Thông tư 105/2016/TT-BTC

CIRCULAR

ON GUIDELINES FOR OUTWARD PORTFOLIO INVESTMENTS BY SECURITIES TRADING ORGANIZATIONS, SECURITIES INVESTMENT FUNDS, INVESTMENT COMPANIES AND INSURANCE ENTERPRISES

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

Pursuant to the Securities Law dated June 29, 2006;

Pursuant to the Law on amendments to certain articles of the Securities Law dated November 24, 2010;

Pursuant to the Law on insurance business dated December 09, 2000;

Pursuant to the Law on amendments to certain articles of the Law on insurance business dated November 24, 2010;

Pursuant to the Ordinance No. 28/2005/PL-UBTVQH dated December 13, 2005 on foreign exchange;

Pursuant to the Ordinance No. 06/2013/PL-UBTVQH13 dated March 18, 2013 on amendments to certain articles of the Ordinance on foreign exchange;

Pursuant to the Government’s Decree No. 215/2013/ND-CP dated December 23, 2013 on the functions, missions, authority and organizational structure of the Ministry of Finance;

Pursuant to the Government’s Decree No. 135/2015/ND-CP dated December 31, 2015 on outward portfolio investment;

At the requests of the Chairman of the State Securities Commission and the Head of the Insurance Supervisory Authority.

Minister of Finance promulgates the Circular on guidelines for outward portfolio investments by securities trading organizations, securities investment funds, investment companies and insurance enterprises.

Chapter I

GENERAL

Article 1. Scope

This Circular regulates the proprietary trading of outward portfolio investments by securities trading organizations, securities investment funds, investment companies and insurance enterprises and the holding of trusteeship for outward portfolio investment by fund management enterprises.

Article 2. Regulated entities

This Circular applies to securities trading organizations, securities investment funds, investment companies, insurance enterprises and bodies, organizations, individuals in connection with outward portfolio investments.

Article 3. Terminology

Apart from the terminology defined in the Government's Decree No. 135/2015/ND-CP dated December 31, 2015 on outward portfolio investment (referred to as the Decree No. 135/2015/ND-CP) the following phrases in this Circular are construed as follows:

1. Securities trading organizations refer to securities companies and fund management enterprises incorporated and operated in conformity to the laws of Vietnam.

2. Insurance enterprises refer to life insurance enterprises, non-life insurance enterprises, health insurance enterprises and reinsurance enterprises.

3. Valid application refers to an application that includes sufficient and legitimate documents, which adhere to this Circular and whose content is fully enumerated as per the law.

4. Trustors refer to business organizations that make outward portfolio investments by entrusting their finances in foreign currencies to domestic fund management enterprises eligible for holding trusteeship of such investments.

Chapter II

FORMALITIES FOR THE ISSUANCE AND REVOCATION OF CERTIFICATES AND APPROVALS OF REGISTRATION OF OUTWARD PORTFOLIO INVESTMENTS

Part 1. SECURITIES TRADING ORGANIZATIONS

Article 4. Formalities for the issuance of certificates of registration of outward portfolio investments

1. An application by a securities trading organization for the certification of its registration of an outward portfolio investment shall include:

a) A filled-in form of application for the issuance of the certificate of registration of the outward portfolio investment, as formatted in Appendix 01 of this Circular;

b) The record(s) of assemblies and written resolution(s) of the General shareholder's meeting or Members' Council, or the written decisions of the owner on approving the outward portfolio investment and relevant plan;

c) The plan of outward portfolio investment, which envisions the host country, amount(s) of investment, source(s) of financing, invested asset(s), efficiency and other information;

d) The written confirmation(s) by tax authorities of the fulfillment of financial obligations to the Government of Vietnam and the settlement of all taxes payable to the state budget upon submission of the application;

dd) The internal procedure for outward portfolio investments, which defines internal control, internal audit, risk identification and management related to the proprietary trading of outward portfolio investments;

e) The written explanation(s) of technical facilities of the securities trading organization, which specifies the system of order transmission and storage for transacting outward portfolio investments;

g) The copies of the certificate(s) of CFA (Chartered Financial Analyst), labor contract(s) and professional certificate(s) in financial analysis (for a securities company) or professional certificate(s) in fund management (for a fund management enterprise) of at least one (01) employee of the securities trading organization;

h) The report on legal compliance with regard to the management and spending of state capital (for a securities trading organization holding state capital) for the year immediately preceding the year that the application is filed.

2. The application, as defined in Section 1 of this Article, shall be submitted in one (01) set directly or by post to the State Securities Commission.

3. In thirty (30) days upon receiving the valid application as prescribed in Section 1 and Section 2 of this Article, the State Securities Commission shall issue the certificate of outward portfolio investment registration to the securities trading organization. A duplicate of such certificate shall also be sent to the State Bank of Vietnam. State Securities Commission, if rejecting the application, must respond in writing and specify its justifications.

4. In twenty four (24) hours upon the effect of its certificate of outward portfolio investment registration, the securities trading organization shall publish particulars of such certificate on its website.

Article 5. Formalities for the revocation of certificates of registration of outward portfolio investments

1. An application voluntarily filed by a securities trading organization for the revocation of its certificate of outward portfolio investment registration shall include:

a) A filled-in form of application for the revocation of the certificate of registration of the outward portfolio investment, as formatted in Appendix 02 of this Circular;

b) The record(s) of assemblies and written resolution(s) of the General shareholder's meeting or Members' Council, or the written decisions of the owner on approving the termination of the outward portfolio investment;

c) The written explanation(s) of the termination of the outward portfolio investment, which specifies reasons of the termination, investment realization result, investment recovery possibility, time of termination, plan for finalization of outward portfolio investments and relevant issues;

d) The original certificate of outward portfolio investment registration.

2. The application, as defined in Section 1 of this Article, shall be submitted in one (01) set directly or by post to the State Securities Commission.

3. In seven (07) working days upon receiving the valid application as prescribed in Section 1 and Section 2 of this Article, the State Securities Commission shall issue a written decision to revoke the certificate of outward portfolio investment registration to the securities trading organization. A duplicate of such decision shall also be sent to the State Bank of Vietnam.

4. A securities trading organization shall be stripped of its certificate of outward portfolio investment registration in these events:

a) Fail to conform to Point d, Section 2, Article 14 of the Decree No. 135/2015/ND-CP If the securities trading organization does not adhere to Point d, Section 2, Article 14 of the Decree No. 135/2015/ND-CP albeit given thirty (30) days after the deadline for rectification as per current laws, the State Securities Commission shall release a written decision to revoke the certificate of outward portfolio investment registration and send a duplicate to the State Bank of Vietnam;

b) Provide untrue details in an application for the certification of outward portfolio investment registration, fail to maintain compliance with requirements for the certification of incorporation and operation as per current laws, or fall under circumstances defined in Section 4, Article 2 of the Decree No. 135/2015/ND-CP In thirty (30) days upon stripping a securities trading organization of its certificate, the State Securities Commission shall release a written decision to revoke the certificate of outward portfolio investment registration and send a duplicate to the State Bank of Vietnam;

5. Upon the effect of the decision to revoke the certificate of outward portfolio investment registration, the securities trading organization shall be responsible for:

a) Publishing the revocation of the certificate of outward portfolio investment registration on its website no later than twenty four (24) hours upon the effect of such decision;

b) Neither making nor extending outward portfolio investments;

c) Finalizing all outward portfolio investments (e.g. rights and interests related to overseas investments);

d) The securities trading organization shall send monthly reports, as formatted in Appendix 09 and Appendix 10 of this Circular, to the State Securities Commission on the progress of finalizing investments unsettled until the finalization completes.

Part 2. SECURITIES INVESTMENT FUNDS AND INVESTMENT COMPANIES

Article 6. Formalities for the approval of outward portfolio investments

1. A securities investment fund or investment company shall apply in writing to the State Securities Commission through a fund management enterprise for the approval of outward portfolio investments. The application includes:

a) A filled-in form of application for the approval of the outward portfolio investment, as formatted in Appendix 03 of this Circular;

b) The copy of the charter of the securities investment fund or investment company, which defines outward portfolio investments;

c) The copies of the depository agreement(s) in principle between the Vietnam-based depository and/ or supervisory bank of the securities investment fund or investment company with overseas depository organization(s), the copies of such organizations’ certificate(s) of registration of securities depository operations or equivalent documents;

b) The copies of the certificate(s) of CFA and labor contract(s) of at least one (01) operating employee of the securities investment fund or investment company;

dd) Documents as defined in Point dd and e, Section 1, Article 4 of this Circular.

2. A self-managed investment company shall apply in writing to the State Securities Commission for the approval of registration of outward portfolio investments. The application includes:

a) Documents as defined in Point a, b and c, Section 1 of this Article;

b) The internal procedure for outward portfolio investments, which defines internal control, internal audit, risk identification and management related to outward portfolio investments;

c) The written explanation(s) of technical facilities of the investment company, which specifies the system of order transmission and storage for transacting outward portfolio investments;

d) The copies of the certificate(s) of CFA, professional certificate(s) in fund management and labor contract(s) of at least one (01) employee of the investment company.

3. The application, as defined in Section 1 and Section 2 of this Article, shall be submitted in one (01) set directly or by post to the State Securities Commission.

4. In thirty (30) days upon receiving the valid application as prescribed in Section 1, 2 and 3 of this Article, the State Securities Commission shall issue a written approval of the outward portfolio investment of the securities investment fund or investment company, and send a duplicate to the State Bank of Vietnam. State Securities Commission, if rejecting the application, must respond in writing and specify its justifications.

5. In twenty four (24) hours after the outward portfolio investment of the securities investment fund or investment company is approved, the fund management enterprise or self-managed investment company shall publish on its website the details of the State Securities Commission's authorization of the outward portfolio investment of the securities investment fund or the investment company.

Article 7. Formalities for the termination of outward portfolio investments

1. If a securities investment fund or investment company voluntarily ends an outward portfolio investment, the application for the termination of such investment shall include:

a) A filled-in form of application for the termination of the outward portfolio investment, as formatted in Appendix 04 of this Circular;

b) The record(s) of assemblies and written resolution(s) of the general investors’ meeting, the general members' meeting, or the general shareholder's meeting on terminating the outward portfolio investment;

c) The written explanation(s) of the termination of the outward portfolio investment, which specifies reasons of the termination, investment realization result, investment recovery possibility, time of termination, plan for finalization of outward portfolio investments and relevant issues.

2. The application, as defined in Section 1 of this Article, shall be submitted in one (01) set directly or by post to the State Securities Commission.

3. In seven (07) working days upon receiving the valid application as prescribed in Section 1 and Section 2 of this Article, the State Securities Commission shall issue a written termination of the outward portfolio investment to the securities investment fund or investment company, and send a duplicate to the State Bank of Vietnam.

4. A securities investment fund or investment company shall be compelled to terminate its outward portfolio investment in these events:

a) The fund management enterprise that administers such securities investment fund or the investment company fails to conform to Point d, Section 2, Article 14 of the Decree No. 135/2015/ND-CP If the fund management enterprise does not adhere to Point d, Section 2, Article 14 of the Decree No. 135/2015/ND-CP albeit given thirty (30) days after the deadline for rectification as per current laws, the State Securities Commission shall issue a written termination of the outward portfolio investment of the securities investment fund or investment company, and send a duplicate to the State Bank of Vietnam;

b) The securities investment fund or investment company provides untrue details in the application for the approval of registration of the outward portfolio investment, the investment company fails to maintain compliance with requirements for the certification of incorporation and operation as per current laws, or fall under circumstances defined in Section 4, Article 2 of the Decree No. 135/2015/ND-CP In thirty (30) days upon compelling the securities investment fund or investment company to terminate its outward portfolio investment, the State Securities Commission shall issue a written termination of such investment and send a duplicate to the State Bank of Vietnam.

5. Upon the effect of the State Securities Commission’s written termination of the outward portfolio investment of the securities investment fund or investment company, the fund management enterprise or the self-managed investment company shall be responsible for:

a) Publishing details of the securities investment fund’s or investment company’s termination of the outward portfolio investment, no later than twenty four (24) hours upon the effect of the written termination, on its website;

b) Neither making nor extending outward portfolio investments;

c) Finalizing all outward portfolio investments (e.g. rights and interests related to overseas investments);

d) The fund management enterprise or the self-managed investment company shall given a monthly report, as formatted in Appendix 13 of this Circular, to the State Securities Commission on the progress of finalizing investments unsettled until the finalization completes.

Part 3. INSURANCE ENTERPRISES

Article 8. Formalities for the issuance of certificates of registration of outward portfolio investments

1. An application by an insurance enterprise for the certification of the registration of its outward portfolio investment shall include:

a) A filled-in form of application for the issuance of the certificate of registration of the outward portfolio investment, as formatted in Appendix 05 of this Circular.

b) The written consent by competent individuals as defined in the charter of the insurance enterprise to such enterprise’s transacting of the outward portfolio investment;

c) The plan of outward portfolio investment, which envisions the host country, amount(s) of investment, source(s) of financing, invested asset(s), efficiency and other information;

d) The written confirmation(s) by tax authorities of the fulfillment of financial obligations to the Government of Vietnam and the settlement of all taxes for the state budget upon submission of the application;

dd) The internal procedure for outward portfolio investments, which defines internal control, internal audit, risk identification and management related to the proprietary trading of outward portfolio investments;

e) The written explanation(s) of technical facilities for transacting the outward portfolio investment;

g) The copies of the certificate(s) of CFA (Chartered Financial Analyst) and labor contract(s) of at least one (01) employee directly engaged in the enterprise's investments;

h) The report on legal compliance with regard to the management and spending of state capital (for an insurance enterprise holding state capital as per the Law on management and investment of state capital in enterprises’ business activities) for the year immediately preceding the year that the application is filed.

2. The application, as defined in Section 1 of this Article, shall be submitted in one (01) set directly or by post to the Ministry of Finance.

3. In thirty (30) days upon receiving the valid application as prescribed in Section 1 and Section 2 of this Article, the Ministry of Finance shall issue the certificate of outward portfolio investment registration to the insurance enterprise and send a duplicate to the State Bank of Vietnam. Ministry of Finance, if rejecting the application, must respond and justify in writing.

4. In twenty four (24) hours upon the effect of its certificate of outward portfolio investment registration, the insurance enterprise shall publish particulars of such certificate on its website.

Article 9. Formalities for the revocation of certificates of registration of outward portfolio investments

1. An application voluntarily filed by an insurance enterprise for the revocation of its certificate of outward portfolio investment registration shall include:

a) A filled-in form of application for the revocation of the certificate of registration of the outward portfolio investment, as formatted in Appendix 06 of this Circular.

b) The written consent by competent individuals as defined in the charter of the insurance enterprise to the termination of the outward portfolio investment;

c) The written explanation(s) of the termination of the outward portfolio investment, which specifies reasons of the termination, investment realization result, investment recovery possibility, time of termination, plan for finalization of outward portfolio investments and relevant issues;

d) The original certificate of outward portfolio investment registration.

2. The application, as defined in Section 1 of this Article, shall be submitted in one (01) set directly or by post to the Ministry of Finance.

3. In seven (07) working days upon receiving the valid application as prescribed in Section 1 and Section 2 of this Article, the Ministry of Finance shall issue a written decision to revoke the certificate of outward portfolio investment registration, and send a duplicate to the State Bank of Vietnam.

4. An insurance enterprise shall be stripped of its certificate of outward portfolio investment registration in these events:

a) Fail to conform to Point d, Section 2, Article 14 of the Decree No. 135/2015/ND-CP If the insurance enterprise does not adhere to Point d, Section 2, Article 14 of the Decree No. 135/2015/ND-CP albeit given thirty (30) days after the deadline for rectification as per current laws, the Ministry of Finance shall release a written decision to revoke the certificate of outward portfolio investment registration, and send a duplicate to the State Bank of Vietnam;

b) Provide untrue details in its application for the certificate of outward portfolio investment registration, which mislead the decisions of the Ministry of Finance, or fall under circumstances defined in Section 4, Article 2 of the Decree No. 135/2015/ND-CP In thirty (30) days upon compelling the revocation of the certificate of outward portfolio investment registration, the Ministry of Finance shall release a written decision to revoke such certificate and send a duplicate to the State Bank of Vietnam.

5. Upon the effect of the written decision to revoke the certificate of outward portfolio investment registration, the insurance enterprise shall be responsible for:

a) Publishing the decision on the revocation of the certificate of outward portfolio investment registration, no later than twenty four (24) hours upon the effect of such decision, on its website;

b) Neither making nor extending outward portfolio investments;

c) Finalizing all outward portfolio investments (e.g. rights and interests related to overseas investments) in at most one (01) year upon the effect of the decision to revoke the certificate of outward portfolio investment registration;

d) The insurance enterprise shall send a quarterly report, as formatted in Appendix 14 of this Circular, to the Ministry of Finance on the progress of finalizing investments unsettled until the finalization completes.

Chapter III

FORMALITIES FOR THE ISSUANCE AND REVOCATION OF CERTIFICATES OF REGISTRATION OF TRUSTEESHIP FOR OUTWARD PORTFOLIO INVESTMENT FOR FUND MANAGEMENT ENTERPRISES

Article 10. Formalities for the issuance of certificates of registration of trusteeship for outward portfolio investment for fund management enterprises

1. An application for the certification of registration of the trusteeship of an outward portfolio investment shall include

a) A filled-in form of application for the issuance of the certificate of registration of the trusteeship of the outward portfolio investment, as formatted in Appendix 07 of this Circular.

b) The internal procedure regarding the holding of trusteeship for outward portfolio investment, which includes the identification and management of risks related to the trusteeship for outward portfolio investment;

c) Documents as defined in Point d, e and g, Section 1, Article 4 of this Circular.

2. The application, as defined in Section 1 of this Article, shall be submitted in one (01) set directly or by post to the State Securities Commission.

3. In thirty (30) days upon receiving the valid application as prescribed in Section 1 and Section 2 of this Article, the State Securities Commission shall issue the certificate of registration of the trusteeship for outward portfolio investment to the fund management enterprise, and send a duplicate to the State Bank of Vietnam. State Securities Commission, if rejecting the application, must respond in writing and specify its justifications.

4. In twenty four (24) hours upon the effect of the certificate of registration of its trusteeship for outward portfolio investment, the fund management enterprise shall publish particulars of such certificate of on its website.

Article 11. Formalities for the revocation of certificates of registration of trusteeship for outward portfolio investment

1. An application voluntarily filed by a fund management enterprise for the revocation of the certificate of registration of its trusteeship for outward portfolio investment shall include:

a) A filled-in form of application for the revocation of the certificate of registration of the trusteeship for outward portfolio investment, as formatted in Appendix 08 of this Circular;

b) The record(s) of assemblies and written resolution(s) of the General shareholder's meeting or Members' Council, or the written decisions of the owner on approving the termination of the trusteeship for outward portfolio investment;

c) The written explanation(s) of the termination of the trusteeship for outward portfolio investment, which specifies reasons of the termination, investment realization result, investment recovery possibility, time of termination, plan for finalizing trusteeship contracts and relevant issues;

d) The original certificate of registration of trusteeship for outward portfolio investment.

2. The application, as defined in Section 1 of this Article, shall be submitted in one (01) set directly or by post to the State Securities Commission.

3. In seven (07) working days upon receiving the valid application as prescribed in Section 1 and Section 2 of this Article, the State Securities Commission shall issue a written decision to revoke the certificate of registration of the trusteeship for outward portfolio investment, and send a duplicate to the State Bank of Vietnam.

4. A fund management enterprise shall be stripped of the certificate of registration of its trusteeship for outward portfolio investment in these events:

a) Fail to conform to Point e, Section 2, Article 23 of the Decree No. 135/2015/ND-CP If the fund management enterprise does not adhere to Point e, Section 2, Article 23 of the Decree No. 135/2015/ND-CP albeit given thirty (30) days after the deadline for rectification as per current laws, the State Securities Commission shall release a written decision to revoke the certificate of registration of and send a duplicate to the State Bank of Vietnam;

Upon failing to conform to Point e, Section 2, Article 23 of the Decree No. 135/2015/ND-CP the fund management enterprise cannot enter or extend trusteeship contracts for outward portfolio investment.

b) Provide untrue details in an application for the certification of registration of the trusteeship for outward portfolio investment, or fail to maintain compliance with requirements for the certification of incorporation and operation as per current laws. In thirty (30) days upon stripping the fund management enterprise of the certificate of registration of the trusteeship for outward portfolio investment, the State Securities Commission shall release a written decision to revoke such certificate, and send a duplicate to the State Bank of Vietnam.

5. Upon the effect of the decision to revoke the certificate of registration of the trusteeship for outward portfolio investment, the fund management enterprise shall be responsible for:

a) Publishing the decision on the revocation of the certificate of registration for the trusteeship for outward portfolio investment, no later than twenty four (24) hours upon the effect of such decision, on its website;

b) Neither entering nor extending any trusteeship contracts for outward portfolio investment (applicable under circumstances defined in Section 1 and Point b, Section 4 of this Article);

c) Terminating its engagement in overseas transactions, except those for finalizing trustors' investment portfolios, and overseas asset management;

d) Ending investment trusteeship contracts, settling (i.e. closing or transferring) investment portfolio accounts, reassigning all remaining cash and securities as per customers’ requests or ceding responsibilities to an alternative fund management enterprise that has been certified for registration of the trusteeship for outward portfolio investment;

dd) The fund management enterprise shall make monthly report, as formatted in Appendix 12 of this Circular, to the State Securities Commission on the progress of finalizing investment trusteeship contracts unsettled until the finalization completes.

Chapter IV

OUTWARD PORTFOLIO INVESTMENT ACTIVITIES

Part 1. PROPRIETARY TRADING OF OUTWARD PORTFOLIO INVESTMENTS

Article 12. General

1. Insurance enterprises, securities trading organizations, securities investment funds and investment companies shall engage in an outward portfolio investment as per the laws on investment and banking after granted by the Ministry of Finance and/ or State Securities Commission a certificate and/ or a written approval of the outward portfolio investment. Moreover, their registration of limitation on proprietary trading must be endorsed by the State Bank of Vietnam in writing prior to the investment.

2. Securities trading organizations, securities investment funds, investment companies and insurance enterprises shall register the limitation on their proprietary trading of outward portfolio investments as per regulations by the State Bank of Vietnam.

3. Foreign-invested proprietary traders (as defined in Section 1, Article 23 of the Law of Investment) are not permitted to carry out outward portfolio investments.

4. A proprietary trader, which is holding a certificate of outward portfolio investment registration in effect, shall not be permitted to entrust a trustee to carry out outward portfolio investments.

5. Fund management enterprises shall engage in depository and supervision contract(s) with Vietnam-based depository bank(s) and supervisory bank(s), which shall safeguard and supervise assets of securities investment funds and investment companies. Depository banks and supervisory banks, which provide services to securities investment funds and investment companies in Vietnam, can authorize an overseas depository organization to safeguard assets generated by outward portfolio investments of the securities investment funds and investment companies.

6. The following requirements apply to the authorization of depository as prescribed in Section 5 of this Article:

a) Such authorization must be regulated in the charter of the securities investment fund or investment company in conformity to relevant laws;

b) Such authorization shall be based on authorization contract(s) between the Vietnam-based depository bank and/ or supervisory bank with the overseas depository organization. An authorization contract must define the rights, duties and responsibilities of the depository bank and/ or supervisory bank in Vietnam and the overseas depository organization in abidance by relevant laws;

c) The depository bank and/ or supervisory bank in Vietnam shall be held fully liable for depository activities delegated and for inspecting, supervising and assessing depository activities delegated;

d) The depository and/ or supervisory bank in Vietnam must assure that the ownership of assets deposited aboard is registered to the securities investment fund or investment company, to which such bank(s) provide services;

dd) The fund management enterprise, depository bank and supervisory bank in Vietnam must be in possession of sufficient information on every asset deposited aboard, which the securities investment fund or investment company owns;

e) The depository bank and/ or supervisory bank in Vietnam must abide by regulations on depository and supervision in the laws on establishment and management of securities investment funds or on incorporation, operation and management of investment companies, and relevant laws.

7. Insurance enterprises shall enter depository contract(s) with overseas depository organization(s) that is (are) permitted to provide depository services as per the laws of the foreign country.

Insurance enterprises may contract with Vietnam-based depository bank(s) to safeguard assets originating from such enterprises' outward portfolio investments. The depository bank in Vietnam can authorize an overseas depository organization to safeguard assets ensuing from the insurance enterprise's outward portfolio investments; however, such bank shall be held fully liable for depository activities delegated.

8. In five (05) working days upon signing a depository contract or a depository authorization contract with an overseas depository organization or upon replacing the overseas depository organization:

a) The insurance enterprise must present to the Ministry of Finance such contract and a copy of the overseas depository organization’s certificate of registration of securities depository operations or equivalent papers.

b) The depository bank and/ or supervisory bank in Vietnam, which service(s) the securities investment fund or the investment company, shall present to the State Securities Commission the depository authorization contract and a copy of the overseas depository organization’s certificate of registration of securities depository operations or equivalent papers.

Article 13. Investment safety ratio for securities companies

1. Only securities companies, which have been licensed for proprietary trading of securities, can carry out or entrust a trustee to carry out outward portfolio investments (except those defined in Section 4, Article 19 of the Decree No. 135/2015/ND-CP) Securities companies or their overseas branches (if any) shall conduct portfolio investments in foreign countries.

2. Securities companies as defined in Section 1 of this Article can invest in or entrust a trustee to invest in investment instruments regulated by the State Bank of Vietnam; however:

a) Investments cannot surpass the registered limitation on proprietary trading as endorsed by the State Bank of Vietnam.

b) If ensuing outward portfolio investment(s) made and entrusted do not exceed thirty percent (30%) of the owner’s equity according to investment limits and to the financial statement audited or inspected at the most recent time to such investments, the investment ratio as per the laws on guidelines for the incorporation and operation of securities companies in this circumstance shall be comprised of domestic and overseas investments.

Article 14. Investment safety ratio for fund management enterprises

1. A fund management enterprise shall be permitted to invest at most twenty percent (20%) of the owner’s equity as shown in the audited financial statement for the nearest year or in the most recent half-year financial statement and the most recent quarter’s financial report. Moreover, investments in the investment instruments regulated by the State Bank of Vietnam shall not exceed the registered limitation on proprietary trading as endorsed by the State Bank of Vietnam.

2. If the investment portfolio of the fund management enterprise oversteps the limitation stated in Section 1 of this Article due to the fluctuation in the market price of assets in its custody or its possession of rights in connection with such assets, the fund management enterprise must carry out essential measures of rectification in three (03) months upon making excessive investments to abide by the limitation on investment as stated in Section 1 of this Article.

3. The fund management enterprise, when conducting outward portfolio investments, must conform to regulations on financial investment in the laws on incorporation, organization and operation of fund management enterprises.

Article 15. Investment safety ratio for securities investment funds and investment companies

1. Securities investment funds or investment companies can only make outward portfolio investments into investment instruments that are defined in their charter in conformity to the regulations of the State Bank of Vietnam.

2. A securities investment fund or investment company can only investment at most twenty percent (20%) of the net value of assets as shown in the most recent investment report. Moreover, such investments must not overstep the registered limitation on proprietary trading as endorsed by the State Bank of Vietnam.

3. The structure, limitation and adjustment of outward portfolio investments of a securities investment fund or investment company must adhere to relevant regulations in the laws on the establishment and management of securities investment funds and on the incorporation, operation and management of investment companies.

Article 16. Investment safety ratio for insurance enterprises

1. Insurance enterprises can spend finances from their owner’s equity on outward portfolio investments as per the laws.

In every circumstance, the total sum of outward portfolio investments must not exceed the value of the owner's equity minus:

- The legal capital or minimum solvency margin, whichever is higher; and

- Overseas investments that have been made (if any).

2. Insurance enterprises can for their own direct gain invest in investment instruments, which have been regulated by the State Bank of Vietnam; however, they cannot invest in more than 5% of the outstanding securities of a foreign organization (except foreign government bonds) and must abide by the registered limitation on proprietary trading as endorsed by the State Bank of Vietnam.

3. On quarterly basis, insurance enterprises shall reassess their outward portfolio investments according to their financial conditions. If their investment ratio does not adhere to Section 1 and Section 2 of this Article, they must carry out measures necessary to abide by the limitation on investment in three (03) months from the end of the quarter.

Part 2. TRUSTEESHIP FOR OUTWARD PORTFOLIO INVESTMENT

Article 17. General

1. Fund management enterprises shall register the limitation of their trusteeship for outward portfolio investment as per regulations of the State Bank of Vietnam.

2. Fund management enterprises shall hold trusteeship for outward portfolio investment as per the laws on investment and banking after granted by the State Securities Commission with a certificate of registration of the trusteeship for outward portfolio investment and by the State Bank of Vietnam with a written endorsement of the registered limitation of trusteeship.

3. When holding trusteeship for outward portfolio investment, fund management enterprises and trustors must engage in contract(s) separate from the agreement(s) for trusteeship for domestic investments. Moreover, fund management enterprises shall be responsible for assuring that trustors conform to Article 20 of the Decree No. 135/2015/ND-CP.

An investment trusteeship contract shall define the pecuniary amounts entrusted, duration of trusteeship, investment instruments, rights and duties of the parties in conformity to current laws. An investment trusteeship contract shall specify the time limit for contract closure upon the revocation of the fund management enterprise's certificate of registration of the trusteeship for outward portfolio investment.

4. Trustors' sources of finances for outward portfolio investments shall abide by Article 10 of the Decree No. 135/2015/ND-CP Moreover, the trustors shall be held liable for risks over the entrusted funds into outward portfolio investments.

5. Trustors and fund management enterprises shall adhere to Article 19 and Article 22 of the Decree No. 135/2015/ND-CP.

6. Fund management enterprises shall enter depository contract(s) with overseas depository organization(s) that is (are) permitted to provide depository services as per the laws of the host country.

Fund management enterprises may contract with depository banks in Vietnam to safeguard assets ensuing from trustors’ outward portfolio investments. The depository bank in Vietnam can authorize an overseas depository organization to safeguard assets ensuing from the trustors’ outward portfolio investments; however, such bank shall be held fully liable for depository activities delegated.

7. In five (05) working days after the fund management company signs a depository contract with an overseas depository organization, the depository bank in Vietnam shall sign a depository authorization contract with that depository organization. Upon replacing the overseas depository organizations, the fund management enterprise shall present to State Securities Commission a written notice, the depository contract, the depository authorization contract, the copy of the overseas depository organization’s certificate of registration of securities depository operations or equivalent papers.

8. The depository and authorization of depository of assets ensuing from outward portfolio investments shall abide by the laws on the incorporation, organization and operation of fund management enterprises and by relevant laws.

Chapter V

NOTIFYING AND REPORTING

Article 18. Notification by fund management enterprises

1. The fund management enterprise must provide investors with a prospectus and/ or summary prospectus, which indicate(s) the risks against the securities investment fund or investment company upon an outward portfolio investment, the responsibilities of the Vietnam-based depository bank and/ or supervisory bank for outward portfolio investments, the portfolio of investments and the structure of outward portfolio investments of the securities investment fund or investment company.

2. Upon the trustor’s request, the fund management enterprise must present the risk management procedure and specify investment restrictions and the enterprise's risk prevention and control measures for the enterprise’s management of the trustor’s assets abroad.

3. The fund management enterprise shall be liable to the trustor for:

a) Presenting the depository contract and documents annexed to the contract for trusteeship for outward portfolio investment;

b) Reporting on monthly basis the investment portfolio as per the laws on the incorporation, organization and operation of the fund management enterprise;

c) Providing the statements of investment portfolio accounts and transactions, which have been confirmed by the depository organization, the information on investment management and the answers to all inquiries upon the client's request.

4. The fund management enterprise, when requested, shall be responsible for providing the State Securities Commission with the investment trusteeship contract and following documents related to the trustor:

a) The copies of the audited financial statements for five (05) consecutive years immediately preceding the entrustment of the outward portfolio investment as per Section 1, Article 20 of the Decree No. 135/2015/ND-CP;

b) The written confirmation(s) by tax authorities of the fulfillment of financial obligations to the Government of Vietnam and the settlement of all taxes for the state budget upon the entrustment of the outward portfolio investment;

c) Documents evidencing that the foreign currency in accounts for outward portfolio investment trust has been self-gained.

d) The plan(s) for outward portfolio investment as approved by competent bodies of the trustor (i.e. general shareholders’ meeting, board of directors, members’ council and equivalents) or other competent individuals according to the laws.

dd) The report on legal compliance with regard to the management and spending of state capital (for a trustor holding state capital) for the year immediately preceding the year that the outward portfolio investment is deputed.

Article 19. Reporting

1. Reporting by securities companies:

a) In three (03) working days upon Vietnam State Bank’s endorsement of the registered limitation on proprietary trading of outward portfolio investment, a securities company shall send a report to the State Securities Commission on such limitation with the copy of Vietnam State Bank’s written endorsement of the registered limitation on proprietary trading.

b) The securities company shall prepare and send monthly reports, as formatted in Appendix 09 of this Circular, on outward portfolio investments to the State Securities Commission. Such report must be sent in ten (10) working days from the end of each month.

2. Reporting by fund management enterprises:

a) In three (03) working days upon Vietnam State Bank’s endorsement of the registered limitations on proprietary trading of and trusteeship for outward portfolio investment, a fund management enterprise shall send a report to the State Securities Commission on such limitations with the copies of Vietnam State Bank’s written endorsements of the registered limitations on proprietary trading and trusteeship.

b) The fund management enterprise shall prepare and send monthly reports, as formatted in Appendix 10, Appendix 11 and Appendix 12 of this Circular, to the State Securities Commission on the former’s proprietary trading of outward portfolio investments, adherence to the limitation on trusteeship for outward portfolio investment and management of the portfolio of the trustor’s outward portfolio investments, respectively. Such reports must be sent in ten (10) working days from the end of each month.

3. Reporting by securities investment funds and investment companies

a) In three (03) working days upon Vietnam State Bank’s endorsement of the registered limitation on proprietary trading of outward portfolio investment, a securities investment fund or an investment company hiring a fund management enterprise or a self-managed investment company shall send a report to the State Securities Commission on the limitation on outward portfolio investments of the securities investment fund or the investment company, with the copy of Vietnam State Bank’s written endorsement of the registered limitation on proprietary trading.

b) The securities investment fund or the investment company hiring a fund management enterprise or the self-managed investment company shall prepare and send monthly reports, as formatted in Appendix 13 of this Circular, on the proprietary trading of outward portfolio investments to the State Securities Commission. Such report must be sent in ten (10) working days from the end of each month.

4. Reporting by insurance enterprises

a) In three (03) working days upon Vietnam State Bank’s endorsement of the registered limitation on proprietary trading of outward portfolio investment, an insurance enterprise shall send a report to the Ministry of Finance on such limitation with the copy of Vietnam State Bank’s written endorsement of the registered limitation on proprietary trading.

b) The insurance enterprise shall prepare and send quarterly reports, as formatted on Appendix 14 of this Circular, to the Ministry of Finance on the proprietary trading of outward portfolio investments. Such report must be sent in thirty (30) days from the end of each quarter.

5. Reporting by supervisory banks in Vietnam

A supervisory bank based in Vietnam shall prepare and send supervisory reports to the State Securities Commission on outward portfolio investments of a securities investment fund or investment company according to the laws on the establishment and management of securities investment funds and on the incorporation, organization and management of investment companies.

6. A securities trading organization or insurance enterprise, at least sixty five percent (65%) of whose charter capital is state-owned, must report to competent state management authorities with regard to its outward portfolio investments made according to the plan approved within twenty four (24) hours upon its receipt of the written approval of outward portfolio investment by the Prime Minister as per Article 9 of the Decree No. 135/2015/ND-CP.

7. In five (05) working days upon amending its internal procedure for outward portfolio investments, a securities trading organization, investment company or insurance enterprise must send a copy of such internal procedure revised to competent state management authorities.

Chapter VI

IMPLEMENTATION

Article 20. Implementation

This Circular comes into force as of August 15, 2016.

Article 21. Implementation

1. Ministry of Finance, State Securities Commission, securities trading organizations, securities investment funds, investment companies, insurance enterprises and relevant entities shall be responsible for implementing this Circular.

2. Minister of Finance shall decide amendments and supplements to this Circular./.