the Minister of Finance guiding the registration of establishment, organization, and operation of representative offices of foreign securities businesses and foreign fund management company branches in Vietnam.

Article 23. Implementation Organization

The State Securities Commission, representative offices, foreign securities company branches, foreign fund management company branches in Vietnam, and related organizations and individuals are responsible for implementing this Circular./.