Thông tư 51/2021/TT-BTC

CIRCULAR

PROVIDING GUIDANCE ON OBLIGATIONS OF ORGANIZATIONS AND INDIVIDUALS ARISING FROM FOREIGN INVESTMENT IN VIETNAM'S SECURITIES MARKET

Pursuant to the Law on Securities dated November 26, 2019;

Pursuant to the Government's Decree No. 155/2020/ND-CP dated December 31, 2020 on elaboration of some Articles of the Law on Securities;

Pursuant to the Government’s Decree No. 87/2017/ND-CP dated July 26, 2017 defining functions, tasks, powers and organizational structure of the Ministry of Finance;

At the request of the Chairman of the State Securities Commission of Vietnam (“SSC”);

The Minister of Finance promulgates a Circular providing guidance on obligations of organizations and individuals arising from foreign investment in Vietnam's securities market.

Article 1. Scope and regulated entities

1. This Circular provides guidance on Clause 6 Article 138 of the Government’s Decree No. 155/2020/ND-CP dated December 31, 2020 on elaboration of some Articles of the Law on Securities (hereinafter referred to as “Decree No. 155/2020/ND-CP”) on obligations of foreign investors, organizations providing services to foreign investors, and other organizations and individuals involved in foreign investment in Vietnam’s securities market.

2. This Decree applies to:

a) Foreign investors, groups of affiliated foreign investors;

b) Depository members, clearing members, securities companies, fund management companies, branches of foreign fund management companies in Vietnam, issuers of depositary receipts in foreign countries, business entities over 50% of charter capital of which is held by foreign investors;

c) Vietnam Securities Depository and Clearing Corporation (VSDCC), Vietnam Exchange (VNX) and its subsidiaries;

d) Other relevant authorities, organizations and individuals.

Article 2. Definitions

For the purposes of this Circular, the terms below are construed as follows:

1. “valid copy” means a copy that is extracted from the master register or authenticated by a competent authority or organization or that has been compared and certified to correspond with its original.

2. Competent representative of a foreign organization means:

a) The Chairperson of the Board of Directors or Board of Members, General Director (Director), Secretary or owner of the foreign organization;

) A competent person as prescribed in the Charter of the foreign organization or the capital contribution agreement or another document of equivalent validity of the foreign organization that has the full authority to sign documents on behalf of the foreign organization;

c) The person granted the written authorization which bears the certification of foreign notary public from the person mentioned in Point a or b of this Clause or the person who is certified by a foreign attorney or notary public to have full authority to act as a representative of a foreign organization as prescribed by the law of that foreign country.

3. “trading representative” means a Vietnamese individual that meets the requirements laid down in Clause 4 Article 138 of Decree No. 155/2020/ND-CP and is authorized by a foreign investor to perform securities transactions and investments in Vietnam's securities market, disclose information, and report to competent state agencies in accordance with the law of Vietnam.

4. “group of affiliated foreign investors” is comprised of foreign organizations that are related with each other in one of the following forms:

a) Foreign funds or foreign organizations managed by the same domestic or foreign fund management company;

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

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

d) Portfolios of the same foreign investment fund or of the same foreign investor, including those deposited on different depository accounts;  

dd) Foreign funds or foreign investors with the same trading representative.

5. “custodian bank" means the commercial bank or foreign bank branch (FBB) that is issued with a certificate of depository member by VSDCC.

Article 3. Indirect investment capital accounts

1. Each foreign investor shall be allowed to open 01 indirect investment capital account at 01 custodian bank obtaining the license for foreign exchange trading in order to perform indirect investment activities in Vietnam’s securities market. Each issuer of depositary receipts in a foreign country shall be allowed to open 01 indirect investment capital account at 01 custodian bank obtaining the license for foreign exchange trading in order to issue or cancel depositary receipts and perform other relevant activities in accordance with regulations of law.

2. When receiving trust capital as prescribed in Point b Clause 1 Article 138 of Decree No. 155/2020/ND-CP, fund management companies or branches of foreign fund management companies in Vietnam shall be allowed to open indirect investment capital accounts to receive capital from foreign investors that do not have indirect investment capital accounts. In this case, indirect investment capital accounts shall be opened in the names of fund management companies or branches of foreign fund management companies in Vietnam.

3. All activities such as transmitting money to perform transactions or investments and make payments relating to securities investment activities of foreign investors and activities of issuers of depositary receipts in foreign countries, receiving and using dividends or distributed profits, or buying foreign currency for the purpose of remitting them to foreign countries (if any) and other relevant transactions must be carried out through indirect investment capital accounts.

4. Opening, closing, use and management of indirect investment capital accounts must comply with law regulations on foreign exchange management.

Article 4. Depository accounts

1. After obtaining securities trading codes, foreign investors and issuers of depositary receipts in foreign countries shall open depository accounts in accordance with regulations of law on registration, depositing, clearing and settlement of securities transactions.

2. Foreign investors and issuers of depositary receipts in foreign countries shall open depository accounts at custodian banks according to the rule that, for each securities trading code granted, only 01 depository account is opened at a custodian bank. In addition to depository accounts opened at custodian banks, foreign investors and issuers of depositary receipts in foreign countries shall be allowed to open depository accounts at securities companies according to the rule that only 01 depository account is opened at each securities company.

3. In case of change of custodian bank, the foreign investor or issuer of depositary receipts in foreign countries must close their depository account at the current custodian bank after the entire balance on this depository account has been transferred to the depository account opened at the new custodian bank. Procedures for transfer of securities between depository accounts shall conform to regulations of law on registration, depositing, clearing and settlement of securities transactions.

Article 5. Obligations arising from foreign investment in Vietnam’s securities market

1. Foreign investors and their trading representatives must ensure that their securities transactions on Vietnam’s securities market and transactions conducted by affiliated persons or groups of affiliated foreign investors do not serve the purposes of creating artificial demand or supply, manipulating securities prices and conducting other prohibited transactions as prescribed by law.

2. Foreign investors and issuers of depositary receipts in foreign countries shall be obliged to declare, pay and finalize taxes, fees, charges and service prices related to securities trading activities in Vietnam in accordance with regulations of the law of Vietnam.

3. Foreign investors and groups of affiliated foreign investors shall submit reports on their ownership and disclose information about their securities transactions in accordance with law regulations on disclosure of information on the securities market. To be specific:

a) The foreign investor shall itself/himself/herself fulfill, or appoint 01 depository member, securities company or fund management company or its representative office (if any) or another organization, or authorize an individual to fulfill the obligations to submit reports on ownership and disclose information in accordance with law regulations on disclosure of information on the securities market;

b) The group of affiliated foreign investors shall appoint 01 depository member, securities company or fund management company or its representative office (if any) or another organization, or authorize an individual to fulfill the obligations to submit reports on ownership and disclose information in accordance with law regulations on disclosure of information on the securities market;

The notification of appointment or change of the organization or individual fulfilling the obligations to make ownership reports and disclose information shall be made using the form in Appendix I enclosed herewith and sent to SSC and the subsidiary of VNX within 24 hours after the appointment or authorization takes effect. Such notification shall be accompanied by the securities trading license or business registration certificate or certificate of fund establishment or other documents of equivalent validity of the appointed organization, or the valid copy of ID card or citizen’s identity card or unexpired Passport or another valid personal identification paper of the authorized person.

c) In case the number of foreign investors in a group of affiliated foreign investors is changed but the organization or individual appointed or authorized to fulfill the obligations to make ownership reports and disclose information is kept unchanged, that appointed or authorized organization or individual shall submit reports to SSC and subsidiary of VNX within 07 working days from the occurrence of such change.   Such report includes:

- The updated list of affiliated foreign investors which is made using the form in Appendix II enclosed herewith;

- The mandate or letter of authorization given by the new foreign investor which is made using the form in Appendix I enclosed herewith (in case new foreign investors participate in the group of affiliated foreign investors).

d) Foreign investors or groups of affiliated foreign investors shall provide adequate information about their ownership of securities for their appointed organizations or authorized individuals to fulfill the obligations to make ownership reports and disclose information as prescribed by law;

dd) Foreign investors and groups of affiliated foreign investors shall make ownership reports and disclose information at the same time. The obligations to make ownership reports and disclose information shall be performed in accordance with law regulations on disclosure of information on securities market.

Article 6. Obligations to provide services for foreign investors

1. When rendering services to foreign investors, securities companies, fund management companies, branches of foreign fund management companies in Vietnam, and business entities over 50% of charter capital of which is held by foreign investors must ensure:

a) They must strictly comply with regulations and laws on securities and securities market;

b) When rendering services or participating in securities auctions with authorization of foreign investors, securities companies, fund management companies, or branches of foreign fund management companies in Vietnam shall separate trading orders and investment directions of foreign investors from those of domestic investors (if any) and their own trading orders, and ensure the compliance with regulations of the law on foreign holdings in Vietnamese enterprises;

c) Assume their responsibility to distribute assets to each client in a fair and reasonable manner as agreed upon in the signed contract.

2. When conducting transactions on behalf of foreign investors, trading representatives of foreign investors shall:

a) comply with regulations of the Law on Securities and relevant laws;

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

3. VSDCC, depository members, clearing members, securities companies, fund management companies and branches of foreign fund management companies in Vietnam shall, when rendering services for foreign investors, keep information about foreign investors confidential in accordance with relevant laws, and provide adequate, accurate and timely information for competent authorities at their request.

4. VSDCC shall establish and operate the system for online securities trading code registration, and provide instructions for use of this system.

5. VSDCC shall provide specific provisions on warning forms, alerts and suspension of use of the system for online securities trading code registration of depository members if they fail to adequately and promptly submit required documents for registration of securities trading code and notification of changes in information as prescribed in Clauses 1, 2 Article 146 and Clause 2 Article 148 of Decree No. 155/2020/ND-CP.

6. VSDCC shall suspend or terminate the use of the system for online securities trading code registration by depository members if requested by SSC.

7. When depository members are found to provide untruthful information in the application for securities trading code registration or register fictitious securities trading codes or carry out securities trading code registration for ineligible entities, VSDCC shall report the case to SSC and suspend or terminate the use of the system for online securities trading code registration by depository members after obtaining approval from SSC. In this case, the depository members shall assume the full responsibility, including financial obligations, for transactions conducted on trading accounts opened on the basis of such securities trading codes.

8. Depository members shall be allowed to carry out registration or cancellation of securities trading codes or notification of changes in information about securities trading codes only after receiving adequate documents as prescribed in  Clauses 1, 2 Article 146, Clause 2 Article 147 and Clause 2 Article 148 of Decree No. 155/2020/ND-CP. In addition to notarized or certified documents as prescribed, depository members shall be responsible for the accuracy of copies of documents they provided.

9. Depository members shall prepare and store documents and records on assets deposited on depository accounts of the entities granted securities trading codes, and shall provide them at the request of competent authorities in accordance with regulations of law.

10. Clearing members shall retain adequate documents about clearing and settlement of securities transactions of the entities granted securities trading codes, and adequately, promptly and accurately provide information and documents concerning clearing and settlement of securities transactions at the request of competent authorities in accordance with regulations of law.

Article 7. Reporting

1. Depository members shall submit monthly reports to SSC on depository accounts and portfolios of foreign investors and issuers of depositary receipts in foreign countries using the form in Appendix No. III enclosed herewith. The depository members that are branches of foreign credit institutions or wholly foreign-owned credit institutions established in Vietnam must also provide reports on their investment activities and investment portfolios using the form in Part III of Appendix No. III enclosed herewith.

2. Custodian banks at which indirect investment capital accounts of foreign investors and issuers of depositary receipts in foreign countries shall submit reports every 02 weeks to SSC on capital turnovers on these accounts using the form in Appendix No. IV enclosed herewith.

3. Securities companies, fund management companies and branches of foreign fund management companies in Vietnam shall provide monthly reports to SSC on management of investment portfolios and investments for foreign investors using the form in Appendix No. V enclosed herewith.

4. VSDCC shall submit monthly reports to SSC on issuance of securities trading codes using the form in Appendix No. VI enclosed herewith.

5. Subsidiaries of VNX shall submit periodical (daily, monthly and annual) reports on transactions of foreign investors and issuers of depositary receipts in foreign countries using the form in Appendix No. VII enclosed herewith.

6. Trading representatives of foreign investors shall submit reports on investments made according to directions of foreign investors using the form in Appendix No. VIII enclosed herewith at the request of SSC.

7. VSDCC, VNX and its subsidiaries, securities companies, fund management companies, branches of foreign fund management companies in Vietnam, depository members, clearing members, trading representatives and foreign investors shall directly submit reports and provide lists, data, figures and other documents related to investment activities of foreign investors if requested by SSC.

8. The reports specified in Clauses 1, 2, 3, 4, 5 of this Article must be submitted within the following time limits:

a) Daily reports shall be submitted by 18:00 pm everyday;

b) Reports on foreign investors’ capital turnover shall be submitted within 03 working days after the 15^th every month (for reports for 02 first weeks of the month) or after the ending day of the month (for reports for 02 last weeks of the month);

c) Monthly reports shall be submitted within 05 working days from the end of the reporting month;

d) Annual reports shall be submitted within 90 days from the end of the reporting year.

9. The closing dates of the periodical reports mentioned in Clauses 1, 2, 3, 4, 5 of this Article are provided for as follows:

a) A two-week report shall include data from the first day to the 15^th of the reporting month or from the 16^th to the last day of the reporting month (except data reflected at a given time);

b) A monthly report shall include data from the first day to the last day of the reporting month (except data reflected at a given time);

c) An annual report shall include data from January 01 to December 31 inclusively of the reporting year (except data reflected at a given time).

10. The reports specified in Clauses 1, 2, 3, 4, 5, 6, 7 of this Article shall be submitted in physical form and enclosed with their electronic files, or submitted electronically via the system for management of foreign investors, and must be retained for a period of no less than 05 years.

Article 8. Implementation

1. This Circular comes into force from August 16, 2021 and supersedes the Circular No. 123/2015/TT-BTC dated August 18, 2015 of the Minister of Finance providing guidance on foreign investment activities in Vietnam’s securities market.

2. Regulations herein applied to Vietnam Securities Depository and Clearing Corporation (VSDCC) shall be implemented by Vietnam Securities Depository until VSDCC starts to officially operate according to the Law on Securities.

3. Regulations herein applied to Vietnam Exchange (VNX) and its subsidiaries shall be implemented by Hanoi Stock Exchange (HNX) and Ho Chi Minh Stock Exchange (HSX) until VNX and its subsidiaries start to officially operate according to the Law on Securities.

Article 9. Implementation organization

SSC, VSDCC, VNX and its subsidiaries, securities companies, fund management companies, branches of foreign fund management companies in Vietnam, depository members, clearing members, issuers of depositary receipts in foreign countries and relevant organizations and individuals are responsible for the implementation of this Circular./.