Decision No. 998/2002/QD-NHNN On foreign exchange management for the purchase and sale of securities by foreign organizations and individuals at the Securities Trading Center

DECISION OF THE GOVERNOR OF THE STATE BANK OF VIETNAM

Regarding foreign exchange management for the purchase and sale

of securities by foreign organizations and individuals at the Securities Trading Center

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated December 12, 1997;

Pursuant to the Government Decree No. 48/1998/NĐ-CP dated July 11, 1998 on securities and the securities market;

Pursuant to the Prime Minister's Decision No. 139/1999/QĐ-TTg dated June 10, 1999 on the proportion of foreign participation in the Vietnamese securities market;

At the proposal of the Director of the Department of Foreign Exchange Management;

DECISION:

Article 1Scope of Regulation

Foreign exchange transactions related to the purchase and sale of securities listed at the Securities Trading Center by foreign organizations and individuals, including the transfer of capital into Vietnam to purchase and sell securities, currency conversion from foreign currencies to Vietnamese dong, opening and using Vietnamese dong accounts to purchase and sell securities, converting Vietnamese dong to foreign currencies, and transferring foreign currencies out of the country shall be carried out in accordance with the provisions of this Decision and relevant current foreign exchange management regulations.

Article 2Applicability

The applicability of this Decision includes:

1. Non-residents who are organizations established under foreign laws, foreigners (including both residents and non-residents), and non-resident Vietnamese persons residing abroad.

2. Organizations and individuals that are foreign parties in foreign-invested enterprises in Vietnam using profits distributed or other lawful income earned in Vietnam to purchase and sell securities at the Securities Trading Center.

In this Decision, the above entities are collectively referred to as foreign organizations and individuals.

Article 3Sources of Capital for Purchasing Securities

Foreign organizations and individuals may use the following sources of capital to purchase securities:

1. Foreign currencies transferred into Vietnam according to current foreign exchange management regulations;

2. Foreign currencies in foreign currency deposit accounts opened by foreign organizations and individuals mentioned in Article 2 of this Decision at banks permitted to operate foreign exchange business in Vietnam;

3. Profits distributed from foreign organizations and individuals' direct investment activities in Vietnam;

4. Proceeds from the transfer, liquidation, or dissolution of foreign organizations and individuals' direct investment activities in Vietnam according to current regulations;

5. Income from the export of goods and services into Vietnam by foreign organizations and individuals according to current regulations;

6. Wages, bonuses, and other lawful income of foreign individuals in Vietnam in accordance with current regulations.

Article 4Transfer of Capital into Vietnam to Purchase Securities

When transferring foreign currencies from abroad into Vietnam to purchase securities, foreign organizations and individuals must sell foreign currencies to the foreign custodian bank (hereinafter referred to as the foreign custodian bank) where they have opened an account to obtain Vietnamese dong to purchase and sell securities.

Article 5Securities Trading Accounts

1. Opening a Vietnamese dong securities trading account and a securities custody account

Foreign organizations and individuals wishing to purchase and sell securities listed at the Securities Trading Center must open a Vietnamese dong securities trading account and a securities custody account at a foreign custodian bank in accordance with this Decision and current securities and securities market laws.

2. Using a Vietnamese dong securities trading account

Part Receipts:

a) Receipts from selling foreign currencies to the foreign custodian bank;

b) Receipts from the sources mentioned in Clause 3, 4, 5, and 6 of Article 3 of this Decision;

c) Transfers from Vietnamese dong accounts of such foreign organizations and individuals in Vietnam according to current foreign exchange management regulations (if applicable) into this account to purchase securities;

d) Receipts from the sale of securities;

e) Receipts from dividends, bond interest payments, and other related income arising from the purchase and sale of securities.

Part Payments:

a) Payments for purchasing securities and related transaction costs;

b) Payments to purchase foreign currencies to transfer out of the country.

Article 6Purchasing Foreign Currencies to Transfer Out of the Country

1. After fulfilling all tax obligations as prescribed by Vietnamese law, foreign organizations and individuals are permitted to use Vietnamese dong funds in their securities trading accounts to purchase foreign currencies at the foreign custodian bank to transfer out of the country.

2. Foreign organizations and individuals may only transfer invested capital (belonging to capital transactions) out of the country after one (01) year from the date such capital was transferred into the Vietnamese dong securities trading account opened at the foreign custodian bank, except in cases permitted by law.

As for investment profits, dividend income, and bond interest income (belonging to current transactions), foreign organizations and individuals may transfer them out of the country without time restrictions.

, Clause 1, Clause 2 Article 7a of this Regulation.Provisions on Document Verification

When performing deposit and withdrawal operations on securities trading deposit accounts for foreign organizations and individuals, foreign custodian banks are responsible for verifying the following documents:

1. For receipts:

Receipts from direct investment profits in Vietnam: A copy of the Investment License, the Board of Directors' (or Project Management Board's in the case of Joint Venture Contracts) resolution on profit distribution (or revenue distribution in the case of Joint Venture Contracts) confirmed by the competent tax authority;

Receipts from the liquidation or dissolution of direct investment activities in Vietnam: The decision to terminate operations or dissolve a foreign-invested enterprise, the decision to terminate the effect of a Joint Venture Contract, the agreement among the parties in the enterprise (or in the Joint Venture Contract) regarding asset liquidation, and the document from the competent tax authority confirming the completion of financial obligations to the Vietnamese state (if the amount received exceeds the initial capital contribution);

For the case of capital transfer: The capital transfer contract recognized by the competent authority, and the document from the competent tax authority confirming the completion of financial obligations to the Vietnamese state (if the capital transfer generates profit).

For tax clearance on supply of goods and services: A document from the competent tax authority confirming that all financial obligations to the Socialist Republic of Vietnam have been fulfilled;

For tax clearance on salaries, bonuses, and lawful income of individuals: Depending on the nature of the income, foreign organizations and individuals must present the following documents: Payroll according to the Labor Contract or confirmation from the employer regarding bonuses or a document from the competent authority confirming the legality of other income (gifts, inheritance, lottery winnings...);

2.For expenditures in Vietnamese dong for purchasing foreign currency to be transferred abroad: A document from the competent tax authority confirming that all financial obligations to the Socialist Republic of Vietnam have been fulfilled with respect to investments from securities at the Securities Trading Center;

3.For the case of transferring capital abroad: Transaction documents proving that foreign organizations and individuals have used part of their capital to buy and sell securities at the Securities Trading Center for a minimum period of one year;

Article 8Responsibilities of Foreign Depository Members

1.Selling foreign currency: When foreign organizations and individuals need to purchase foreign currency to transfer abroad, the Foreign Depository Member bases on the foreign currency reserves of the bank to sell foreign currency to foreign organizations and individuals in accordance with current foreign exchange management regulations;

2.Reporting: Monthly (no later than the 5th day of the following month), the Foreign Depository Member must report to the State Bank of Vietnam (Department of Foreign Exchange Management):

a)- The situation of opening and closing Securities Trading Accounts in Vietnamese dong for foreign organizations and individuals at the Foreign Depository Member (Form No. 01);

b)- The operation status of Securities Trading Accounts and the situation of purchasing foreign currency to transfer abroad for foreign organizations and individuals at the Foreign Depository Member (Form No. 02);

c)- The operation status of the securities deposit accounts of foreign organizations and individuals at the Foreign Depository Member (Form No. 03).

In cases where necessary, the Foreign Depository Member has the responsibility to provide information and reports as required by the State Bank of Vietnam.

Article 9Implementation Provisions

1.This Decision takes effect fifteen days from the date of signature. Any amendments or supplements to this Decision shall be decided by the Governor of the State Bank of Vietnam.

2.The Director of the Office, Heads of the Department of Foreign Exchange Management, Heads of units under the State Bank of Vietnam; Directors of Branches of the State Bank of Vietnam in provinces and centrally-administered cities; Chairmen of the Board of Directors and General Managers (Directors) of credit organizations permitted to operate in foreign exchange, Foreign Depository Members, and foreign organizations and individuals participating in buying and selling listed securities at the Vietnam Securities Trading Center are responsible for implementing this Decision./.

REPORT ON THE SITUATION OF OPENING AND CLOSING SECURITIES TRADING ACCOUNTS

IN VIETNAMESE DONG OF FOREIGN ORGANIZATIONS AND INDIVIDUALS

AT FOREIGN DEPOSITORY MEMBER

(Report for Month /20..., from ... to ...)

Unit: Equivalent USD:        State Bank of Vietnam

(Department of Foreign Exchange Management)

                                                                                     ..., Day .../.../200...

Foreign Depository Member

Chief Accountant                     General Director                  Credit organization branch in province/city and basic credit cooperative…

Bank ...            

Form No. 02

Foreign Depository Member:

Address:

2. Intellectual Property Rights Owner:

Telephone:

REPORT ON THE OPERATING STATUS OF SECURITIES TRADING ACCOUNTS

AND FOREIGN CURRENCY PURCHASE AND SALE BY FOREIGN ORGANIZATIONS AND INDIVIDUALS

AT FOREIGN DEPOSITORY MEMBER

(Report for Month /20..., from ... to ...)

Respectfully submitted to:        State Bank of Vietnam

(Department of Foreign Exchange Management)

Note:

II.1.c:Income from securities transactions includes cash proceeds from selling securities, receiving dividends, interest on bonds...

II.2.b:Expenditures for purchasing securities include cash payments for purchasing securities, brokerage fees...

..., Day .../.../200...

Foreign Depository Member

Chief Accountant                     General Director                              Credit organization branch in province/city and basic credit cooperative…                                                                  

Bank ...             Implementation Report of Production Projects of Supporting Industry Products Confirmed with Incentives

Foreign Depository Member:

Address:

2. Intellectual Property Rights Owner:

Telephone:

report onTHE STATUS OF SECURITIES DEPOSIT ACCOUNTS

OF FOREIGN ORGANIZATIONS AND INDIVIDUALS

AT FOREIGN DEPOSITORY MEMBER

(Report for Month /20..., from ... to ...)

Respectfully submitted to:        State Bank of Vietnam

(Department of Foreign Exchange Management)

Remarks:

The value of securities calculated in VND is determined by multiplying the quantity of securities by the closing price of those securities at the nearest trading session at the time of reporting.

                                                                                     ..., Day .../.../200...

                                                                         Foreign Depository Member

Chief Accountant                     General Director                              Credit organization branch in province/city and basic credit cooperative…