Quyết định 1550/2004/QD-NHNN

DECISION

ON THE FOREIGN EXCHANGE CONTROL FOR THE PURCHASE, SALE OF SECURITIES BY FOREIGN INVESTORS IN THE STOCK EXCHANGE

THE GOVERNOR OF THE STATE BANK

- Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated 12 December 1997; the Law on the amendment, supplement of several Articles of the Law on the State Bank of Vietnam No. 10/2003/QH11 dated 17 June 2003;
- Pursuant to the Decree No. 144/2003/ND-CP dated 28 November 2003 of the Government on securities and securities market;
- Pursuant to the Decision No. 146/2003/QD-TTg dated 17 July 2003 of the Prime Minister on the ratio of foreign party participation in the Vietnamese securities market;
- Upon the proposal of the Director of the Foreign Exchange Control Department,

DECIDES:

I. GENERAL PROVISIONS

Article 1. Governing scope

1. This Decision shall govern foreign exchange transactions of foreign investors relating to the purchase, sale of securities listed in the Stock Exchange of Vietnam, including the capital remittance into Vietnam for the purchase, sale of securities, the conversion of foreign currencies into Vietnam Dong, the opening and use of VND account for securities purchase, sale, the conversion of Vietnam Dong into foreign currencies and overseas remittance of foreign currencies.

2. Foreign exchange transactions relating to the activity of capital contribution, the purchase of shares in Vietnamese enterprises by foreign investors shall be performed in accordance with separate guidance of the State Bank.

3. Foreign exchange transactions of foreign investors relating to the activity of direct investment in Vietnam in accordance with the Law on foreign investment in Vietnam shall not be governed by this Decision.

Article 2. Interpretation

In this Decision, following terms shall be construed as follows:

1. Foreign investors include:

- Non-residents being foreign financial, economic organizations that are set up in accordance with the foreign laws;

- Non-residents being foreigners who do not permanently reside in Vietnam, Vietnamese persons who have settled overseas;

- Residents being foreigners who reside permanently in Vietnam.

2. Authorized banks are the banks operating in Vietnam and permitted by the State Bank to engage in foreign exchange activity.

3. Securities listed at the Stock Exchange include different types of stocks, bonds, certificate of investment fund and other types of securities in accordance with provisions of applicable laws.

Article 3. Currency used in the purchase, sale of securities

Within the territory of Vietnam, the purchase, sale of securities by foreign investors shall be made in Vietnam Dong.

Article 4. Source of capital used in the purchase of securities

Foreign investors shall be entitled to use following sources in foreign currency and in Vietnam Dong to purchase securities:

1. Foreign currency remitted from abroad into Vietnam in accordance with current provisions on foreign exchange control;

2. Foreign currency and Vietnam Dong on the foreign investors accounts, which are maintained at authorized banks;

3. Vietnam Dong on the accounts capital contribution, share purchase of foreign investors opened at commercial banks in Vietnam in accordance with the State Banks provisions on the foreign exchange control applicable to the capital contribution, share purchase by foreign investors in Vietnamese enterprises;

4. Distributed profits of foreign investors from their direct investment activities in Vietnam;

5. Receipt of foreign investors from the transfer, liquidation, dissolution of their direct investment activities in Vietnam in accordance with provisions of applicable laws;

6. Salaries, bonus and other legal incomes of foreign individuals in Vietnam in accordance with provisions of applicable laws;

7. Other sources if accepted by the State Bank.

Article 5. Capital remittance into and out of Vietnam

1. If foreign investors wish to use their foreign currency, remitted from abroad or maintained on their accounts foreign currency at the authorized banks in Vietnam in accordance with provisions of applicable laws on foreign exchange control, for securities investment, they must transfer their foreign currency to the account foreign currency demand deposits for special purposes of the securities company opened at the authorized bank in accordance with provisions in this Decision. They must sell foreign currency to the authorized bank to exchange for Vietnamese Dong for securities purchase.

2. After having fulfilled their tax obligations to the State of Vietnam in accordance with provisions of applicable laws, foreign investors shall be entitled to purchase foreign currency at authorized banks to remit overseas in accordance with provisions of applicable laws on foreign exchange control.

II. OPENING AND USE OF ACCOUNTS OF FOREIGN INVESTORS AND SECURITIES COMPANIES

Article 6. Opening of account securities transactions in VND of foreign investors at the Securities Company

1. Foreign investors shall open the account securities transactions in VND at a securities company for the sake of their securities purchase, sale activities at the Stock Exchange in accordance with provisions of applicable laws on securities and securities market.

2. The Securities Company shall manage separately the securities transaction deposits of each foreign investor and separate the securities transaction deposits of foreign investors and its own money. The whole deposits of foreign investors must be transferred into the account VND deposits for special purposes of the Securities Company opened at an authorized bank under provisions in Article 7 of this Decision. All transactions of money transfer, payment relating to the securities investment activities of the foreign investors shall be performed through this account at the authorized bank.

Article 7. Opening and use of the account VND demand deposits for special purposes and the account foreign currency demand deposits for special purposes of the securities company at the authorized bank

The securities company must open one (01) account VND demand deposits for special purposes and one (01) account foreign currency demand deposits for special purposes at an (01) authorized bank for the maintenance of the entire securities transaction deposits of foreign investors.

1. Account VND demand deposits for special purposes

Receipts:

a. Receipts from the sale of foreign currency on the account foreign currency demand deposits for special purposes of the securities company for the sake of securities investment activity under the authorization of the foreign investor;

b. Receipts from money transfer of VND sources of the foreign investor as stated in paragraph 2, 3, 4, 5, 6 and 7, Article 4 of this Decision;

c. Receipts from the sale of securities, from the receipt of dividends, bonds interests and other relevant receipts arising from the purchase, sale of securities under the authorization of the foreign investor;

Payments:

a. Payment for the purchase of securities being in circulation at the Stock Exchange in Vietnam under the authorization of the foreign investor;

b. Payment for the transfer to the account capital contribution, VND share purchase of the foreign investor for the capital contribution, purchase of shares in Vietnamese enterprises;

c. Payment for the spending of the foreign investor in Vietnam, which are made from dividends income, bonds interests gained from his securities investment activity.

d. Payment for the purchase of foreign currency to remit overseas under the authorization of the foreign investor.

2. Account foreign currency demand deposits for special purposes

Receipts:

a. Receipt from the money transfer from abroad into Vietnam under the authorization of the foreign investor;

b. Receipts from the money transfer from the account foreign currency of the foreign investor opened at an authorized bank in Vietnam.

Payments:

a. Payment for the sale of foreign currency to the authorized bank where the account foreign currency is opened for VND to transfer to the account VND deposits for special purposes of the securities company for the sake of the securities investment activity under the authorization of the foreign investor;

b. Payment for the overseas remittance under the authorization of the foreign investor.

Article 8. Vouchers verification

1. The authorized bank, upon carrying out the receipt, payment operations on the account VND deposits for special purposes of a securities company, shall be responsible for the verification of following vouchers:

- The contract on the opening of account securities transaction between the securities company and the foreign investor;

- The transaction order of the foreign investor placed at the securities company;

- In respect of expenditures from income sources such as dividends, bonds interests of the foreign investor for his spending in Vietnam: the written confirmation by the securities company of the dividends, bonds interests of the foreign investor.

- In respect of expenditures in VND for the foreign currency purchase to remit overseas: the written confirmation by the State competent agency of the foreign investors fulfillment of tax obligations to the State of Vietnam for investments in securities at the Stock Exchange (if applicable).

2. For transactions of foreign currency sale to the foreign investor: the authorized bank shall be only permitted to sell foreign currency to the foreign investor to remit overseas, but not be permitted to sell foreign currency to transfer to the account foreign currency of the foreign investor.

Article 9. Reporting

The report on the account deposits for special purposes of the securities company opened at the authorized bank shall be made in accordance with current provisions of the State Bank on the statistic reporting regime applicable to units of the State Bank and credit institutions.

III. ORGANIZATION OF IMPLEMENTATION

Article 10. Implementing provisions

1. This Decision shall be effective after 15 days from its publication in the Official Gazette and replace the Decision No. 998/2002/QD-NHNN dated 13 September 2002 of the Governor of the State Bank.

2. The Director of the Foreign Exchange Control Department, Heads of units of the State Bank, General Managers of the State Banks branches in provinces, cities under the central Governments management; Chairpersons of the Board of Directors and General Directors (Directors) of credit institutions permitted to engage in foreign exchange activities, Chairpersons of the Board of Directors and Directors of the Securities Companies, foreign investors participating in the sale and purchase of securities shall be responsible for the implementation of this Decision.