Thông tư 10/2016/TT-NHNN

CIRCULAR

GUIDING CERTAIN CONTENTS IN THE GOVERNMENT'S DECREE NO. 135/2015/ND-CP DATED DECEMBER 31, 2015 PROVIDING FOR REGULATIONS ON OUTWARD PORFOLIO INVESTMENT

Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on credit institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Investment No. 67/2014/QH13 dated November 26, 2014;

Pursuant to the Ordinance on foreign exchange control No. 28/2005/PL-UBTVQH11 dated December 13, 2005 and the Ordinance No.06/2013/PL-UBTVQH13 dated March 18, 2013 on amendment and supplementation of a number of articles of the Ordinance on foreign exchange control;

Pursuant to the Government's Decree No. 135/2015/ND-CP dated December 31, 2015 providing for regulations on outward porfolio investment;

Pursuant to the Government’s Decree No.156/2013/ND-CP dated November 11, 2013 defining functions, tasks, powers and apparatus of the State Bank of Vietnam;

At the request of the Director General of Foreign Exchange Management Department;

The Governor of the State Bank of Vietnam promulgates this Circular to provide for guidelines on certain contents in the Government's Decree No. 135/2015/ND-CP dated December 31, 2015 providing for regulations on outward porfolio investment.

Chapter I

GENERAL PROVISIONS

Article 1. Scope

This Circular provides for guidelines on certain contents in the Government's Decree No. 135/2015/ND-CP dated December 31, 2015 providing for regulations on outward porfolio investment (hereinafter referred to as the Decree No. 135/2015/ND-CP).

Article 2. Regulated entities

1. Investors mentioned in Clause 1 Article 2 of the Decree No. 135/2015/ND-CP.

2. Other entities involved in outward portfolio investment.

Article 3. Interpretation of terms

In this Circular, these terms are construed as follows:

1. Licensed credit institutions include commercial banks and branches of foreign banks which are allowed to provide foreign exchange services in Vietnam in compliance with the laws.

2. Foreign organization having the program that awards shares issued in foreign nation refers to an organization that is established under the law of a foreign nation and has a commercial presence established in Vietnam (hereinafter referred to as foreign organization).

3. Organization executing the program that awards shares issued in foreign nation refers to a commercial presence of foreign organization in Vietnam, which is an economic organization possessing foreign investment, branch, representative office or executive office of a foreign party in business cooperation contract (hereinafter referred to as the share awarding program-executing organization).

4. Foreign currency account for proprietary trading of outward portfolio investments refers to a payment account in foreign currency which is opened by a proprietary trader at 01 (one) licensed credit institution to collect and make payments related to its proprietary trading of outward portfolio investments (hereinafter referred to as proprietary trading account). 

5. Foreign currency account for outward portfolio investment trust refers to a payment account in foreign currency which is opened by a entrusted organization at 01 (one) licensed credit institution to collect and make payments related to the activities of outward portfolio investment trust (hereinafter referred to as trust account). 

6. Account for executing the program that awards shares issued in foreign nation refers to a payment account in foreign currency which is opened by the share awarding program-executing organization at 01 (one) licensed credit institution to collect and make payments related to the activities of the program awarding shares issued in foreign nations (hereinafter referred to as program-executing account).

7. Total annual proprietary trading limit refers to the highest annual amount of foreign currency that a proprietary trader can spend on proprietary trading activities of outward portfolio investments.

8. Total annual trust limit refers to the highest annual amount of foreign currency that an entrusted organization is allowed to be entrusted with for conducting activities of outward portfolio investment trust.

Article 4. Outward portfolio investment instruments

1. Proprietary traders and entrusted organizations are allowed to make outward portfolio investments through the following investment instruments:

a) Shares listed on overseas stock markets;

b) Securities investment fund certificates;

c) Bonds, bills and promissory notes issued by the Government and those issued by organizations that have been rated by international credit rating organizations such as Standard & Poor's, Moody's Investors Service and Fitch Ratings.

2. The trading of certificates of deposit conducted by proprietary traders that are commercial banks and general financial companies shall comply with regulations of the Law on credit institutions and guidelines announced by the State Bank of Vietnam (hereinafter referred to as the State Bank).

Article 5. Safe investment ratio of proprietary traders that are commercial banks and general financial companies

1. The safe investment ratio of a proprietary trader that is a commercial bank or general financial company is 7% of its equity capital, excluding investments and business activities of its branches in foreign nations.

2. The activities of outward portfolio investments by commercial banks and general financial companies shall not exceed the safe investment ratio prescribed in Clause 1 of this Article and must conform to current regulations and laws on prudential ratios and limits for activities of commercial banks and general financial companies.

3. In case of excess of the safe investment ratio due to reduction of equity capital, commercial banks and general financial companies shall:

a) Report to the State Bank immediately when the excess of the safe investment ratio due to reduction of equity capital occurs;

b) Within 03 (three) months from the month in which the excess of safe investment ratio occurs for the first time, implement necessary measures for increasing equity capital, and implement treatment measures against investments in foreign nations and transfer invested money in foreign nations to Vietnam for ensuring the compliance with the safe investment ratio as regulated in Clause 1 of this Article;

c) Suspend the transfer of capital for outward portfolio investments according to the annual limit of which the registration has been certified by the State Bank.

Article 6. Application and procedures for permission for outward portfolio investments granted by the Prime Minister to other investment cases

1. The application submitted to the Prime Minister to grant permission for outward portfolio investments to other investment cases as prescribed in Article 9 of the Decree No. 135/2015/ND-CP shall consist of:

a) The application form for permission for outward portfolio investments (using the form stated in Annex No. 01 herein);

b) The copy which is originated from the master register or certified copy or copy, enclosed with the original copy for comparison, of business registration certificate or establishment decision or other document with equivalent legal effect. The person making the comparison, if the original copy is presented together with the copy in course of application submission, shall verify the accuracy of the copy with its original;

c) Written approval for outward portfolio investments, enclosed with the outward portfolio investment plan (in which, total investment, investment objectives, form of investment, investment instruments, equity capital for outward portfolio investments, investment period and the credit institution where foreign currency account will be opened to make outward portfolio investments must be specified), granted by the authorized body of the economic organization applying for permission for outward portfolio investments.

2. Procedures for permission for outward portfolio investments granted by Prime Minister to other investment cases as prescribed in Article 9 of the Decree No. 135/2015/ND-CP are as follows:

a) The investor shall, directly or by post, submit 06 (six) sets of application in Vietnamese language for permission for outward portfolio investments to the State Bank.  Within 05 (five) working days from the date on which the application is received, the State Bank shall grant written request for modification or supplementation if the application is invalid or insufficient;

b) Within 05 (five) working days from the date on which the valid application is received, the State Bank shall get opinions of Ministry of Planning and Investment, Ministry of Finance and relevant ministries;

c) Within 35 (thirty-five) working days from the date on which the valid application is received, the State Bank shall summarize opinions given by relevant agencies as mentioned in Point b of this Clause and submit report thereof to the Prime Minister for consideration;

d) Within 05 (five) working days from the date on which guidelines are given by the Prime Minister, the State Bank shall grant written notice to the investor to make outward portfolio investments.

3. The investor that is one of the other investment cases permitted to make outward portfolio investments by the Prime Minister must open 01 (one) foreign currency account at 01 (one) licensed credit institution to transfer capital for making outward portfolio investments, and transfer capital and lawful incomes to Vietnam in conformity with the outward portfolio investment plan approved by the Prime Minister.

Chapter II

PROGRAM AWARDING SHARES ISSUED IN FOREIGN NATIONS

Article 7. Entities making outward portfolio investments by participating in a program awarding shares issued in foreign nations

Vietnamese employees working in foreign organizations in Vietnam are allowed to make outward portfolio investments by participating in a program awarding shares issued in foreign nations.

Article 8. Principles for executing a program awarding shares issued in foreign nations

The program awarding shares issued in foreign nations is executed by applying the following principles:

1. The program that awards shares issued in foreign nations to Vietnamese employees shall be only executed by a share awarding program-executing organization after the registration thereof has been confirmed by the State Bank.

2.  Earnings from sale of shares and/or share options of Vietnamese employees, dividends and other lawful incomes in foreign currency must be transferred to Vietnamese employees via the program-executing account laid down in Article 12 of this Circular.

3. The execution of share awarding program must comply with regulations on foreign exchange management, payment of personal income tax and other relevant laws.

Article 9. Awarding forms

1. Award actual shares.

2. Award share options with special rights.

Article 10. Rights of Vietnamese employees

1. Receive and own common shares; sell awarded shares in foreign nations; receive dividends and other lawful incomes through the share awarding program-executing organization.

2. Receive share options to buy shares at discounted price; execute the awarded share options in foreign nations and own shares bought at discounted price; receive dividends and other lawful incomes; sell awarded share options in foreign nations through the share awarding program-executing organization.

3. Use self-gained foreign currency in accounts; extract money from salary, bonuses or use other lawful incomes to buy foreign currency for making settlement for buying shares at discounted price at licensed credit institution through the share awarding program-executing organization.

4. Receive earnings from sale of common shares in foreign nations, sale of common share options in foreign nations in foreign currency through the share awarding program-executing organization.

Article 11. Procedures for registration of execution of program awarding shares issued in foreign nations

1. The share awarding program-executing organization shall, directly or by post, submit 01 (one) set of application in Vietnamese language for registration of execution of program awarding shares issued in foreign nations to the State Bank. The application consists of:

a) The written registration of execution of program awarding shares issued in foreign nations (using the form stated in Annex 02 herein);

b) Documents proving legal status of relevant foreign organization;

c) Copy of investment registration certificate or operation registration certificate of executive office or permit for establishment of branch/representative office of foreign organization in Vietnam or other document with equivalent legal effect;

d) Written detailed description of the program awarding shares issued in foreign nations;

dd) List of Vietnamese employees who are eligible for participating in the program awarding shares issued in foreign nations.

2. Within 05 (five) working days from the date on which the application is received, the State Bank shall grant a written request for modification or supplementation if the application is invalid or insufficient.

3. Within 15 (fifteen) working days from the date on which the valid application is received, the State Bank shall confirm the registration of execution of the program that awards shares issued in foreign nations to Vietnamese employees.

4. Before terminating operations in Vietnam, if any, the share awarding program-executing organization must sell awarded shares and awarded share options, and transfer the entire earnings to Vietnamese employees who participate in the program awarding shares issued in foreign nations.

Article 12. Opening and use of program-executing accounts

1. After the State Bank has confirmed the registration of execution of the program awarding shares issued in foreign nations, the share awarding program-executing organization must 01 (one) program-executing account to collect and make payments as regulated in Clause 2 and Clause 3 of this Article.

2. Collections:

a) Collect foreign currency earnings from sale of shares in foreign nations;

b) Collect foreign currency earnings from sale of share options in foreign nations;

c) Collect dividends and other lawful incomes related to the program awarding shares issued in foreign nations;

d) Collect money from foreign currency accounts of Vietnamese employees who participate in the program awarding shares issued in foreign nations;

dd) Purchase foreign currency from licensed credit institutions for Vietnamese employees who participate in the program awarding shares issued in foreign nations.

3. Payments:

a) Payment for buying shares in foreign nations;

b) Sell foreign currency to licensed credit institutions in order to transfer money to VND accounts of Vietnamese employees who participate in the program awarding shares issued in foreign nations;

c) Transfer money to foreign currency accounts of Vietnamese employees who participate in the program awarding shares issued in foreign nations;

d) Payment for other expenses such as fees and charges (if any).

Chapter III

APPLICATION AND PROCEDURES FOR THE ISSUANCE AND REVOCATION OF CERTIFICATES OF OUTWARD PORTFOLIO INVESTMENT REGISTRATION GRANTED TO COMMERCIAL BANKS OR GENERAL FINANCIAL COMPANIES, AND CERTIFICATES OF THE REGISTRATION OF TRUSTEESHIP FOR OUTWARD PORTFOLIO INVESTMENTS

Article 13. Application and procedures for the issuance of certificate of outward portfolio investment registration

1. The application for the issuance of certificate of outward portfolio investment registration must be made in Vietnamese language and shall consist of:

a) The application form for the issuance of certificate of outward portfolio investment registration (using the form stated in Annex No. 03 herein);

b) Copies of audited financial statements of 05 (five) consecutive years preceding the year when the application is submitted;

c) Copies of tax accounting statements or tax agency's written certification to prove that the applicant has fulfilled all financial obligations to the Government of Vietnam and has no tax debts to the state budget;

d) Report on the compliance with regulations on prudential ratios and limits for banking activities of the year preceding the year when the application is submitted;

dd) Internal regulations on management of proprietary trading activities of outward portfolio investments in which systems for internal control, audit, risk identification and management related to the proprietary trading activities of outward portfolio investment must be specified;

e) Written description of facilities, techniques and human resources for conducting the proprietary trading activities of outward portfolio investment;

g) Report on the compliance with regulations and laws on management and use of state capital (if the applicant is a commercial bank or general financial company with state-owned capital) of the year preceding the year when the application is submitted.

2. Procedures for the issuance of certificate of outward portfolio investment registration:

a) A commercial bank or general financial company that has demand to conduct the proprietary trading activities of outward portfolio investment shall, directly or by post, submit 05 (five) sets of application as prescribed in Clause 1 of this Article to the State Bank.  Within 05 (five) working days from the date on which the application is received, the State Bank shall grant a written request for modification or supplementation to such commercial bank or general financial company if the application is invalid or insufficient;

b) Within 35 (thirty-five) working days from the date on which the valid application is received in compliance with regulations herein, the State Bank shall issue or refuse to issue certificate of outward portfolio investment registration to the applicant that is the said commercial bank or general financial company. In case of refusal, the State Bank shall specify reasons thereof in writing.

Article 14. Application and procedures for the revocation of certificate of outward portfolio investment registration

1. Voluntary application for the revocation of certificate of outward portfolio investment registration:

a) The commercial bank or general financial company shall, directly or by post, submit 01 (one) set of application made in Vietnamese language for the revocation of certificate of outward portfolio investment registration to the State Bank. The application shall consist of:

i) The application form for the revocation of certificate of outward portfolio investment registration (using the form stated in Annex No. 04 herein);

ii) The written approval by the authorized body as regulated in the Charter of the commercial bank or general financial company for the termination of the outward portfolio investment activities, enclosed with reports on settlement of in-progress outward portfolio investments;

b) Within 05 (five) working days from the date on which the application is received, the State Bank shall grant a written request for modification or supplementation to the commercial bank or general financial company if the application is invalid or insufficient;

c) Within 07 (seven) working days from the date on which the valid application is received in compliance with regulations in Point a of this Clause, the State Bank shall make decision on the revocation of certificate of outward portfolio investment registration of the commercial bank or general financial company.

2. Compulsory revocation of certificate of outward portfolio investment registration:

a) The certificate of outward portfolio investment registration which has been issued to the commercial bank or general financial company shall be revoked if such commercial bank or general financial company has provided false information or forged documents relating to the application for the issuance of certificate of outward portfolio investment registration;

b) The State Bank shall make decision on the revocation of certificate of outward portfolio investment registration immediately after the competent authority has granted an official letter to confirm that the commercial bank or general financial company has provided false information or forged documents relating to the application for the issuance of certificate of outward portfolio investment registration.

3. Since receiving the decision on the revocation of certificate of outward portfolio investment registration, the relevant commercial bank or general financial company shall:

a) Within 05 (five) working days, return the original copy of certificate of outward portfolio investment registration to the State Bank;

b) Within 24 (twenty-four) hours, post information about the decision on the revocation of certificate of outward portfolio investment registration on its website;

c) Stop transferring money to foreign nations according to the limit approved by the State Bank; stop making outward portfolio investments; stop extending period of existing outward portfolio investments;

d) Settle outward portfolio investments upon the plan approved by the authorized body and submit report thereof to the State Bank within 60 (sixty) days from the date on which the decision on the revocation of certificate of outward portfolio investment registration made by the State Bank takes effect (except for the voluntary application for the revocation of certificate of outward portfolio investment registration).

Article 15. Application and procedures for the issuance of certificate of the registration of trusteeship for outward portfolio investment

1. The application for the issuance of certificate of the registration of trusteeship for outward portfolio investment must be made in Vietnamese language and shall consist of:

a) The application form for the issuance of certificate of the registration of trusteeship for outward portfolio investment (using the form stated in Annex No. 05 herein);

b) Copies of audited financial statements of 05 (five) consecutive years preceding the year when the application is submitted;

c) Copies of tax accounting statements or tax agency's written certification to prove that the applicant has fulfilled all financial obligations to the Government of Vietnam and has no tax debts to the state budget;

d) Internal regulations on the management of the activities of holding trusteeship for outward portfolio investments, including the identification and management of risks related to the holding of trusteeship for outward portfolio investments;

dd) Report on the compliance with regulations on prudential ratios and limits for the activities relating to the holding of trusteeship of the commercial bank of the year preceding the year when the application is submitted;

e) Written description of facilities, techniques and human resource for holding trusteeship for outward portfolio investment.

2. Procedures for the issuance of certificate of the registration of trusteeship for outward portfolio investment:

a) The commercial bank that has demand to execute the holding of trusteeship for outward portfolio investment shall, directly or by post, submit 06 (six) sets of application as prescribed in Clause 1 of this Article to the State Bank.  Within 05 (five) working days from the date on which the application is received, the State Bank shall grant a written request for modification or supplementation to the commercial bank if the application is invalid or insufficient;

b) Within 35 (thirty-five) working days from the date on which the valid application is received, the State Bank shall issue or refuse to issue certificate of the registration of trusteeship for outward portfolio investment to the applicant that is the commercial bank. In case of refusal, the State Bank shall specify reasons thereof in writing.

Article 16. Application and procedures for the revocation of certificate of the registration of trusteeship for outward portfolio investment

1. Voluntary application for the revocation of certificate of the registration of trusteeship for outward portfolio investment:

a) The commercial bank shall, directly or by post, submit 01 (one) set of application made in Vietnamese language for the revocation of certificate of the registration of trusteeship for outward portfolio investment to the State Bank. The application shall consist of:

i) The application form for the revocation of certificate of the registration of trusteeship for outward portfolio investment (using the form stated in Annex No. 06 herein);

ii) The written approval by the authorized body as regulated in the commercial bank’s charter for the termination of holding of trusteeship for outward portfolio investment, enclosed with reports on settlement of in-progress outward portfolio investments.

b) Within 05 (five) working days from the date on which the application is received, the State Bank shall grant a written request for modification or supplementation to the commercial bank if the application is invalid or insufficient;

c) Within 07 (seven) working days from the date on which the valid application is received in compliance with regulations in Point a of this Clause, the State Bank shall make decision on the revocation of certificate of the registration of trusteeship for outward portfolio investment which has been granted to the commercial bank.

2. Compulsory revocation of certificate of the registration of trusteeship for outward portfolio investment:

a) The commercial bank’s certificate of the registration of trusteeship for outward portfolio investment shall be revoked if such commercial bank has provided false information or forged documents relating to the application for the issuance of certificate of the registration of trusteeship for outward portfolio investment;

b) The State Bank shall make decision on the revocation of certificate of the registration of trusteeship for outward portfolio investment immediately after the competent authority has granted an official letter to confirm that the commercial bank has provided false information or forged documents relating to the application for the issuance of certificate of the registration of trusteeship for outward portfolio investment.

3. Since receiving the decision on the revocation of certificate of the registration of trusteeship for outward portfolio investment, the relevant commercial bank shall:

a) Within 05 (five) working days, return the original copy of certificate of the registration of trusteeship for outward portfolio investment to the State Bank;

b) Within 24 (twenty-four) hours, post information about the decision on the revocation of certificate of the registration of trusteeship for outward portfolio investment on its website;

c) Neither sign new investment trust contracts nor renew investment trust contracts;

d) Stop transferring money to foreign nations according to the trust limit approved by the State Bank; stop making outward portfolio investments; stop extending period of existing outward portfolio investments;

dd) Terminate investment trust contracts, close trust accounts, transfer the entire balance in bank accounts and investment instruments to the entrusting customers at their requests;

e) Submit the report on the settlement of overseas investment assets of entrusting customers to the State Bank within 60 (sixty) days from the date on which the decision on the revocation of certificate of the registration of trusteeship for outward portfolio investment made by the State Bank takes effect (except for the voluntary application for the revocation of certificate of the registration of trusteeship for outward portfolio investment).

Chapter IV

OPENING AND USE OF PROPRIETARY TRADING ACCOUNTS AND TRUST ACCOUNTS

Article 17. Opening of proprietary trading accounts

1. The proprietary trader must open 01 (one) proprietary trading account to collect and make payments as regulated in Article 18 of this Circular after it has obtained the certificate of outward portfolio investment registration.

2. If a proprietary trader, as a securities investment fund or securities investment company, makes outward portfolio investments through a fund management company, the fund management company must open 01 (one) proprietary trading account to collect and make payments related to the securities investment fund’s or securities investment company’s proprietary trading of outward portfolio investments. If a fund management company manages several securities investment funds and/or securities investment companies, a proprietary trading account must be opened separately for each securities investment fund or securities investment company.

3. If the proprietary trader is a commercial bank, it is allowed to open 01 (one) proprietary trading account at that commercial bank or at another licensed credit institution to collect and make payments as regulated in Article 18 of this Circular.

4. In case of change of the credit institution that is licensed to open proprietary trading account, the proprietary trader can open 01 (one) proprietary trading account at 01 (one) other licensed credit institution and close the old proprietary trading account after the entire balance on this account has been transferred to the new one. Procedures for opening and closing proprietary trading accounts shall comply with the State Bank’s regulations on opening and use of payment accounts at licensed credit institutions. The proprietary trader shall make collections or payments as prescribed in Article 18 of this Circular on the new proprietary trading account only after the old one has been closed.

Article 18. Use of program-executing accounts

The proprietary trader may use a proprietary trading account to make the following collections or payments:

1. Collections:

a) Make foreign currency collection from payment account in foreign currency of the proprietary trader;

b) Buy foreign currency from licensed credit institutions for conducting proprietary trading of outward portfolio investments;

c) Collect foreign currency earnings transferred to Vietnam from the sale of investment instruments in foreign nations;

d) Collect dividends and other lawful incomes related to the proprietary trading of outward portfolio investment.

2. Payments:

a) Transfer foreign currency capital to foreign nations for buying investment instruments which are permitted to be invested in foreign nations;

b) Make payments of expenses arisen in foreign nations in connection with the proprietary trading of outward portfolio investments;

c) Sell foreign currency to licensed credit institutions;

d) Transfer money from the proprietary trading account to a payment account in foreign currency of the same proprietary trader;

dd) Make other lawful payments related to the proprietary trading of outward portfolio investment.

Article 19. Opening of trust accounts

1. The entrusted organization must open 01 (one) trust account to collect and make payments as regulated in Article 20 of this Circular after it has obtained the certificate of the registration of trusteeship for outward portfolio investment.

2. If the entrusted organization is a commercial bank, it is allowed to open 01 (one) trust account at that commercial bank or at 01 (one) other licensed credit institution to collect and make payments as regulated in Article 20 of this Circular.

3. In case of change of the credit institution that is licensed to open trust account, the entrusted organization can open 01 (one) trust account at 01 (one) other licensed credit institution and close the old trust account after the entire balance on this account has been transferred to the new one. Procedures for opening and closing trust accounts shall comply with the State Bank’s regulations on opening and use of payment accounts at licensed credit institutions. The entrusted organization shall make collections or payments as prescribed in Article 20 of this Circular on the new trust account only after the old one has been closed.

4. When conducting the activities of outward portfolio investment trust, the entrusting customer's overseas assets must be deposited under a depository contract signed by the commercial bank and a depository institution in foreign nation.

Article 20. Use of trust account

The entrusted organization may use a trust account to make the following collections or payments:

1. Collections:

a) Make foreign currency collection from payment account in foreign currency of the entrusting organization;

b) Collect foreign currency earnings transferred to Vietnam from the sale of investment instruments in foreign nations;

c) Collect dividends and other lawful incomes in connection with the activities of outward portfolio investment trust for the entrusting organization.

2. Payments:

a) Transfer capital to foreign nations for buying investment instruments which are permitted to be invested in foreign nations;

b) Make payments of expenses arisen in foreign nations in connection with the entrusted organization’s holding of trusteeship for outward portfolio investments;

c) Sell foreign currency to licensed credit institutions;

d) Transfer money from the trust account to a payment account in foreign currency of the same entrusting organization;

dd) Make other lawful payments related to the entrusted organization’s holding of trusteeship for outward portfolio investments.

Chapter V

ESTABLISHMENT OF PROPRIETARY TRADING LIMIT AND TRUST LIMIT; APPLICATION AND PROCEDURES FOR THE REGISTRATION AND CONFIRMATION OF THE REGISTRATION OF PROPRIETARY TRADING LIMIT, TEMPORARY PROPRIETARY TRADING LIMIT, TRUST LIMIT AND TEMPORARY TRUST LIMIT FOR OUTWARD PORTFOLIO INVESTMENT

Article 21. Establishment of proprietary trading limit and trust limit for outward portfolio investment

1. Total limit of annual outward portfolio investments includes total proprietary trading limit, total trust limit and total limit of outward portfolio investments for other investment cases permitted by the Prime Minister as prescribed in Article 9 of the Decree No. 135/2015/ND-CP.

2. Based on total annual proprietary trading limit and the basis for confirmation of the proprietary trader’s registration of proprietary trading limit regulated in Clause 1 Article 27 of the Decree No. 135/2015/ND-CP, the State Bank shall grant confirmation of the registration of proprietary trading limit to each proprietary trader.

2. Based on total annual trust limit and the basis for confirmation of the entrusted organization’s registration of trust limit regulated in Clause 1 Article 28 of the Decree No. 135/2015/ND-CP, the State Bank shall grant confirmation of the registration of trust limit to each entrusted organization.

4. The capital size and the size of assets for establishment of proprietary trading limit:

a) The capital size for establishing the proprietary trading limit of the proprietary trader that is a commercial bank or general financial company is the equity capital of such proprietary trader;

b) The capital size for establishing the proprietary trading limit of the proprietary trader that is a securities company or fund management company is the shareholder’s equity of such proprietary trader;

c) The proprietary trading limit of a proprietary trader that is a securities investment fund or securities investment company shall be established on the basis of the size of assets (which is the net asset value) of such securities investment fund or securities investment company;

d) The capital size for establishing the proprietary trading limit of the proprietary trader that is an insurance company is the permitted amount of capital for outward portfolio investments in compliance with regulations of the law on insurance business;

dd) The capital size for establishing the proprietary trading limit of a state capital investment corporation is the amount of capital for outward portfolio investments approved by the authorized body in compliance with regulations and laws.

5. The capital size and the size of assets for the establishment of trust limit:

a) The capital size for establishing the trust limit of the entrusted organization that is a commercial bank is the equity capital of such entrusted organization;

b) The size of trust assets for establishing the trust limit of the entrusted organization that is a fund management company is the size of the list of assets, including cashes, securities and other assets which are managed by the fund management company as entrusted by the entrusting customers in compliance with regulations and laws on securities and relevant laws.

6. The highest annual amount of foreign currency which the proprietary trader can spend on outward portfolio investments or the entrusted organization is allowed to be entrusted with for outward portfolio investments is the net amount of foreign currency transferred to foreign nations (which is calculated by subtracting the amount of foreign currency transferred to Vietnam from that transferred to foreign nations) which must not exceed the proprietary trading limit or trust limit of which the registration has been confirmed by the State Bank.

7. While the Prime Minister does not approve total limit of annual outward portfolio investments, the State Bank may consider and confirm the proprietary trader’s or entrusted organization’s registration of temporary proprietary trading limit of temporary trust limit in conformity with regulations on the application and procedures in  Article 23 and Article 25 of this Circular.

Article 22. Application and procedures for the registration and confirmation of the registration of proprietary trading limit

1. The application for the registration of proprietary trading limit must be made in Vietnamese language and consist of:

a) The application form for the registration of proprietary trading limit (using the form stated in Annex No. 07 herein);

b) The financial statements, which are examined by an independent auditor, of the year preceding the year when the application for the registration of proprietary trading limit is submitted;

c) The written approval made by the authorized body of the proprietary trader upon its Charter for the plan for proprietary trading of outward portfolio investments of the year in which the registration of proprietary trading limit is applied for;

d) The reports on collections and payments made on the proprietary trading account with confirmation of the licensed credit institution where the proprietary trading account is opened by the proprietary trader; the execution of proprietary trading limit for outward portfolio investments of the previous year and the temporary proprietary trading limit of current year (this regulation shall not apply to the proprietary trader that is applying for the first registration of proprietary trading limit).

2. Procedures for confirmation of the registration of proprietary trading limit:

a) The proprietary trader shall, directly and by post, submit 01 (one) set of the application for the registration of proprietary trading limit to the State Bank by April 15^th annually;

b) No later than May 15^th annually, the State Bank shall confirm or refuse to confirm the registration of proprietary trading limit.  In case of refusal to confirm the registration of proprietary trading limit, the State Bank shall specify reasons thereof in writing.

Article 23. Application and procedures for the registration and confirmation of the registration of temporary proprietary trading limit

1. While the Prime Minister does not approve total limit of annual outward portfolio investments, the proprietary trader in need of maintaining its outward portfolio investments must, by hand or by post, submit an application for the registration of temporary proprietary trading limit (using the form stated in Annex No. 08 herein) to the State Bank by March 31^st annually.

2. Within 05 (five) working days from the date on which the application for the registration of temporary proprietary trading limit is received, the State Bank shall base on the results of making outward portfolio investments in the previous year and the safe investment ratio of the proprietary trader to confirm or refuse to confirm the proprietary trader’s registration of temporary proprietary trading limit. In case of refusal, the State Bank shall specify reasons thereof in writing.

Article 24. Application and procedures for the registration and confirmation of the registration of trust limit

1. The application for the registration of investment trust limit must be made in Vietnamese language and consist of:

a) The application form for the registration of investment trust limit (using the form stated in Annex No. 09 herein);

b) The financial statements, which are examined by an independent auditor, of the year preceding the year when the application for the registration of investment trust limit is submitted;

c) The reports on collections and payments made on the trust account with confirmation of the licensed credit institution where this account is opened; the execution of trust limit of the previous year and the temporary trust limit of current year (this regulation shall not apply to the entrusted organization that is applying for the first registration of trust limit).

2. Procedures for the registration of trust limit for outward portfolio investments:

a) The entrusted organization shall, by hand and by post, submit 01 (one) set of the application for the registration of trust limit to the State Bank by April 15^th annually;

b) No later than May 15^th annually, the State Bank shall confirm or refuse to confirm the registration of trust limit.  In case of refusal to confirm the registration of trust limit, the State Bank shall specify reasons thereof in writing.

Article 25. Application and procedures for the registration and confirmation of the registration of temporary trust limit

1. While the Prime Minister does not approve total limit of annual outward portfolio investments, the entrusted organization in need of conducting the activities of outward portfolio investment trust must, by hand or by post, submit an application for the registration of temporary trust limit (using the form stated in Annex No. 10 herein) to the State Bank by March 31^st annually.

2. Within 05 (five) working days from the date on which the application for the registration of temporary trust limit is received, the State Bank shall base on the results of the activities of outward portfolio investment trust in previous year to confirm or refuse to confirm the registration of temporary trust limit. In case of refusal, the State Bank shall specify reasons thereof in writing.

Chapter VI

RESPONSIBILITIES OF LICENSED CREDIT INSTITUTIONS AND INVESTORS

Article 26. Responsibilities of licensed credit institutions 

1. Request the customers to provide documents and papers related to the opening and use of proprietary trading accounts, trust accounts and program-executing accounts.

2. Examine and retain documents and papers which are provided by customers in connection with collections and payments made on proprietary trading accounts, trust accounts and program-executing accounts in order to ensure that foreign exchange services are provided in proper manner and in conformity with prevailing regulations and laws.

3. Comply with reporting regulations in Article 36 of this Circular.

Article 27. Responsibilities of investors 

1. Conform to regulations in this Circular and other regulations of the law of Vietnam with respect to outward portfolio investments.

2. When making corrections and payments on proprietary trading accounts and trust accounts, proprietary traders and entrusted organizations shall be responsible for:

a) Making statements of collections and payments related to the proprietary trading of outward portfolio investments and the activities of outward portfolio investment trust as requested and instructed by licensed credit institutions; 

b) Presenting and/or supplementing documents and papers at the requests of licensed credit institutions.

3. Comply with reporting regulations in Article 32, Article 33 and Article 34 of this Circular.

Article 28. Responsibilities of share awarding program-executing organizations

1. The share awarding program-executing organizations and Vietnamese employees who participate in the program that awards shares issued in foreign nations must comply with regulations in this Circular and other relevant regulations of the law of Vietnam.

2. When making collections and payments on program-executing accounts, the share awarding program-executing organizations shall be responsible for:

a) Making statements of collections and payments related to the execution of the program that awards shares issued in foreign nations as requested and instructed by licensed credit institutions; 

b) Presenting and/or supplementing documents and papers at the requests of licensed credit institutions.

3. Comply with reporting regulations in Article 35 of this Circular.

Chapter VII

RESPONSIBILITIES OF RELEVANT AFFILIATES OF THE STATE BANK

Article 29. Responsibilities of Foreign Exchange Management Department

1. Take charge and coordinate with the Bank Supervision and Inspection Agency, the Financial Policy Department and relevant agencies affiliated to the State Bank to:

a) Examine and report to the Governor of the State Bank who shall request the Prime Minister to consider and make decisions on outward portfolio investment cases prescribed in Article 9 of the Decree No.135/2015/ND-CP and regulations in this Circular;

b) Establish and report the total limit of annual outward portfolio investments to the Governor of the State Bank who shall request the Prime Minister to grant approval for the total limit of annual outward portfolio investments in compliance with regulations in Article 26 of the Decree No. 135/2015/ND-CP.

2. Consider and process the applications for the registration of temporary proprietary trading limits or proprietary trading limits submitted by proprietary traders, and the applications for the registration of temporary trust limits or trust limits submitted by entrusted organizations.

3. Submit a summarized report of reports submitted by relevant agencies as regulated in this Circular to the Governor for coordinating with Ministry of Finance to compile data and assess the conjuncture of investors’ outward portfolio investments and make annual reports to the Prime Minister on the investors’ performances of outward portfolio investments in accordance with regulations in Decree No. 135/2015/ND-CP.

4. Coordinate and offer opinions to the Bank Supervision and Inspection Agency about the issuance and revocation of certificates of outward portfolio investment registration granted to proprietary traders that are commercial banks or general financial companies, and the issuance and revocation of certificates of the registration of trusteeship for outward portfolio investments granted to entrusted organizations that are commercial banks.

Article 30. Responsibilities of the Bank Supervision and Inspection Agency

1. Take charge and coordinate with the Foreign Exchange Management Department and relevant affiliates of the State Bank to appraise and request the Governor of the State Bank to consider:

a) The issuance and revocation of certificates of outward portfolio investment registration which are granted to proprietary traders that are commercial banks or general financial companies;

b) The issuance and revocation of certificates of the registration of trusteeship for outward portfolio investments which are granted to the entrusted organizations that are commercial banks.

2. Supervise the outward portfolio investment activities in compliance with the laws and inspect the implementation of this Circular by relevant competent authorities.

3. Take actions and request competent authorities to settle violations as regulated by laws.

4. Coordinate with the Foreign Exchange Management Department in the following issues:

a) Examine and report to the Governor of the State Bank to request the Prime Minister to consider and make decisions on outward portfolio investment cases prescribed in Article 9 of the Decree No.135/2015/ND-CP;

b) Establish the total limit of annual outward portfolio investments.

Article 31. Responsibilities of relevant affiliates of the State Bank

Affiliates of the State Bank shall, within the ambit of assigned functions and tasks, coordinate with the Foreign Exchange Management Department and the Bank Supervision and Inspection Agency to implement regulations in Article 29 and Article 30 of this Circular.

Chapter VIII

REPORTING

Article 32. Proprietary traders’ reports

1. Each quarter, no later than the 20^th day of the first month of the quarter following the reporting quarter, proprietary traders must submit reports on the conjuncture of proprietary trading of outward portfolio investments to the State Bank by using the form stated in Annex No. 11 herein.

2. Every year, no later than January 30^th of the year following the reporting year, proprietary traders must submit reports on the conjuncture of proprietary trading of outward portfolio investments of the reporting year and the estimated investment demand in the following year to the State Bank by using the form stated in Annex No. 12 herein.

Article 33. Entrusted organizations’ reports

1. Each quarter, no later than the 20^th day of the first month of the quarter following the reporting quarter, entrusted organizations must submit reports on the conjuncture of activities of outward portfolio investment trust to the State Bank by using the form stated in Annex No. 13 herein.

2. Every year, no later than January 30^th of the year following the reporting year, entrusted organizations must submit reports on the conjuncture of activities of outward portfolio investment trust of the reporting year and the estimated demand of investment trust in the following year to the State Bank by using the form stated in Annex No. 14 herein.

Article 34. Reports regarding outward portfolio investment cases prescribed in Article 9 of the Decree No. 135/2015/ND-CP

1. Each quarter, no later than the 20^th day of the first month of the quarter following the reporting quarter, investors must submit reports on the conjuncture of investors’ performances of outward portfolio investments to the State Bank by using the form stated in Annex No. 15 herein.

2. Every year, no later than January 30^th of the year following the reporting year, investors must submit reports on the conjuncture of investors’ performances of outward portfolio investments of the reporting year to the State Bank by using the form stated in Annex No. 15 herein.

Article 35. Reports by share awarding program-executing organizations

Each quarter, no later than the 20^th day of the first month of the quarter following the reporting quarter, share awarding program-executing organizations must submit reports on the execution of the program that awards shares issued in foreign nations to Vietnamese employees to the State Bank by using the form stated in Annex No. 16 herein.

Article 36. Reports by credit institutions

A licensed credit institution where proprietary trading accounts and/or trust accounts and/or program-executing accounts are respectively opened by proprietary traders and/or entrusted organizations and/or share awarding program-executing organizations must make reports on collections and payments made on said accounts in compliance with the State Bank’s prevailing regulations on statistics and reports by credit institutions and branches of foreign banks.

Chapter IX

IMPLEMENTATION

Article 37. Effect

1. This Circular shall take effect as of August 13, 2016.

2. Credit institutions that are licensed by the State Bank to make investment in outward investment instruments before the effective date of this Circular shall continue the execution of investment projects approved by the State Bank.

Article 38. Implementation

The Chief of Office, the Director General of the Foreign Exchange Management Department, Heads of relevant agencies affiliated to the State Bank, Directors of branches of the State Bank located in central-affiliated cities or provinces, Presidents of the Board of Directors, Presidents of the Member Boards, and General Directors (Directors) of credit institutions and branches of foreign banks shall implement this Circular./.