Circular 123/2015/TT-BTC On foreign investment activities on Vietnams securities maket

1 Chapter I. GENERAL PROVISIONS

CIRCULAR 123/2015/TT-BTC

August 19, 2015

PROVIDING GUIDANCE ON FOREIGN INVESTMENT ACTIVITIES ON VIETNAM’S SECURITIES MARKET

Pursuant to the Law on Securities dated June 29, 2006;

Pursuant to the Law on Amendments and Supplements to several articles of the Law on Securities dated November 24, 2010;

Pursuant to the Law on Enterprise dated November 26, 2014;

Pursuant to the Law on Investment dated November 26, 2014;

Pursuant to the Law on Electronic Transaction dated November 29, 2005;

Pursuant to the Government's Decree No. 215/2013/ND-CP dated December 23, 2013 on defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Government's Decree No. 58/2012/ND-CP dated July 20, 2012 on providing specific provisions and guidance on the implementation of several articles of the Law on Securities and the Law on Amendments and Supplements to several articles of the Law on Securities;

Pursuant to the Government's Decree No. 60/2015/ND-CP dated June 26, 2015 on amending and supplementing several articles of the Government's Decree No. 58/2012/ND-CP dated July 20, 2012 on providing specific provisions and guidance on the implementation of several articles of the Law on Securities and the Law on Amendments and Supplements to several articles of the Law on Securities;

Pursuant to the Government's Decree No. 64/2007/ND-CP dated April 10, 2007 on applying information technology to operations of Government agencies;

After considering the request of the Chairman of the State Securities Commission;

The Minister of Finance hereby issues the Circular on providing guidance on foreign investment activities on Vietnam’s securities market.

Chapter I. GENERAL PROVISIONS

Article 1. Scope of application and applicable entities

1. This Circular shall provide guidance on securities investing and trading activities, and the rate of securities ownership by foreign investors on Vietnam's securities market, exclusive of the following investing activities:

a) Investing activities stipulated in Article 22, 27 and 28 of the Investment Law;

b) Contribution of capital to and trading of shares of companies other than public companies, or capital contributions to limited liability companies, except for contribution of capital, purchase of shares, capital contributions in securities trading organizations and securities investment funds.

2. This Circular shall apply to the following entities:

a) Foreign investors;

b) Economic organizations of which more than 51% of the charter capital is held by foreign investors;

c) Depository banks, securities trading organizations;

d) Issuing organizations and public companies;

dd) Other related organizations or individuals.

Article 2. Interpretation of terms

In this Decree, terms used herein shall be construed as follows:

1. Valid copy refers to the notarized or authenticated copy that complies with relevant legal regulations.

2. Competent representatives of foreign organizations comprise:

a) The Chairman of the Management Board, the Chairman of the Members’ Council, the company’s Secretary or the Director (the Director General) of foreign organizations, and the owners of foreign organizations;

b) Competent persons stipulated in the Charter of foreign organizations or in the capital contribution agreement or equivalent materials of foreign organizations having full authority to put their signature to materials and perform tasks stipulated in this Circular;

c) Persons granted the written authorization with certification of foreign notaries public from those stipulated in Point a, b of this Clause, or persons certified by foreign attorneys or notaries public to have full authority to act as representatives of foreign organizations in accordance with their home country's laws.

3. Transactional representatives refer to Vietnamese individuals in compliance with regulations laid down in Clause 6 Article 3 hereof authorized by foreign investors to perform securities trading and investing activities on Vietnam's securities market, publicly disclose information, report to competent state agencies in accordance with Vietnamese laws.

4. Valid application refers to the application containing a full set of documents stipulated by this Circular which includes properly and sufficiently declared contents in accordance with legal regulations.

5. Securities trading organizations include securities companies and fund management companies operating in Vietnam.

6. Foreign investors refer to individuals holding foreign nationality; organizations incorporated in accordance with their home country's laws and charged with carrying out investment and business activities in Vietnam (hereinafter referred to as foreign organization).

7. Group of related foreign investors is composed of foreign organizations that connect with each other in one of the following forms:

a) Offshore funds or foreign organizations put under the management of the same onshore or offshore fund management company;

b) Funds of the same master fund or portfolios of the same fund, and sub-funds of the same fund, and funds of the same feeder fund;

c) Investment portfolios of the same offshore fund, or foreign organizations put under the management of the Multiple Investment Managers Fund (MIMF);

d) Investment portfolios of the same offshore fund or the same foreign investor, even those deposited in different depository accounts;

dd) Offshore funds, foreign investors with the same transactional representative.

8. Depository members refer to securities companies, commercial banks that obtain the certificate of depository operations from the State Securities Commission and have registered as members of the Vietnam Securities Depository.

Chapter II. SECURITIES INVESTMENT REGISTRATION

Article 3. Securities investing activities of foreign investors

1. Foreign investors shall carry out securities investing activities on the Vietnam’s securities market in the following forms:

a) Directly or authorize their transactional representatives or securities trading organizations to trade shares, stocks and other securities types; carry out capital contribution, buy, sell and swap shares in accordance with legal regulations on securities and securities market;

b) Carry out indirect investments in the form of entrusting their capital to the care of fund management companies or branches of offshore fund management companies.

2. Before performing investment activities as prescribed in Point a Clause 1 of this Article, foreign investors are required to register securities trading codes with the Vietnam Securities Depository through depository members in accordance with regulations laid down in Article 4 hereof.

3. Foreign investors only carrying out their investment activities stipulated in Point b Clause 1 of this Article are not required to register their trading codes. In this situation, fund management companies or branches of offshore fund management companies that provide entrusted asset management service for foreign investors shall be granted trading code certificates by the Vietnam’s Securities Depository.

4. Foreign investors shall ensure that transactions stipulated in Clause 1 of this Article and those performed by related persons, or group of related foreign investors do not serve the purpose of creating artificial demand and supply, and manipulating stock prices and engaging in other prohibited trades in accordance with legal regulations.

5. Foreign investors shall be obliged to declare, pay and settle tax liabilities, fees and charges related to securities trading activities in Vietnam in accordance with Vietnamese laws, or authorize depository members, securities trading organizations, their own representative offices or transactional representatives to fulfill their obligations to declare, pay and settle tax liabilities, fees and charges in accordance with Vietnamese laws.

6. Foreign investors shall be entitled to designate one transactional representative in Vietnam provided that they meet the following conditions:

a) Have full capacity to perform civil acts; be not the ones serving prison sentences or subject to the Court's business ban;

b) Obtain the professional certificate in stock trading;

c) Be not concurrently the staff members of securities trading organizations or branches of offshore fund management companies in Vietnam or depository banks operating in Vietnam;

d) Act as the exclusive representative of a foreign investor in Vietnam and obtain foreign investors’ written authorization.

7. Foreign investors, transactional representatives and securities trading organizations providing services for foreign investors must comply with legal regulations on the rate of foreign ownership of Vietnamese enterprises.

In the event of performing swap transactions with the Exchange-traded Fund (ETF), executing derivative transactions in the form of material transfer which may lead to the rate of foreign ownership of component and underlying securities exceeding the statutory rate of foreign ownership, the Vietnam Securities Depository shall be responsible for requesting fund management companies, clearing members and transactional partners of foreign investors to sell their excess component and underlying securities as well as pay monetary sums to foreign investors .

8. Except for open-end funds, economic organizations of which more than 51% of the charter capital is owned by foreign investors, including indirect ownership through authorization and investment trust, are required to register securities trading codes and comply with laws on the foreign ownership rate once performing investing activities on Vietnam's securities market.

Article 4. securities trading code registration

1. Foreign investors must register securities trading codes with the Vietnam Securities Depository by going through the following procedure:

a) Foreign investors shall submit a valid set of documents to depository members as prescribed in Clause 2 of this Article;

b) Depository members shall verify these documents submitted to apply for registration of securities trading codes by foreign investors and declare information required in Appendix 1 and 2 attached with this Circular on the online code registration system managed by the Vietnam Securities Depository;

c) Within one (01) working day of receipt of information declared by depository members, the Vietnam Securities Depository shall issue and send an electronic confirmation of securities trading codes to foreign investors through depository members on the online code registration system. In case of rejection, the Vietnam Security Depository should send their written response and clearly state reasons for this via the system;

Foreign investors shall proceed to complete the procedure for opening securities trading accounts and perform their investing activities immediately after being granted securities trading codes in the form of electronic confirmation issued by the Vietnam Securities Depository.

d) Within a permitted duration of five (05) working days of receipt of trading codes, depository members shall submit a full set of documents to apply for registration of trading codes to the Vietnam Securities Depository under the provisions of Clause 2 of this Article for review and filing purposes;

dd) Within a permitted duration of five (05) working days of receipt of all required documents from depository members as stipulated in Point d of this Clause, the Vietnam Securities Depository shall issue the certificate of trading codes to foreign investors (through depository members) by adopting the form stipulated in Appendix 20 enclosed herein;

e) The Vietnam Securities Depository shall file all documents submitted to apply for trading code registration and provide them for the State Securities Commission whenever obtaining their written request.

2. Documentation submitted to apply for securities trading code registration shall include:

a) The application form given in Appendix 1 or Appendix 2 attached herein (hard copy or copy verified by global depository banks sent in the form of a telegram), enclosing a copy of written authorization, which is filed to depository members to apply for trading code registration;

b) Foreign investor's credentials under instructions given in Appendix 12 attached herein (applicable to organizations), or the true copy of valid passports or other personal status documents (applicable to individuals);

c) If foreign investors have their have transactional representatives, supplementary materials shall be composed of the followings:

- The written authorization of transactional representatives according to the form stipulated in Appendix 10 issued together with this Circular;

- Transactional representative’s information slip according to the form stipulated in Appendix 11 issued together with this Circular;

- The valid duplicate identification cards or passports or other personal status documents held by transactional representatives;

- The valid copy professional certificates of securities business held by transactional representatives.

3. Documents stipulated in Clause 2 of this Article must meet the following regulations:

a) Except for extracts of contents posted on the website of foreign competent authorities, materials written in foreign languages must be notarized and authenticated in accordance with overseas countries’ laws. Materials written in Vietnamese and issued by competent organizations in Vietnam must be notarized and authenticated in accordance with Vietnam’s laws. Notarization and authentication must be obtained within less than one (01) year prior to the date on which foreign investors submit their documents to depository members;

b) Except for materials written in English or English translations notarized or authenticated in accordance with overseas countries' laws, materials written in other foreign languages must be translated into Vietnamese. Vietnamese translation must be undertaken by depository members or translation service providers legally operating in Vietnam.

4. Foreign investors shall assume their responsibility before Vietnamese laws for the accuracy, legitimacy and authenticity of documents submitted to apply for trading code registration. Depository members shall assume their responsibility before Vietnamese laws for providing adequate, accurate and genuine information provided by investors on the online code registration system managed by the Vietnam Securities Depository.

5. Foreign investors shall not be issued securities trading codes under the following circumstances:

a) If they are currently under investigation or are used to be subjected to penalties imposed by domestic or foreign competent authorities for their commission of prohibited acts under the provisions of laws on securities, money laundry crimes or other violations against laws as well as are faced with administrative or criminal penalties for violations against laws on finance, banks, foreign exchange administration and taxes, but the sanctioning duration has not ended, this means that they have yet to be subjected to administrative penalties or failed to fully comply with such decision on administrative penalties;

b) Their trading codes have been annulled within two (02) years prior to the date on which applications for securities trading code registration are submitted.

6. Fund management companies, branches of offshore fund management companies operating in Vietnam shall be allowed to register securities trading codes for the purpose of managing investment portfolios of foreign investors performing their investing activities in the forms stipulated in Point b Clause 1 Article 3 hereof. Trading code registration of these entities must comply with instructions given by the Vietnam Securities Depository. Documentation submitted to apply for securities trading code registration shall include:

a) Materials stipulated in Point a Clause 2 of this Article;

b) Valid duplicate of depository contracts entered into between fund management companies, branches of offshore fund management companies operating in Vietnam and depository banks;

c) Valid duplicate of Certificates of establishment and operation of fund management companies, branches of offshore fund management companies operating in Vietnam.

7. Foreign securities companies shall be issued two (02) trading codes: one (01) code for self-employment account and one (01) code for brokerage account held by brokerage companies.

8. Foreign investment funds or foreign organizations put under the MIMF’s management, investing organizations of foreign governments, or intergovernmental organizations of international investments, shall be entitled to register multiple trading codes according to the following principles:

a) Each investment portfolio of investing organizations of foreign governments, or intergovernmental organizations of international investments which is deposited at a depository bank shall be permitted to register one trading code;

b) Each investment portfolio of the MIMF put under the management of a fund management company shall be given one trading code; investment portfolios managed by the fund itself shall be given one separate trading code.

9. In case foreign investment funds or foreign investing organizations stipulated in Clause 8 of this Article, or foreign securities companies issued one (01) trading code, application for another trading code shall be composed of materials stipulated in Point a Clause 2 of this Article, enclosing documents stating that foreign organizations have met regulations laid down in Clause 8 of this Article and duplicate copy of previously-issued trading code certificates.

Article 5. Changes compulsorily reported to the Vietnam Securities Depository

1. Before making changes, foreign investors must obtain approval from depository members and report to the Vietnam Securities Depository on the following contents:

a) Change of transactional representatives;

b) Transfer of investment portfolios between depository accounts as prescribed in Clause 2 Article 8 hereof.

2. Documentation included in reports on these changes as stipulated in Clause 1 of this Article shall include:

a) Change report by adopting the form stipulated in Appendix 3 attached herein (hard copy or copy verified by global depository banks sent in the form of a telegram), enclosing a copy of written authorization, which is filed to depository members for reporting purposes;

b) Depending on changed contents, additional materials shall include:

- Materials relating to new transactional representatives as prescribed in Point c Clause 2 Article 4 hereof (if any), enclosing the notification of termination of operational authorization obtained by previous transactional representatives;

- Detailed report on investment portfolios placed on previous depository accounts by completing the form stipulated in Appendix 13 attached herein; agreement in principle or notification of depository contract termination issued by depository members; agreement in principle over opening of new depository accounts or duplicate written authorization for depository operations in Vietnam; documents submitted to final settlement of depository accounts or securities transfer under the guidance of the Vietnam Securities Depository.

3. Within a permitted duration of thirty (30) days from changes made, foreign investors must notify depository members and report to the Vietnam Securities Depository on the following changes:

a) Replacement of depository bank where indirect investment capital account is opened;

b) Change of name, main office or address of foreign investors or transactional representatives (if any);

c) Change of passport number or other personal status documents (if foreign investors are individuals); number of the business registration certificate or equivalent materials as credentials of foreign organizations issued by competent foreign authorities as stipulated in Point b Clause 2 Article 4 hereof (if foreign investors are organizations);

d) Changes made by splitting, division, merging or acquisition.

4. Documentation included in reports on these changes as stipulated in Clause 3 of this Article shall include:

a) Materials stipulated in Point a Clause 2 of this Article;

b) Depending on the degree of change, additional documents should be submitted, including bank’s written confirmation of new indirect investment capital accounts; valid duplicate of new passports or other personal status documents; valid duplicate of proofs of change made to name, main office, address, splitting, division, merging, acquisition and other contents; other materials serving as credentials of foreign investors as prescribed in Appendix 12 enclosed herein;

With respect to change made to name, the material providing confirmation of this name change shall be one of the followings:

Business registration certificate or certificate of establishment and operation or equivalents verifying that foreign investors have changed their name, including old and new name of such foreign investors, or prospectus or equivalents of offshore funds available on the website of foreign authorities where the fund is issued the certificate of establishment and operation in which the name change is specified, or other materials issued by foreign authorities or address and information extracted from the website of authorities with new name (along with other number of the establishment certificate or business registration or tax codes or reference number kept unchanged), or other materials stating new name, enclosing the certification of change made to foreign investor's name given by foreign notaries public .

5. Foreign investors shall make reports on changes as stipulated in Clause 1 and Clause 3 of this Article under the following procedure:

a) Foreign investors shall submit a full set of valid documents to depository members as prescribed in Clause 2 and Clause 4 of this Article;

b) Depository members shall verify these documents included in change reports submitted by foreign investors and declare information required in Appendix 3 attached with this Circular on the online code registration system managed by the Vietnam Securities Depository;

c) Within one (01) working day of receipt of information provided by depository members, the Vietnam Securities Depository shall adjust information upon the request of foreign investors in the form of electronic confirmation through depository members, or transfer of securities portfolios of foreign investors to new depository members (applicable to changes stipulated in Point b Clause 1 of this Article);

Abovementioned changes shall take effect from receipt of electronic confirmation issued by the Vietnam Securities Depository. In case of rejection, the Vietnam Security Depository should send their response with clear reasons for this via the system.

d) Within a permitted duration of five (05) working days of receipt of the electronic confirmation from the Vietnam Securities Depository, depository members shall submit all required reports on changes to the Vietnam Securities Depository under the provisions of Clause 2 and Clause 4 of this Article for review and filing purposes. Materials and documents must meet the regulations laid down in Clause 3 Article 4 hereof;

dd) Within a permitted duration of five (05) working days of receipt of all required documents as stipulated in Point d of this Clause, the Vietnam Securities Depository shall issue the written confirmation of changes as requested by foreign investors (through depository members).

Article 6. Suspension of transactions, cancellation of securities trading codes

1. Foreign investors shall be subjected to transactional suspension for a maximum duration of six (06) months under the following circumstances:

a) Documents submitted to apply for trading code registration by foreign investors have been found containing false or inaccurate information, or several important information required in applications for trading code registration have been missed out;

b) Foreign investors have provided inauthentic, inaccurate and untimely reports or materials as requested by the Vietnam Securities Depository or the State Securities Commission; failed to fulfill obligations to report on ownership or publicly disclose information in accordance with laws;

c) Foreign investors perform prohibited acts stipulated in Article 9 of the Law on Securities and Clause 4 Article 1 of the Law on Amendments or Supplements to several articles of the Law on Securities;

d) Foreign investors commit violations against legal regulations on foreign exchange administration in accordance with Vietnamese laws; fail to fulfill their tax and financial obligations to the State in accordance with legal regulations.

2. The Vietnam Securities Depository shall cancel securities trading codes of foreign investors under the following circumstances:

a) Foreign investors are governed under the provisions of Point a Clause 5 Article 4 hereof;

b) After the transactional suspension stipulated in Clause 1 of this Article, deficiencies that may cause such transactional suspension of foreign investors have not been corrected;

c) The cancellation is requested by foreign investors. In this situation, foreign investors send the written request to the Vietnam Securities Depository through depository members for cancellation of securities trading codes by adopting Appendix 14 attached herein (hard copy or copy verified by global depository banks sent in the form of a telegram), enclosing a copy of written authorization, which is filed to depository members to apply for cancellation of securities trading codes.

3. Foreign investors whose trading codes have been cancelled as stipulated in Point b Clause 2 of this Article shall not be reissued securities trading codes within a stipulated period of two (02) years from the date on which these trading codes are cancelled.

Article 7. Indirect investment capital account

1. Each foreign investor shall be allowed to open one (01) indirect investment capital account at one (01) depository bank obtaining the license for foreign exchange trades in order to perform indirect investment activities in Vietnam.

2. All activities such as transmitting money to perform transactions or investments stipulated in Clause 1 Article 3 hereof, and making payments relating to securities investment activities of foreign investors; receiving and using share dividends or distributed dividends, or buying foreign currency from credit institutions licensed to perform foreign exchange trades in Vietnam for the purpose of remitting them to overseas countries and other relevant transactions must be carried out through this account.

3. In the professional practice of managing investment portfolios of foreign investors, fund management companies, branches of offshore fund management companies operating in Vietnam shall be allowed to open indirect investment capital account for the purpose of receiving capital from foreign investors who are not indirect investment capital accounts and for performing investment activities on Vietnam's securities market as stipulated in Point b Clause 1 Article 3 hereof. In this situation, indirect investment capital accounts shall be held under the name of fund management companies, branches of offshore fund management companies operating in Vietnam.

4. Entities carrying out, conditions, procedures and processes for opening, closing, use and management of indirect investment capital account shall conform to legal regulations on foreign exchange administration.

Article 8. Securities depository accounts

1. Assets deposited at depository banks:

a) After registering securities trading codes, foreign investors shall be entitled to open securities depository accounts at depository banks by sticking to the rule that, for each trading code granted, only one securities depository account is opened.

This provision shall not be applied to the circumstance under which foreign investors deposit their securities in securities trading accounts opened at securities companies;

b) Opening depository accounts at depository accounts shall conform to legal regulations on registering, depositing, clearing and settling securities. Recording of payment entries and depositing securities of foreign investors must be carried out through this account type.

2. Foreign investors shall have the right to transfer all of investment portfolios from this depository account (final settlement of a depository account) to another depository account. In the event that foreign investors deposit their assets at depository banks as stipulated in Clause 1 of this Article, before opening depository accounts at new depository banks, they must close current depository accounts, and carry the entire balance recorded in this account forward the new account. Procedure for transfer of securities portfolios between depository accounts shall conform to regulations laid down in Article 5 hereof and legal regulations on registering, depositing, clearing and settling securities.

Chapter III. OBLIGATIONS ARISING FROM FOREIGN INVESTMENT ACTIVITIES

Article 9. Obligations arising from furnishing foreign investors with services

1. In order to furnish foreign investors with services, securities trading organizations must meet the following requirements:

a) Strictly comply with legal regulations on securities and securities market;

b) If securities trading organizations are authorized by foreign investors to provide services for foreign investors or participate in securities auctions, they are required to separate trading orders, and investment directions of foreign investors from trading orders, investment directions of domestic investors and of their own, and ensure that investing in securities, purchasing shares on behalf of foreign investors comply with legal regulations on the rate of foreign ownership at Vietnamese enterprises;

c) Assume their responsibility to distribute assets to each foreign investor in a fair and reasonable manner as agreed upon in binding contracts;

d) Except for the circumstance under which those in charge of management of transaction accounts on behalf of foreign investors are individuals in accordance with legal regulations, securities companies shall not be allowed to make an investment decision on behalf of clients.

2. When performing transactions on behalf of foreign investors, transactional representatives of foreign investors must meet the following requirements:

a) Comply with laws on securities and other relevant legal regulations;

b) Comply with trading and payment directions of foreign investors, and avoid directly making investment decisions including choosing securities type, quantity, price and time of trading when not receiving trading orders, investment directions from foreign investors;

c) Avoid colluding with other domestic and foreign investors in buying and selling securities with the aim of creating artificial demand and supply; transact securities in collusion with others to continuously buy and sell securities to manipulate stock price;

d) Comply with reporting obligations as requested in writing by the State Securities Commission.

3. The Vietnam Securities Depository, depository members and securities trading organizations furnishing foreign investors with services shall be responsible for keeping foreign investor’s information confidential in accordance with relevant legal regulations and providing such information for competent authorities whenever the written request is obtained.

4. The Vietnam Securities Depository shall be responsible for establishing the online code registration system and provide instructions for use of this system.

5. The Vietnam Securities Depository shall provide specific provisions on warning forms, alerts and temporary stop for use of the online code registration system of depository members if these depository members fail to submit required documents specified in the list stipulated in Point d Clause 1 Article 4, and Point d Clause 5 hereof.

6. The Vietnam Securities Depository shall be allowed to decide the unlimited termination of the online code registration system of depository members if these depository members fail to declare accurate information about foreign investors used for applying for trading code registration, or register fictitious trading codes, or make code registration for ineligible entities after obtaining consent from the State Securities Commission.

7. Depository members shall be allowed to accept foreign investor’s application for trading code registration only after receiving required documents listed in the regulation laid down in Clause 2 Article 4 hereof. Depository members are strictly prohibited from registering fictitious trading codes or registering trading codes for ineligible entities. Depository members carrying out fictitious trading code registration or accepting code registration from ineligible entities must assume their full liability, even their financial obligations that arise from transactions performed through transactional accounts opened on the basis of such trading codes.

Article 10. Reporting obligations arising from foreign investment activities

1. Depository members are required to prepare and store documents and records on asset depository activities performed through depository accounts of foreign investors. These materials must be provided for competent authorities, even including those that fall within the scope of application of regulations on investor’s information and information security in accordance with legal regulations.

2. Depository members must report to the State Securities Commission on a monthly basis on statistical data on depository accounts and portfolios of foreign investors under the provisions of Appendix 4 issued together with this Circular. If depository members are branches of foreign credit institutions or wholly foreign-owned credit institutions established in Vietnam, they are required to supplement reports on their investment activities, portfolios by completing the form given in Part IV of Appendix 4 issued together with this Circular.

3. Depository banks where foreign investors have opened indirect investment capital accounts, share-buying paid-in capital accounts must report to the State Securities Commission every two (02) weeks on foreign investor’s capital turnovers on these accounts by adopting the form stipulated in Part III of Appendix 4 issued together with this Circular.

4. Depository members must report to the State Securities Commission on a monthly basis on statistical data on depository accounts and portfolios of foreign investors under the provisions of Appendix 5 issued together with this Circular.

5. Transactional representatives of foreign investors shall be responsible for reporting on appointed investment activities on behalf of foreign investors by adopting the form stipulated in Appendix 6 issued together with this Circular when obtaining the request from the State Securities Commission.

6. The Vietnam Securities Depository shall send monthly reports on the followings to the State Securities Commission:

a) Grant of securities trading codes to foreign investors and changes made by foreign investors (if any) by adopting the form stipulated in Appendix 7 issued together with this Circular;

b) Full update of data on foreign investors and portfolios of foreign investors in alignment with the system for operational management of foreign investors managed by the State Securities Commission.

7. The Stock Exchange shall submit periodic reports to the State Securities Commission on the daily, monthly and yearly basis on trading activities of foreign investors by adopting the form stipulated in Appendix 8 issued together with this Circular.

8. The permitted duration of reports shall conform to regulations laid down in Clause 2, 3, 4, 5, 6 and 7 of this Article as follows:

a) Before 4:00 pm everyday for daily reports;

b) Within a permitted duration of three (03) working days, and after the 15th and 30th every month for reports on capital turnovers of foreign investors;

c) Within a permitted duration of five (05) working days from the ending date of the month for monthly reports;

d) Within a permitted duration of ninety (90) days from the ending date of the year for yearly reports.

9. When necessary, the State Securities Commission shall request the Vietnam Securities Depository, the Stock Exchange, securities trading organizations, depository members, transactional representatives, or investors, shall directly report on foreign investor’s activities.

10. The permitted duration of submission of reports as stipulated in Clause 9 of this Article is within forty eight (48) hours of receipt of the request for reports from the State Securities Commission.

11. Reports of the Stock Exchange, the Vietnam Securities Depository, securities trading organizations, or depository members, as stipulated in this Article must be sent along with electronic data files to the State Securities Commission and must be stored for the minimum period of five (05) years.

12. Foreign investors and group of related foreign investors shall take on obligations to make ownership reports and disclose information about securities trades in accordance with legal regulations on information disclosure on the securities market under the following rules:

a) Foreign investors shall fulfill by themselves, or appoint one (01) depository member, one (01) securities trading organization, or their representative offices (if any), or another organization, or authorize one (01) individual to fulfill obligations to make ownership reports and disclose information in accordance with legal regulations;

b) The group of related foreign investors shall be responsible for appointing one (01) depository member, one (01) securities trading organization, or its representative offices (if any), or another organization, or authorizing one (01) individual to fulfill obligations to make ownership reports and disclose information in accordance with legal regulations on information disclosure on the securities market;

The notification of appointment or change of organizations or individuals taking on obligations to make ownership reports and disclose information by adopting the form stipulated in Appendix 15 enclosed herein must be sent to the State Securities Commission, the Stock Exchange and the Vietnam Securities Depository not later than three (03) working days prior to the date on which the appointment or authorization takes effect, enclosing the valid copy of certificates of establishment and operation, or business registration certificates, or certificates for fund establishment registration, or equivalents (of appointed organizations), or the true copy of valid ID cards or passports or other personal status documents (of authorized persons);

c) Foreign investors and group of related foreign investors shall be responsible for providing a full amount of information about their securities ownership status in order for appointed organizations or authorized individuals in charge of information disclosure to fulfill their obligations to make ownership reports and disclose information in accordance with laws;

d) Obligations to make ownership reports and disclose information taken on by foreign investors, group of related foreign investors may arise under the following circumstances:

- The total number of stocks, closed-end fund certificates of foreign investors, group of related foreign investors accounts for more than 5% of outstanding voting shares of an issuing organization, or more than 5% of closed-end fund certificates, or fails to reach the abovementioned rates.

- Foreign investors, group of related foreign investors are holding more than 5% of outstanding voting shares of an issuing organization, or more than 5% of closed-end fund certificates, or are performing transactions to change the ownership rate exceeding 1% of the benchmark rate;

- If foreign investors are or, in the group of related foreign investors, there are foreign investors who are members of public companies, public funds, they must comply with legal regulations on information disclosure on the securities market;

Regulations laid down in this Point shall not be applied to the situation where the ownership rate has been changed as issuing organizations trade fund certificates or issue more stocks.

dd) Contents of ownership reports and information disclosure shall conform to the form stipulated in Appendix 18, Appendix 19 enclosed herein. Time-related requirements for ownership reports and information disclosure shall comply with legal regulations on information disclosure on the securities market.

Chapter IV. FOREIGN OWNERSHIP ON THE SECURITIES MARKET

Article 11. Foreign ownership on Vietnam's securities market

1. The maximum rate of foreign ownership of public companies; state-owned enterprises carrying out the equitization in the form of a public securities offering; the rate of foreign investors’ ownership of bonds, fund certificates for securities investment, stocks of securities investment companies, and non-voting stocks of public companies, derivative securities, depository receipts shall be determined under the provisions of Clause 2 Article 1 of the Government's Decree No. 60/2015/ND-CP dated June 26, 2015 on amendments or supplements to several articles of the Government's Decree No. 58/2012/ND-CP dated July 20, 2012 on providing specific provisions and guidance on the implementation of a number of articles of the Law on Securities and the Law on Amendments and Supplements to several articles of the Law on Securities (hereinafter referred to as the Decree No. 60/2015/ND-CP).

2. Public companies shall be responsible for determining investment and business industries and sectors as well as the maximum rate of foreign ownership of companies. The list of conditional investment and business industries or sectors; the rate of foreign ownership in each investment and business industry, sector (if any) shall conform to International Agreements, provisions laid down in investment or corporate laws and other relevant legal regulations.

3. Public companies which are not subject to restrictions on the rate of foreign ownership as stipulated in Clause 2 Article 1 of the Decree No. 60/2015/ND-CP, when wishing to limit the actual foreign ownership rate, shall clearly stipulate the maximum rate of foreign ownership of the company’s charter.

4. If public companies impose the rate of foreign ownership exceeding the permitted rate stipulated in Clause 2 Article 1 of the Decree No. 60/2015/ND-CP, they and their related organizations or individuals must ensure that they do not allow an increase in the foreign ownership rate in companies.

5. The foreign ownership rate in securities trading organizations is unlimited according to the following regulations:

a) Foreign organizations meeting requirements stipulated in Clause 21 and Clause 24 Article 1 of the Decree No. 60/2015/ND-CP shall be allowed to hold more than 51% of the charter capital of securities trading organizations;

b) Each foreign investor as an individual or other organization shall only be allowed to hold less than 51% of the charter capital of securities trading organizations.

6. The maximum rate of foreign ownership of securities trading organizations must be stipulated in the charter of these securities trading organizations, except for the situation in which they are organized in the form of single member limited companies.

Article 12. Obligations of public companies to make reports and disclose information on foreign ownership

1. Public companies making changes to the rate of foreign ownership shall be obliged to make reports and disclose information. Reporting on the foreign ownership rate is required under the following circumstances:

a) Public companies which are not subject to restrictions on the rate of foreign ownership as stipulated in Clause 2 Article 1 of the Decree No. 60/2015/ND-CP make adjustments to their foreign ownership rate;

b) When obtaining the permission for registration as public companies or offering or issuing stocks, public companies make changes to their foreign ownership rate;

c) Companies are restructured by going through the process of splitting, division, merging or acquisition which may lead to changes made to the foreign ownership rate;

d) Changes in investment and business industries or sectors result in changes to the foreign ownership rate as stipulated in Clause 2 Article 1 of the Decree No. 60/2015/ND-CP;

dd) International Agreements or relevant laws have been changed in terms of regulations on the foreign ownership rate in investment and business industries or sectors in which public companies are operating.

2. Reporting processes, procedures and documentation for the foreign ownership rate as stipulated in Point a, d, dd Clause 1 of this Article shall conform to regulations laid down in Article 13 hereof. Reporting and information disclosure as stipulated in Point b, c Clause 1 of this Article shall be carried out in the same manner as reporting and information disclosure required to be carried out during the process of applying for registration as public companies, registration of stock offering, issue or company restructuring in accordance with legal regulations.

Article 13. Processes, procedures and documentation for reporting the foreign ownership rate in public companies

1. Documentation submitted to make reports on the rate of foreign ownership of public companies as stipulated in Point a, d and dd Clause 1 Article 12 hereof shall be composed of the followings:

a) The written notification of the maximum rate of foreign ownership of a company by adopting the form stipulated in Appendix 16 attached with this Circular, enclosing the valid copy of the establishment and operation certificate, business registration certificate or enterprise registration certificate;

b) Materials shall be additionally provided, including:

- If public companies are not subject to restrictions on the rate of foreign ownership as stipulated in Clause 2 Article 1 of the Decree No. 60/2015/ND-CP, they must additionally provide the followings:

Extracts of address and information posted on the national business registration portal, the national portal for foreign investment, or websites of competent state agencies or other valid documents of competent state agencies under the guidance of the State Securities Commission which help verify that companies are operating in industries and sectors which are not subject to restrictions on the foreign ownership rate; meeting minutes and resolutions of the management board on no restriction imposed on the foreign ownership rate (if companies do not set limits on the foreign ownership rate), or meeting minutes or resolutions of the general meeting of shareholders on restrictions on the foreign ownership rate and the company’s charter stipulating the maximum rate of foreign ownership (if companies set limits on the foreign ownership rate);

- If public companies are subject to restrictions on the rate of foreign ownership as stipulated in Clause 2 Article 1 of the Decree No. 60/2015/ND-CP, they must additionally provide the followings:

Extracts of address and information posted on the national business registration portal, the national portal for foreign investment, or websites of competent state agencies or other valid documents of competent state agencies relating to investment and business industries and sectors, and the foreign ownership rate (if any) imposed on investment and business industries and sectors in which companies are operating in accordance with legal regulations on investment, relevant laws, International Agreements or other materials under the guidance of the State Securities Commission on determination of investment and business industries and sectors and the foreign ownership rate imposed on companies;

- If state-owned enterprises carry out the equitization in the form of public securities offerings, the following must be additionally provided:

Documents of competent authorities on approving the equitization plan in which contents relating to the maximum foreign ownership rate must be specified.

2. Within a permitted duration of ten (10) working days of receipt of a full and valid amount of required reporting documents as stipulated in Clause 1 of this Article, the State Securities Commission shall confirm receipt of all required reporting documents from companies.

3. The abovementioned duration shall be exclusive of the duration when the State Securities Commission collaborates with competent state agencies in confirming information about the foreign ownership rate under the following circumstances:

a) Companies do not have investment and business industries and sectors, or operational scope of these industries and sectors are not clear, or investment and business industries and sections registered in the business registration certificate or enterprise registration certificate are not consistent with those available on the national business registration portal, the national portal for foreign investment or websites of competent authorities for investment and business industries and sectors;

b) Companies are operating in investment and business industries and sectors which Vietnam has not agreed upon in International Agreements.

4. Within a permitted duration of one (01) working day of receipt of the confirmation of the State Securities Commission, public companies shall post information on company's websites and notify the Stock Exchange (if companies are listing and registering their transactions), and the Vietnam Securities Depository, of the maximum rate of foreign ownership of companies.

5. Foreign investors shall trade securities according to the maximum rate of foreign ownership immediately after public companies disclose information about the maximum rate of foreign ownership of companies in accordance with regulations laid down in Clause 4 of this Article, except for those companies applying for the registration as public companies.

Article 14. Processes, procedures and documentation submitted to apply for consent to foreign organizations’ ownership of more than 51% of the charter capital of securities trading organizations

1. Foreign organizations meeting regulations laid down in Clause 21 and Clause 24 Article 1 of the Decree No. 60/2015/ND-CP and wishing to hold more than 51% of the charter capital of securities trading organizations must seek approval from such securities trading organizations before filing their documentation to obtain the permission from the State Securities Commission.

2. Documentation submitted to apply for the consent to foreign investors' ownership of more than 51% of the charter capital of securities trading organizations must include the followings:

a) The application form for the consent to trades performed to make an increase in the ownership rate by 51% of the charter capital of securities trading organizations by adopting the form given in Appendix 9 enclosed herein;

b) Agreements in principle on stock trading and capital contribution between trading parties (if any), enclosing the written authorization that foreign organizations grant securities trading organizations to go through the procedure for request for the trading approval;

c) The valid duplicate of the establishment and operation certificate, business registration certificate or equivalents;

d) The valid copy of the meeting minutes, resolutions of the general meeting of shareholders, the members’ council, or the decision of the owners of foreign organizations on purchasing shares to hold more than 51% of the charter capital of securities trading organizations in Vietnam;

dd) The duplicate of the meeting minutes, resolutions of the general meeting of shareholders, the members’ council, or the decision of the owners of securities trading organizations on allowing foreign organizations to purchase shares to own more than 51% of the charter capital of securities trading organizations (except for the situation in which foreign organizations carry out the tender offer in accordance with laws), enclosing the company’s charter in which the maximum rate of foreign ownership of securities trading organizations;

e) Commitment of foreign organizations to only using the owner's equity and other legitimate capital for buying shares, and commitment in which foreign investors undertake that they are not subject to ownership restrictions in accordance with regulations laid down in Point c Clause 7 and Point c Clause 8 Article 71 of the Decree No. 58/2012/ND-CP;

g) The latest annual financial statement which has been audited and the financial statements released in the latest quarter. If foreign organizations are parent companies, the consolidated financial statements released in the latest year and audited must be additionally provided. Information provided on audited financial reports must prove that foreign organizations meet regulations laid down in Point b Clause 6 Article 71 of the Decree No. 58/2012/ND-CP;

h) The confirmation of competent agencies or organizations in overseas countries where main offices of foreign organizations are located which certifies that foreign organizations are not put under control or special control or in other alarming state, and other materials proving that foreign organizations meet requirements stipulated in Clause 6, 10 Article 71 of the Decree No. 58/2012/ND-CP and Clause 24 Article 1 of the Decree No. 60/2015/ND-CP.

3. Materials written in foreign languages which are translated into Vietnamese and authenticated by an organization performing the translation function in accordance with Vietnamese legal regulations. Documents issued by competent foreign authorities which must be notarized and legalized by the consulate in accordance with relevant laws. The request for trading approval must be made into one (01) original copy directly submitted to the State Securities Commission or sent by posts.

4. Within a permitted period of fifteen (15) days of receipt of all statutory documents, the State Securities Commission shall issue the decision to grant permission to foreign organizations to perform transactions to hold more than 51% of the charter capital of securities trading organizations. In case of rejection, the State Securities Commission must send their written response and clearly state reasons for this.

5. Related parties must complete trading procedures after obtaining the permission for trades within six (06) months from the entry of the decision of the State Securities Commission into force. Where such transactions have not been completed within the abovementioned duration, the written permission of the State Securities Commission shall automatically become defunct.

After obtaining permission to own more than 51% of the charter capital of a securities trading organization, foreign organizations are not required to go through the procedure for request for approval granted by the State Securities Commission if translations are performed to serve the purpose of changing the rate of their ownership of that securities trading organization, including public offering or tender offer as stipulated in Clause 7 and Clause 8 of this Article.

6. Within a permitted duration of five (05) days from the date on which transactions have already been completed, securities trading organizations are obliged to send reports on transactional results to the State Securities Commission by adopting the form stipulated in Appendix 17 enclosed herein.

7. In the event that securities trading organizations carry out the non-public stock offering or public securities offering which results in an foreign investor’s ownership of more than 51% of the charter capital, securities trading organization shall be responsible for additionally providing related materials for the application for securities offering as prescribed in Clause 2 of this Article, and complying with legal regulations on securities offering.

8. In the event that foreign organizations intending to purchase shares to own more than 51% of the charter capital of securities trading organizations are public companies, foreign organizations shall be responsible for submitting one (01) set of documents as prescribed in Point a, c, dd, e, g, h Clause 2, 3 and 4 of this Article to the State Securities Commission and complying with securities laws on public offering.

Chapter V. IMPLEMENTARY PROVISIONS

Article 15. Effect

This Circular shall enter into force from October 1, 2015 and replace the Circular No. 213/2012/TT-BTC of the Ministry of Finance dated December 6, 2012 on providing guidance on foreign investment activities on Vietnam’s securities market.

Article 16. Implementation

1. Within a permitted period of six (06) months from the entry of this Circular into force, the Vietnam Securities Depository and depository members must perfect their system to organize the task of issuing securities transaction codes to foreign investors in accordance with provisions enshrined in this Circular.

2. Within a permitted period of six (06) months from the entry of this Circular into force, the grant of securities trading codes to foreign investors shall be carried out by the Vietnam Securities Depository on the basis of the set of documents prepared under the provisions of the Circular No. 213/2012/TT-BTC of the Ministry of Finance on providing guidance on operations of foreign investors on Vietnam's securities market or the set of documents prepared under the provisions of Clause 3 Article 4 hereof.

3. The State Securities Commission, the Vietnam Securities Depository, the Stock Exchange, securities trading organizations and depository members as well as related organizations or individuals shall be responsible for implementing this Circular.