THE OFFICE OF THE NATIONAL ASSEMBLY OF VIETNAM ----------	THE SOCIALIST REPUBLIC OF VIET NAM Independence-Freedom-Happiness -----------------
No. 24/VBHN-VPQH	Hanoi, February 26, 2025

 

LAW

ON SECURITIES

The Law on Securities No. 54/2019/QH14 dated November 26, 2019 of the National Assembly, which comes into force from January 01, 2021, is amended by:

The Law No. 56/2024/QH15 dated November 29, 2024 of the National Assembly providing amendments to Law on Securities, Law on Accounting, Law on Independent Audit, Law on State Budget, Law on Management and Use of Public Property, Law on Tax Administration, Law on Personal Income Tax, Law on National Reserves, and Law on Penalties for Administrative Violations, which comes into force from January 01, 2025.

Pursuant to the Constitution of the Socialist Republic of Vietnam;

The National Assembly promulgates the Law on Securities[1].

Chapter I

GENERAL PROVISIONS

Article 1. Scope

This Law provides for securities activities and the securities market; rights and obligations of organizations and individuals in the securities market; organization of the securities market; state management of securities and the securities market.

Article 2. Regulated entities

1. Vietnamese and foreign organizations and individuals that invest in securities and operate in the securities market of Vietnam.

2. Securities authorities.

3. Other authorities, organizations and individuals involved in securities activities and the securities market.

Article 3. Application of Law on Securities and relevant laws

Securities activities and the securities market, rights and obligations of organizations and individuals in the securities market, organization of the securities market, and state management of securities and the securities market must comply with provisions of this Law and other relevant laws.

Article 4. Definitions

For the purposes of this Law, terms used herein shall be construed as follows:

1. Securities include the following assets:

a) Shares, bonds, fund certificates;

b) Warrants, covered warrants, rights issue, depositary receipts;

c) Derivatives;

d) Other kinds of securities defined by the Government.

2. Shares are securities that certify their holders’ lawful rights and interests to a portion of share capital of the issuer.

3. Bonds are securities that certify their holders’ lawful rights and interests to part of the debt of the issuer.

4. Fund certificates are securities that certify their holders’ ownership of a stake in a securities investment fund.

5. Warrants are the securities that are issued together with bonds or preference shares and bestow upon their holders the right to buy a certain amount of common shares at a specified price over a specific period of time.

6. Covered warrants are securities secured by collateral and issued by a securities company. They give their holders the right to buy (“call” warrant) or to sell (“put” warrant) the underlying securities to their issuer at a specified price (the “strike” or “exercise” price) prior to or on a predetermined date, or receive the difference between the strike price and the underlying security price determined when the warrant is exercised.

7. Rights issue is a type of securities which is issued by a joint-stock company to give its existing shareholders the right to buy new shares under predetermined conditions.

8. Depositary receipts are the securities issued on the basis of securities of an organization that is lawfully established and operating in Vietnam.

9. Derivatives are financial instruments in the form of contracts, including options contracts, futures contracts, and forward contracts, that determine rights and obligations of the parties to pay money and transfer a specific quantity of underlying assets at a predetermined price prior to or on a specified date in the future.

10. Underlying assets (for derivatives) are securities, securities indexes or other assets, as prescribed by the Government, upon which the derivative price is based.

11. Options contracts are derivatives that certify the buyer’s right and the seller’s obligation to:

a) Buy or sell a specific quantity of underlying assets at a specified strike price prior to or on a specified date in the future;

b) Pay the difference between the value of the underlying assets determined upon contract conclusion and that determined prior to or on a specified date in the future.

12. Futures contracts are listed derivatives that certify the parties’ agreement to:

a) Buy or sell a specific quantity of underlying assets at a predetermined price on a specified date in the future;

b) Pay the difference between the value of the underlying assets determined upon contract conclusion and that determined on a specified date in the future.

13. Forward contracts are derivatives that certify the parties’ agreement to buy or sell a specific quantity of underlying assets at a predetermined price on a specified date in the future.

14. Securities and securities market-related activities include offering, listing, trading, investing in securities, providing securities-related services, disclosing information, public company administration and other activities provided for in this Law.

15. Securities investment means the purchase, sale and holding of securities by investors on the securities market.

16. Investors are organizations and individuals that make investments in the securities market.

17. Strategic investors are the investors selected the General Meeting of Shareholders according to their financial capacity, technological capacity and commitment to cooperate with the building work for at least 03 years.

18. Major shareholder means a shareholder that holds at least 5% of the voting shares of an issuer.

19. Public offering means the offering of securities:

a) Through mass media;

b) To at least 100 investors, excluding professional investors; or

c) To unidentified investors.

20. Private placement means the offering of securities in cases other than those specified in Point a Clause 19 of this Article and:

a) The securities are offered to fewer than 100 investors, excluding professional investors;

b) The securities are only offered professional investors.

21. Issuer means an organization that that offers, issues securities.

22. Accredited audit organization means an independent audit organization on the list of audit organizations accredited by the State Securities Commission (SSC) in accordance with this Law and independent audit laws.

23. Prospectus means a physical or electronic document that contains accurate, truthful and objective information about the offering or listing of securities by an issuer.

24. Listing means the admission of eligible securities to trading on a system for trading of listed securities.

25. Trading registration means the admission of securities to trading on a system for trading of unlisted securities.

26. Securities trading systems include the systems for trading of listed securities and the systems for trading of unlisted securities, organized and run by Vietnam Exchange (VNX) and its subsidiaries.

27. Securities market means a place or method of information exchange where or whereby buy and sell orders are rallied and securities transactions are conducted.

28. Securities trading include brokerage, proprietary trading, securities underwriting, securities investment consulting, securities investment fund management, securities portfolio management and provision of securities-related services in accordance with Article 86 of this Law.

29. Securities brokerage means the brokerage of sale and purchase of securities.

30. Proprietary trading means a securities company’s act of buying or selling securities for itself.

31. Securities underwriting means an underwriter’s commitment to the issuer to buy part or all of the issuer’s securities for reselling, or to buy the unsold securities, or to put the best efforts to sell as much as possible of a securities offering.

32. Securities investment consulting means the provision of analysis result, analysis report to the client and giving recommendations regarding the purchase, sale or holding of securities.

33. Securities registration means the registration of information about the issuer, its securities and holders.

34. Securities depository services include the depositing, storage, transfer of securities for clients, assisting the clients in exercising their rights relevant to the deposited securities.

35. Securities portfolio management means the management of an investor’s sale, purchase and holding of securities and other assets of the investor under an agreement.

36. Securities investment fund management means management of the sale, purchase and holding of securities and other assets of the securities investment fund.

37. Securities investment fund means a fund established through capital contribution by investors to make investment in securities or other assets, including real estate. Investors do not have the right to daily control the investment decisions of the fund.

38. Public fund means a securities investment fund that publicly offers fund certificates.

39. Open-end fund means a public fund whose publicly offered fund certificates have to be redeemed at the request of the investors.

40. Closed-end fund means a public fund whose publicly offered fund certificates cannot be redeemed at the request of the investors.

41. Private fund means a securities investment fund that has 02 - 99 capital contributors who are all professional investors.

42. Exchange-traded fund (ETF) means an open-end fund that is established on the basis of receipt and exchange of component securities for fund certificates. ETF certificates shall be listed and traded on the systems for trading of listed securities.

43. Real estate investment fund means a securities investment fund that primarily makes investments in real estate and securities issued by real estate enterprises at least 65% of revenue of which comes from ownership and trade in real estate according to their latest annual financial statements.

44. Internal information means the information about a public company, listed organization, registered organization, public fund or public investment company which may considerably affect its securities price if published.

45. Internal actors are persons holding important positions in the management of an enterprise, public fund or public investment company. To be specific:

a) Internal actors of an enterprise include the Chairperson of the Board of Directors or the Chairperson of the Board of Members or the company president, members of the Board of Directors or the Board of Members, legal representative, General Director (Director), Deputy General Director (Deputy Director), financial director, chief accountant and persons holding equivalent managerial positions elected by the General Meeting of Shareholders or designated by the Board of Directors, the Board of Members or the company president; chief and members of the Board of Controllers (Controllers), members of the internal audit board, secretary, administrators and authorized spokespersons;

b) Internal actors of a public fund or public investment company include members of the representative board of the public fund or members of the Board of Directors of the public investment company, executives of the public fund or public investment company, and internal actors of the securities investment fund management company (hereinafter referred to as “fund management company”).

46. Related persons mean individuals or organizations that have relationship with each other in the following cases:

a) An enterprise and its internal actors; a public fund or public investment company and its internal actors;

b) An enterprise and any organization or individual that holds more than 10% of voting shares or stakes of such enterprise;

c) Any organization or individual that directly or indirectly supervises or is directly or indirectly supervised by another organization or individual; two organizations or individuals under the management of the same entity;

d) An individual and his/her biological parent, adoptive parent, father- or mother-in-law, spouse, biological child, adopted child, son- or daughter-in-law, sibling, brother- or sister-in-law;

dd) A fund management company and securities investment funds or securities investment companies under its management;

e) An organization or individual that is the representative of another organization or individual in a contract;

g) Other organizations and individuals that are related persons as defined by the Law on Enterprises.

47. Certified securities professional means a person who has the securities practicing certification granted by SSC and works for a securities company, fund management company, branch in Vietnam of a foreign securities company or foreign fund management company (hereinafter referred to as “branches in Vietnam of foreign securities companies and fund management companies”) or a securities investment company.

48. Listed organization or registered organization is an organization whose securities are listed or registered for trading on the securities trading system.

49.[2] Securities market manipulation means the commission of one of the following acts:

a) Using one or several accounts of oneself, or of another person, or colluding with others to continuously buy and sell securities in order to create artificial demand or supply;

b) Placing orders to buy and sell securities of the same type within the same trading day or colluding with others to buy and sell securities without actual transfer of securities ownership or with the securities ownership transferred within a group in order to create artificial demand and supply;

c) Continuously buying or selling securities with a controlling quantity at the opening or closing time of the market in order to manipulate securities prices;

d) Trading securities by colluding with or persuading others to continuously place securities but and sell orders to remarkably affect the demand, supply and prices of securities, or manipulate securities prices;

dd) Offering opinions, whether directly or via the mass media, about a type of securities or securities issuer in order to affect the price of that type of securities after conducting a transaction and holding the position of that type of securities;

e) Adopting other methods or performing other trading acts, with or without providing false or inaccurate information to the public, to create artificial demand and supply or manipulate securities prices.

Article 5. Rules for securities and securities market-related activities

1. Respect of ownership and other rights to assets in securities activities; freedom to trade, invest and provide information about securities of organizations and individuals.

2. Ensure fairness, openness, transparency.

3. Protect investors’ lawful rights and interests.

4. Accept risks.

Article 6. Policies on development of securities market

1. The State shall adopt policies encouraging and facilitating Vietnamese and foreign organizations and individuals to invest and operate in the securities market in order to mobilize medium-term and long-term capital for development investment activities.

2. The State shall adopt management and supervision policies to ensure the fairness, openness, transparency, safety and effectiveness of the securities market.

3. The State shall adopt policies on investment in modernization of infrastructure and information technology serving the operation of the securities market, develop human resources for the securities industry, provide basic knowledge about securities and the securities market.

Article 7. Measures for assurance of security and safety of securities market

1. Measures for assurance of security and safety of securities market include:

a) Supervision of security and safety of the securities market;

b) Response to and recovery from events that adversely affect the safety, stability and integrity of the securities market;

c) Suspension of certain listed or registered securities from trading on the securities trading system;

d) Suspension or restoration of some or all transactions of VNX and its subsidiaries;

dd) Partial or full suspension or restoration of securities registration, depositing, clearing, payment functions of Vietnam Securities Depository and Clearing Corporation (VSDC) and its subsidiaries[3];

e) Temporary or permanent prohibition from holding certain positions in securities companies, fund management companies, branches in Vietnam of foreign securities companies and fund management companies, or securities investment companies; temporary or permanent prohibition from performing securities and securities market-related activities due to commission of prohibited acts in securities and securities market;

g) Freezing securities accounts; requesting a competent person to freeze a deposit account involved in a securities offence.

2. The Government shall provide for implementation of the measures for assurance of security and safety of securities market mentioned in Clause 1 of this Article.

Article 8. State management of securities and securities market

1. The Government shall perform uniform state management of securities and securities market.

2. The Ministry of Finance shall be responsible to the Government for state management of securities and securities market, and have the following duties and entitlements:

a) Propose strategies, plans, schemes and policies on development of the securities market to the Government and the Prime Minister for promulgation;

b) Promulgate within its competence or submit legislative documents on securities and securities market to competent authorities for promulgation;

c) Direct SSC to implement strategies, plans, schemes and policies on development of securities market and legislative documents on securities and securities market.

3. Ministries and ministerial agencies, within the scope of their duties and entitlements, shall cooperate with the Ministry of Finance in performing state management of securities and securities market.

4. People’s Committees at all levels, within the scope of their duties and entitlements, are responsible for state management of securities and securities market in their administrative divisions.

Article 9. State Securities Commission (SSC)

1. SSC is affiliated to the Ministry of Finance and is responsible for advising and assisting the Minister of Finance in performing state management of securities and securities market, organizing implementation of regulations of law on securities and securities market as authorized by the Minister of Finance, and has the following duties and entitlements:

a) Propose legislative documents on securities and securities market, strategies, plans, schemes and policies on development of securities market to the Minister of Finance or a competent authority for promulgation;

b) Organize and develop the securities market; directly manage and supervise securities and securities market-related activities; manage services related to securities and the securities market in accordance with regulations of law;

c) Issue, re-issue, renew, modify and revoke licenses/certificates of practicing in securities and certificates related to securities and securities market-related activities; approve changes, suspension and cancelations related to securities and securities market-related activities in accordance with regulations of law;

d) [4] Manage, inspect, examine and supervise securities-related operations of VNX and its subsidiaries, and VSDC and its subsidiaries; consider approving regulations on securities-related operations of VNX and VSDC; request VNX and VSDC to revise their regulations; suspend or invalidate decisions on operations of VNX and its subsidiaries, and VSDC and its subsidiaries; where necessary, direct VNX and its subsidiaries, and VSDC and its subsidiaries to fulfill their duties to protect the lawful rights and interests of investors;

dd) Consider approving new securities; change and apply new transaction methods; consider approving new securities trading systems and their operation;

e) Manage and supervise securities and securities market-related activities performed by organizations and individuals;

g) Carry out inspections; settle complaints and denunciations; impose administrative penalties against securities-related offences;

h) Submit reports on the securities market developments to the Ministry of Finance for further submission to the Prime Minister or Government. Submit a report to the Ministry of Finance, the Government and the Prime Minister on any adverse event that considerably affects the security and safety of the securities market in order to adopt appropriate solutions to stabilize the securities market and maintain financial security and safety;

i) Implement within its competence or request a competent authority to implement measures for assurance of safety and security of the securities market;

k) Produce statistics and forecasting about securities and securities market-related activities; modernize information technology serving securities and securities market-related activities;

l) Provide or cooperate with relevant authorities and organizations in providing training for securities officials and certified securities professionals; spread knowledge about securities and the securities market in the public;

m) Issue instructional documents and other documents under the management of SSC;

n) Supervise securities-related socio-professional organizations implementing their charters and guidelines;

o) Prepare and submit reports on securities trading and securities market as prescribed by law;

p) Promote international cooperation and coordinate implementation of securities and securities market-related international agreements to which Vietnam is a signatory;

q) Perform other duties and entitlements provided for in this Law and relevant laws.

2. Functions, tasks, entitlements and organizational structure of SSC shall be specified by the Prime Minister.

3. Officials and public employees of SSC, in performance of their duties, shall ensure truthfulness and confidentiality of information, compliance with regulations on securities and the securities market and relevant laws.

Article 10. Securities-related socio-professional organizations

1. Securities-related socio-professional organizations shall be established and run in accordance with regulations of law on associations, comply with regulations of law on securities and the securities market, and be supervised by SSC.

2. Each securities-related socio-professional organization shall issue its own code of professional ethics after it is approved by SSC; cooperate with securities authorities in disseminate knowledge about securities and the securities market among its members.

Article 11. Professional investors

1. Professional investors are investors that have adequate financial capacity or securities qualifications, including:

a) Commercial banks, foreign branch banks (FBB), finance companies, insurers, securities companies, fund management companies, securities investment companies, securities investment funds, international financial institutions, off-budget financial funds, state-owned financial institutions permitted to buy securities as prescribed by relevant laws;

b) Any company whose contributed charter capital exceeds VND 100 billion; every listed or registered organization;

c) Holders of securities practicing certifications;

d) Any individual holding a quantity of listed or registered securities that is worth at least 02 billion VND as confirmed by the securities company at the time when he/she is certified as a professional investor;

dd) Any individual whose taxable income in the latest year is at least 01 billion according to his/her submitted tax return or tax deduction documents of his/her income payer;

e) [5] Foreign investors that are individuals holding foreign nationalities, or organizations established under the law of foreign country, and carrying out business investment activities in Vietnam.

1a. [6] Professional investors that are the organizations defined in clause 1 of this Article may purchase, trade in and transfer privately placed corporate bonds.

1b. [7] Professional investors that are the individuals defined in clause 1 of this Article may purchase, trade in and transfer privately placed corporate bonds in one of the following cases:

a) Privately placed bonds have been given credit ratings and are secured by collateral;

b) Privately placed bonds have been given credit ratings and are covered under payment guarantee issued by a credit institution.

2. The Government shall elaborate this Article.

Article 11a. Responsibilities of organizations and individuals relevant to applications/reports[8]

1. Organizations and individuals that engage in the preparation of applications/reports on securities and securities market shall assume legal responsibility for the legality, accuracy, truthfulness and adequacy of these applications/reports. Organizations and individuals that engage in the certification of applications/reports shall assume legal responsibility for performance of their tasks. Information in applications/reports must be clear, unequivocal and includes adequate important information that affects decisions of authorities, organizations and investors.

2. Authorities, organizations and individuals that have the power to receive, process and approve the applications/reports shall consider the validity of received applications/reports; assume no responsibility for violations committed by organizations or individuals before and after submitting applications/reports which are considered valid. Valid application/report means an application/report that contains adequate documents in which information is declared adequately as prescribed by law.

3. Consulting organizations and consultants that provide consultancy on applications shall fulfill the following responsibilities:

a) Consulting organizations and consultants that provide consultancy on applications must perform their duties in a honest and prudent manner, and strictly comply with regulations of law during their provision of consulting services;

b) Consulting organizations shall check and examine the information included in applications, ensure that their analysis and assessment are reasonably and prudently carried out on the basis of received information, data and documents, and assume legal responsibility for performance of their consulting tasks.

4. Audit organizations, approved auditors, and persons who signatures appear on audit or review reports must comply with provisions of law on independent audit; comply with auditing standards when conducting audit of financial statements, and assume responsibility for their opinions about the truth and fairness of audited reports and figures; comply with standards for assurance service contracts; assume responsibility to give opinions about pro forma financial statements.

Article 12. Prohibited acts in performing securities and securities market-related activities

1. Direct or indirect commission of frauds, forgery of documents, provision or disclosure of false information to conceal true information or omit necessary information in a manner that causes misunderstanding, adversely affects the offering, listing, trading, investment of securities and provision of securities-related services.

2. Use of internal information to buy or sell securities to oneself or another person; revelation or provision of internal information; advising another person to buy or sell securities based on internal information.

3. ⁹ Commission of securities market manipulation acts.

4. Engaging in securities trade or provision of securities-related services without a license, certification or approval issued or given by SSC.

5. Use of a client’s account or asset without the client’s authorization or against the law; abuse of trust to appropriate a client’s assets.

6. Allowing another person to borrow the account to trade securities, hold securities in the name of another person for the purpose of manipulating securities prices.

7. Organization of the securities market against regulations of this Law.

Chapter II

OFFERING SECURITIES

Section 1. PUBLIC OFFERING

Article 13. Face values of securities

1. Face values of securities offered within Vietnam’s territory shall be expressed as VND.

2. The face value of a publicly offered share or fund certificate shall be 10 thousand VND. The face value of a publicly offered bond shall be 100 thousand VND or its multiple.

3. In case the securities price of an issuer on the securities trading system is lower than the face value, the issuer may offer the securities at that lower price.

Article 14. Types of public offering

1. Public offerings include initial public offerings, follow-on offerings of shares or rights issue, and other types of offering.

2. The Government shall elaborate this Article.

Article 15. Requirements for public offering

1. A joint-stock company (the issuer) shall satisfy the following requirements to carry out initial public offering:

a) The contributed charter capital is at least 30 billion VND on the date of offering registration according to the accounting books;

b) The company has profit over the last 02 years and has no accumulated loss on the date of offering registration;

c) There is a plan for issuance and use of capital generated by the offering ratified by the General Meeting of Shareholders;

d) At least 15% of the issuer’s voting shares have been sold to at least 100 non-major shareholders. If the issuer’s charter capital is 1.000 billion VND or above, the ratio shall be at least 10%;

dd) Before the date of the initial public offering, the major shareholders have made a commitment to hold at least 20% of the issuer’s charter capital for at least 01 year from the end of the offering;

e) The issuer is not undergoing criminal prosecution and does not have any unspent conviction for economic crimes;

g) The offering is consulted by a securities company, unless the issuer is already a securities company;

h) The issuer has a commitment to have its shares listed or registered on the securities trading system after the end of the offering;

i) The issuer has an escrow account to receive payments for the offered shares.

2. In order to make a follow-on offering, a public company (the issuer) shall satisfy the following requirements:

a) It satisfies the requirements specified in Points a, c, e, g, h and i Clause 1 of this Article;

b) The company has profit in the preceding year and has no accumulated loss on the date of offering registration;

c) The value of the new shares does not exceed the total value of shares outstanding at their face value, unless there is a commitment to buy all of the shares of the issuer for reselling or to buy all of the unsold shares of the issuer, shares issued to raise more capital from equity, shares issued for swapping, consolidation or acquisition of enterprises;

d) [9] If the public offering is meant to raise capital for executing a project of the issuer, at least 70% of total number of shares to be offered must be sold to investors, unless shares are offered to existing shareholders at their holdings. The issuer shall have a plan to make up for the shortage in case the capital generated by the offering is inadequate to execute the project.

3. In order to make a public offering of bonds, an enterprise (the issuer) shall satisfy the following requirements:

a) The contributed charter capital is at least 30 billion VND on the date of offering registration according to the accounting books;

b) The issuer has profit in the preceding year and has no accumulated loss on the date of offering registration; there is no debt that is overdue for more than 01 year;

c) There is a plan for issuance, use and repayment of the capital generated by the offering ratified by the General Meeting of Shareholders, Board of Directors, the Board of members or the company president;

d) The issuer has a commitment to fulfill its obligations to the investors in terms of conditions for issuance, payment, assurance of the lawful rights and interests of investors and other conditions;

dd) The offering is consulted by a securities company, unless the issuer is already a securities company;

e) All of the requirements specified in Point e Clause 1 of this Article are satisfied;

g) [10] All of the requirements imposed by the Government regarding bond trustee, debt ratio, ratio of value of to-be-offered bonds to equity, and credit rating are satisfied;

h) The issuer has an escrow account to receive payments for the offered bonds;

i) The issuer has a commitment to have its bonds listed on the securities trading system after the end of the offering.

4. Requirements for public offering of convertible bonds are the same as those specified in Clause 2 and Point d Clause 3 of this Article.

5. Requirements for initial public offering of fund certificates:

a) The total value of the fund certificates to be offered is at least 50 billion VND;

b) There is a plan for issuance and use of capital generated by the offering as prescribed by this Law;

c) The offering is supervised by a supervisory bank as prescribed by this Law;

d) The publicly offered fund certificates are listed on the securities trading system after the end of the offering, except open-end fund certificates.

6. The Government shall specify the requirements and the application for public offering to convert state-owned enterprises, wholly state-owned single-member limited liability companies, public service agencies into joint-stock companies; offering of shares at prices lower than their face values; public offering by shareholders of public companies or credit institutions placed under special control; overseas offering and other cases of offering and issuance.

Article 16. Public offering registration

1. Before a public offering, issuers and shareholders of public companies shall register with SSC, except for the cases specified in Clause 2 of this Article.

2. Public offering registration is not required in the following cases:

a) Offering of debt instruments of the Government, Government-backed bonds issued by policy banks, and municipal bonds;

b) Offering of bonds issued by international financial institutions with approval given by Vietnam’s Government;

c) Public offering to convert state-owned enterprises, wholly state-owned single-member limited liability companies, public service agencies into joint-stock companies;

d) Sale of securities under an effective court judgment or decision or under an arbitral decision; sale of securities of the asset manager or recipient in case of bankruptcy or insolvency.

Article 17. Requirements for underwriting public offering

1. A securities company or an organization shall be required to satisfy the following requirements to underwrite a public offering:

a) The securities underwriting is licensed by SSC in accordance with this Law;

b) Financial safety criteria are satisfied as prescribed by law;

c) The underwriter is not a related person of the issuer.

2. If the underwriter provides underwriting in the form of commitment to purchase part or all of the issuer’s securities, the total value of securities purchased must not exceed the equity and 15 times the difference between current assets and current liabilities as defined in the financial statements of the last quarter.

Article 18. Application for registration of public offering

1. An application for registration of initial public offering by a joint-stock company (the issuer) consists of:

a) An application form;

b) The Prospectus;

c) The issuer’s charter;

d) The decision of the General Meeting of Shareholders to ratify the plan for issuance and the plan for use of capital generated by the offering, and the commitment to have the shares listed or registered on the securities trading system;

dd) The commitment to comply with the regulations in Point d and Point e Clause 1 Article 15 of this Law;

e) The major shareholders’ written commitment, made before the date of the initial public offering, to hold at least 20% of the company’s charter capital for at least 01 year from the end of the offering;

g) The contract with a securities company for public offering consulting;

h) A bank’s or FBB’s confirmation of opening of an escrow account to receive payments for the offered shares;

i) A public offering underwriting agreement (if any);

k) [11] A report on charter capital contributed by the time of application for registration of initial public offering which has been audited by an independent audit organization according to regulations adopted by the Minister of Finance of Vietnam.

2. An application for registration of follow-on offering by a public company (the issuer) consists of:

a) An application form;

b) The documents specified in Points b, c, d, g, h and i Clause 1 of this Article and the written commitment mentioned in Point e Clause 1 Article 15 of this Law;

c) A competent authority’s decision to approve the project and the plan for making up for shortage of capital in the event mentioned in Point d Clause 2 Article 15 of this Law;

d) An audited statement on use of capital generated by the latest offering which must have been made within 02 years of submitting the application, unless the audited financial statements have detailed descriptions of the use of capital generated by the latest offering.

3. An application for registration of public offering of bonds consists of:

a) An application form;

b) The documents specified in Points b and c Clause 1 of this Article and the written commitment mentioned in Point e Clause 1 Article 15 of this Law;

c) The decision of the General Meeting of Shareholders, Board of Directors, Board of Members or company owner to ratify the plan for issuance and the plan for use and repayment of capital generated by the offering, and the commitment to have the bonds listed on the securities trading system;

d) The issuer’s commitment to fulfill its obligations to the investors in terms of conditions for issuance, payment, assurance of the lawful rights and interests of investors and other conditions;

dd) A credit rating report prescribed in Point g Clause 3 Article 15 of this Law;

e) The contract with a securities company for public offering consulting;

g) A bank’s or FBB’s confirmation of opening of an escrow account to receive payments for the offered bonds;

h) A public offering underwriting agreement (if any);

i) [12] The trust indenture between the issuer and the bond trustee.

4. An application for registration of public offering of convertible bonds consists of:

a) An application form;

b) The documents specified in Points b, c, g and h Clause 1, Point d Clause 2 of this Article and the written commitment mentioned in Point e Clause 1 Article 15 of this Law;

c) The decision of the General Meeting of Shareholders to ratify the plan for issuance and the plan for use of capital generated by the offering, and the commitment to have the securities listed or registered on the securities trading system;

d) The issuer’s commitment to fulfill its obligations to the investors in terms of conditions for issuance, payment, assurance of the lawful rights and interests of investors and other conditions;

dd) Other documents relevant to the conversion of bonds into shares;

e) A public offering underwriting agreement (if any).

5. An application for registration of public offering of fund certificates consists of:

a) An application form;

b) The Prospectus;

c) The draft charter of the securities investment fund;

d) The principle contract on supervision by the supervisory bank and the fund management company; the principle contract on distribution; principle contracts with relevant service providers (if any);

dd) A public offering underwriting agreement (if any);

6. An application for public offering of shares or bonds shall be enclosed with the decision of the Board of Directors or Board of members or company president to approve the application. An application for public offering of shares of a credit institution shall have the SBV’s written approval for change in its charter capital. In case the public offering of an insurer leads to change in its charter capital, the application shall be enclosed with the Ministry of Finance’s written approval for change in the insurer’s charter capital.

7. In case any of the documents in an application for public offering is certified by a relevant entity, the issuer shall send the written certification to SSC.

8. Information in the application for public offering shall be accurate, truthful, unequivocal and includes important information that may affect investors’ decision.

9. When the issuer submits an application for public offering to SSC, it shall also submit an application for listing or registration of securities prescribed in Clause 4 Article 48 of this Law, except for offering of open-end fund certificates.

Article 19. Prospectus

1. In case of public offering of shares or bonds, the prospectus shall contain the following information:

a) Summary of the issuer, including its organizational structure, business operations, assets, financial status, Board of Directors, the Board of members or the company owner, General Director (Director), Deputy General Director (Deputy Director), chief accountant and shareholders (if any);

b) Information about the offering and the offered securities, including: offering conditions, risk factors, estimated profit and dividends of the nearest year after the issuance, the issuance plan and the plan for use of capital generated by the offering;

c) The issuer’s financial statements of the last 02 years as prescribed in Article 20 of this Law;

d) Other information prescribed in the model prospectus.

2. In case of public offering of fund certificates, the prospectus shall contain the following information:

a) The type and scale of the securities investment fund;

b) Investment targets, strategy, method and procedures; investment limits and risk factors of the securities investment fund;

c) Summary of the draft charter of the securities investment fund;

d) The plan for issuance of fund certificates and instructions on making investment in the securities investment fund;

dd) Summary of the fund management company and the supervisory bank, regulations on trading with their related persons;

e) Other information prescribed in the model prospectus.

3. Signatures in the prospectus:

a) In case of public offering of shares or bonds, the prospectus shall bear the signatures of the Chairperson of the Board of Directors, the Chairperson of the Board of members, the company's President; General Director (Director); CFO or chief accountant of the issuer; legal representative of the consulting organization or underwriter or lead underwriter (if any). A letter of authorization is required in case of authorized signing;

b) In case of public offering of fund certificates, the prospectus shall bear the signatures of the Chairperson of the Board of Directors, the Chairperson of the Board of members, the company's President; General Director (Director) of the fund management company; legal representative of the underwriter (if any). A letter of authorization is required in case of authorized signing.

4. The Minister of Finance shall promulgate the model prospectus.

Article 20. Financial statements

1. Financial statements shall be prepared in accordance with accounting laws.

2. If the issuer is a parent company, it shall submit a consolidated financial statement in accordance with accounting laws.

3. The annual financial statements shall be audited by an accredited audit organization. The financial statements shall receive unqualified opinions. If the financial statements receive qualified opinions, they must not affect the offering conditions, and in this case, the issuer shall provide justifications certified by the auditing organization.

4. If the application is submitted within 60 days from the end of the annual tax period, the annual financial statements of the previous year is not required to be audited, provided the audited financial statements of the 02 preceding years are enclosed therewith.

5. If the application is submitted after 90 days from the end of the annual tax period, the issuer shall prepare supplementary financial statements of the latest month or quarter.

Article 21. Accredited audit organizations and auditors

1. SSC shall consider granting approval and publish the list of accredited audit organizations and auditors to audit public interest entities in the securities industry.

2. Public interest entities in the securities industry include public companies, listed organizations, registered organizations, organizations making public offering, securities companies, fund management company, securities investment companies and securities investment funds.

3. An accredited audit organization that audits a public interest entity shall comply with independent audit laws and has the obligations to:

a) Submit a report to SSC within 10 days from the day on which its name, headquarters location, business lines, list of auditors is changed in a manner that it is no longer accredited;

b) Provide explanation, information and data about the audit for the public interest entity at the request of SSC;

c) After providing the audit report to the audited entity, if the audit organization finds material errors due to the audited entity’s failure to comply with laws and regulations on the audited financial statements, the accredited audit organization shall send a written notification thereof to SSC;

d) Protect confidentiality of information as prescribed by law.

4. The Government shall elaborate this Article.

Article 22. Revising application for registration of public offering

1. While an application for registration of public offering is being considered, if the issuer finds inaccurate, inadequate or misleading information, it shall revise the submitted application.

2. While an application is being considered, SSC is entitled to request the issuer to revise it in order to make sure that the published information is accurate and adequate, and the lawful rights and interests of investors are protected.

3. If new information has to be published after SSC issues a certificate of registration of public offering, the issuer shall disclose such information within 07 working days following the procedures in Clause 3 Article 25 of this Law and revise the application.

4. The revised application submitted to SSC shall contain the signatures of the persons whose signatures appear on the submitted application, or of those holding the same positions as these persons.

5. The time limit for processing an application in the circumstances specified in Clause 1 and Clause 2 of this Article begins from the time when SSC receives an adequate and valid revised application.

Article 23.[13] (abrogated)

Article 24. Information before public offering

While an application is being considered by SSC, the issuer, the underwriter, relevant organizations and individuals may truthfully and accurately use information in the prospectus submitted to SSC for the purpose of market survey. It is mandatory to emphasize that the issuance date and securities price are unofficial.

Article 25. Issuance of certificate of registration of public offering

1. Within 30 days from the receipt of the satisfactory public offering application, SSC shall decide whether to issue a certificate of registration of public offering, or reject the application and provide explanation.

2. A certificate of registration of public offering issued by SSC is a certification that the public offering application is conformable with law.

3. Within 07 working days from the issuance date of the certificate of registration of public offering, the issuer shall announce the issuance on 01 online newspaper or 03 issues of a printed newspaper.

4. Securities may only be publicly offered after an announcement is made in accordance with Clause 3 of this Article.

Article 26. Distribution of securities

1. Securities shall only be distributed after the issuer makes the prospectus publicly available at the locations specified in the issuance announcement.

2. The issuer, the underwriter or agent shall distribute securities fairly and openly; allow investors a minimum period of 20 days to subscribe. In case the offered securities are covered warrants, the time limit shall be specified in the issuance announcement.

In case the quantity of securities subscribed exceeds the permissible quantity, the issuer or underwriter shall fully distribute the permissible quantity of securities to investors in proportion to the ratio of securities subscribed by each investor.

3. All payments for subscribed securities shall be made to an escrow account opened at a bank or FBB until the offering ends and a report is submitted to SSC.

4. The issuer shall complete the distribution of its securities within 90 days from the effective date of the certificate of registration of public offering. In case the issuer is not able to complete the distribution of securities within this time limit, SSC will consider extending the time limit for up to 30 more days. If the offering is divided into multiple waves, the interval between two waves shall not exceed 12 months.

5. The issuer or underwriter shall submit a report on the offering result to SSC within 10 days from the end of the offering together with a confirmation of the total revenue from the offering issued by the bank or FBB where the escrow account is opened.

6. The issuer, underwriter or agent shall complete the distribution of securities or securities ownership certificates to buyers within 30 days from the end of the offering.

Article 27. Suspension of public offering

1. SSC is entitled to suspend a public offering for up to 60 days in the following circumstances:

a) The public offering application contains inaccurate or inadequate information that might affect investors’ decisions and cause damage to investors;

b) The securities are not distributed in accordance with Article 26 of this Law.

2. Within 07 working days from the suspension date, the issuer shall announce the suspension in accordance with Clause 3 Article 25 of this Law, withdraw the issued securities if requested by investors, and refund payments to investors within 15 days from the day on which a request is received.

3. After the causes of the suspension have been rectified, SSC shall issue a notice to lift the suspension and the offering may continue.

4. Within 07 working days from the date of the notice of lifted suspension, the issuer shall disclose information on the lifted suspension adopting the method specified in clause 3 Article 25 of this Law.

Article 28. Cancellation of public offering

1. SSC shall issue a decision to cancel a public offering in the following cases:

a) The causes of the suspension are not rectified by the deadline mentioned in Clause 1 Article 27 of this Law;

b) The quantity of voting shares being sold to at least 100 non-major shareholders of the issuer is below the ratio specified in Point d Clause 1 Article 15 of this Law;

c) The follow-on offering fails to raise adequate capital to execute the issuer’s project as prescribed in Point d Clause 2 Article 15 of this Law;

d) [14] Upon the end of the public offering and before completion of procedures for listing or registration of shares, the offering is found to have been carried out in contravention of provisions of clause 1 Article 27 of this Law;

dd) [15] Upon the end of the public offering of bonds or covered warrants, the offering is found to have been carried out in contravention of provisions of clause 1 Article 27 of this Law.

2. The public offering is cancelled under an effective court judgment or decision, arbitral decision or decision of a competent authority in cases other than those specified in Clause 1 of this Article.

2a.[16] Upon completion of the public offering, if the offered shares or shares converted from convertible bonds or shares acquired from warrants have been listed or registered for trading, they shall not be canceled.

3. Within 07 working days from the cancellation date, the issuer shall announce cancellation in accordance with Clause 3 Article 25 of this Law, withdraw the issued securities if requested by the investors, and refund the investors within 15 days from the cancellation date. The issuer that fails to refund payments by this deadline shall compensate for damage as agreed upon with investors.

Article 29. Issuer’s obligations

1. The issuer that has successfully made a public offering and thus become a public company as prescribed in Point b Clause 1 Article 32 of this Law is not required to submit an application for public company registration to SSC as prescribed in Clause 1 Article 33 of this Law.

2. The successful issuer shall complete the application for listing or registration for trading within 30 days from the ending date of the public offering.

3. The successful issuer has the obligation to disclose information in accordance with this Law.

Section 2. PRIVATE PLACEMENT

Article 30. Private placement by issuers other than public companies

The Law on Enterprises and relevant laws shall apply to private placement by issuers other than public companies.

Article 31. Private placement by public companies, securities companies, fund management companies

1. In order to make a private placement of shares, convertible bonds, warrant-linked bonds, a public company shall satisfy the following requirements:

a) [17] There is a decision of the General Meeting of Shareholders to ratify the plan for issuance and use of capital earned from the private placement which must clearly determine criteria of investors, number of shares, offer prices of shares or rules for determination thereof;

b) [18]The private placement of shares or convertible bonds is only available to strategic investors, professional investors defined in clause 1 Article 11 of this Law; the private placement of warrant-linked bonds is only available to professional investors defined in clauses 1a and 1b Article 11 of this Law;

c) [19] The trading and transfer of privately placed shares, convertible bonds and warrant-linked bonds are restricted to strategic investors and professional investors for at least 03 years and 01 year respectively from the ending date of the private placement, unless such trading or transfer is carried out between professional investors as prescribed in point b of this clause or according to an effective court judgment or decision, arbitral decision or in case of inheritance as prescribed by law;

d) There is an interval of at least 06 months between two private placements of shares, convertible bonds, warrant-linked bonds;

dd) The ratio of holding of shares, conversion of bonds into shares and execution of warrants by foreign investors is conformable with law.

2. In order to make a private placement of bonds in cases other than those specified in Clause 1 of this Article, a public company shall satisfy the following requirements:

a) There is a decision of the General Meeting of Shareholders or the Board of Directors to ratify the plan for issuance and the plan for use of capital generated by the private placement with specific criteria and quantity of investors;

b) [20] The private placement is available to professional investors that are organizations.

In case bonds to be offered fall in the case prescribed in point a or point b clause 1b Article 11 of this Law, the private placement is available to professional investors that are either organizations or individuals;

c) [21] Trading and transfer of privately placed bonds shall only be carried out between professional investors defined in clauses 1a and 1b Article 11 of this Law, unless such trading or transfer is carried out according to an effective court judgment or decision, arbitral decision or in case of inheritance as prescribed by law;

d) The principal and interest of the offered bonds or mature debts over the last 03 years before the private placement (if any) have been fully paid, unless bonds are offered to creditors that are pre-selected financial institutions;

dd) The financial statements of the year preceding the year of bond issuance which have been duly audited by an accredited audit organization are available;

e) Adequacy ratios and prudential ratios in operations (if any) are maintained in accordance with regulations of law.

3. In order to make private placement of shares, convertible bonds or warrant-linked bonds, a securities company or fund management company that is not a public company shall satisfy the requirements in Clause 1 of this Article.

4. In order to make a private placement of bonds in cases other than those specified in Clause 3 of this Article, a securities company or fund management company that is not a public company shall satisfy the following requirements:

a) There is a decision of the General Meeting of Shareholders or the Board of Directors or the Board of members or the company’ owner to ratify the plan for issuance and the plan for use of capital generated by the private placement with specific criteria and quantity of investors;

b) All of the requirements specified in Points b, c, dd, e Clause 2 of this Article are satisfied.

5. In order to offer shares to existing shareholders according to their holdings, a securities company or fund management company that is not a public company shall satisfy the requirements in Point a and Point d Clause 1 of this Article.

6. The Government shall issue specific regulations on private placement by public companies, securities companies, fund management companies mentioned in this Article; private placement of other securities by public companies.

Article 31a. Suspension of private placement[22]

1. SSC is entitled to suspend a private placement which has been registered with SSC for up to 60 days in the following circumstances:

a) The application for registration of the private placement contains inaccurate information or does not contain adequate important information that might affect investors’ decisions and cause damage to investors;

b) Securities are not distributed in accordance with regulations of law.

2. Within 07 working days from the day on which the private placement is suspended, the issuer shall announce the suspension adopting the method specified in clause 3 Article 25 of this Law, withdraw the issued securities if requested by investors, and refund received payments to investors within 15 days from the day on which the request is received.

3. After the causes of the suspension have been successfully rectified, SSC shall issue a written notice to lift the suspension under which the suspended private placement shall be reinstated.

4. Within 07 working days from the date of the notice of lifted suspension, the issuer shall disclose information on the lifted suspension adopting the method specified in clause 3 Article 25 of this Law.

Article 31b. Cancellation of private placement[23]

1. SSC shall issue a decision to cancel a private placement which has been registered with SSC in the following circumstances:

a) Upon the end of the suspension period specified in clause 1 Article 31a of this Law, the issuer still fails to rectify causes of the suspension;

b) Upon the end of the private placement of shares and before completion of procedures for listing or registration of shares, the private placement is found to have been carried out in contravention of provisions of clause 1 Article 31a of this Law;

c) Upon the end of the private placement of bonds, the private placement is found to have been carried out in contravention of provisions of clause 1 Article 31a of this Law.

2. Apart from the circumstances specified in clause 1 of this Article, the private placement shall also be canceled under an effective court judgment or decision, arbitral decision or decision issued by a competent authority in accordance with regulations of law.

3. Upon completion of the private placement, if the offered shares or shares converted from convertible bonds or shares acquired from warrants have been listed or registered for trading, they shall not be canceled.

4. Within 07 working days from the day on which the private placement is canceled, the issuer shall announce the cancellation adopting the method specified in clause 3 Article 25 of this Law, withdraw the issued securities, and refund received payments to investors within 15 days from the cancellation date. The issuer that fails to refund payments by this deadline shall compensate for damage as agreed upon with investors.

Chapter III

PUBLIC COMPANIES

Section 1. GENERAL PROVISIONS ON PUBLIC COMPANIES

Article 32. Public companies

1. A public company is a joint-stock company in one of the following cases:

a) [24] The company has a contributed charter capital of at least VND 30 billion, an equity of at least VND 30 billion and at least 10% of its voting shares held by at least 100 investors other than major shareholders;

b) The company has successfully made its initial public offering by registration with SSC as prescribed in Clause 1 Article 16 of this Law.

2. The joint-stock company mentioned in Point a Clause 1 of this Article shall submit the application for public company registration as prescribed in Clause 1 Article 33 of this Law to SSC within 90 days from the day on which the requirements specified in Point a Clause 1 of this Article are fully satisfied.

3. Within 15 days from the receipt of an adequate and valid application from the joint-stock company mentioned in Point a Clause 1 of this Article, or from the receipt of the report on completion of the offering prescribed in Point b Clause 1 of this Article, SSC shall confirm the registration of the public company, publish the company’s name, business operations and other information on SSC’s media.

4.[25] The Minister of Finance of Vietnam shall elaborate the registration of public company, and registration procedures.

Article 33. Application for public company registration

1. An application for public company registration consists of:

a) An application form;

b) The company’s charter;

c) The enterprise registration certificate;

d) The information disclosure statement about the public company, including summary of the company’s organizational structure, business operations, management, shareholders, assets, financial status and other information;

dd) [26] The latest annual financial statements of the joint-stock company which have been audited by an independent audit organization. In case the company’s charter capital is increased after the end of the latest fiscal year, the audited or reviewed financial statements of the latest period are required.

e) The list of shareholders;

g) [27] The report on charter capital contributed by the time of application for registration of the public company which has been audited by an independent audit organization according to regulations adopted by the Minister of Finance of Vietnam.

2. The Minister of Finance shall promulgate the model information disclosure statement and regulations on application for public company registration after split-off, split-up, consolidation, or merger.

Article 34. Rights and obligations of public companies

1. After SSC confirms the public company registration, the public company shall have the following rights and obligations:

a) Disclose information in accordance with this Law;

b) Comply with regulations on company administration in this Law;

c) Apply for share registration at VSDC as prescribed in Article 61 of this Law;

d) The public company mentioned in Point a Clause 1 Article 32 of this Law shall apply for registration of trading in shares on the trading system for unlisted securities within 30 days from the day on which SSC confirms the public company registration. After 02 years from the first day of trading on the trading system for unlisted securities, the public company may apply for listing whenever all listing requirements are satisfied;

dd) The public company mentioned in Point b Clause 1 Article 32 of this Law shall have its shares listed or registered for trading on the securities trading system within 30 days from the end of the public offering.

2. Apart from the rights and obligations specified in Clause 1 of this Article, a public company also has the rights and obligations specified in the Law on Enterprises and relevant laws.

Article 35. Tender offer

1. In the following cases, tender offer is mandatory and has to be registered with SSC:

a) The planned purchase of voting shares or closed-end fund certificates by an organization or individual and their related persons defined in Points a, b, c, d, e and g Clause 46 Article 4 of this Law will directly or indirectly lead to ownership of at least 25% of the voting shares of a public company, or at least 25% of the outstanding fund certificates of a closed-end fund;

b) The organization or individual and their related persons defined in Points a, b, c, d, e and g Clause 46 Article 4 of this Law that are holding at least 25% of the voting shares of a public company, or at least 25% of the outstanding fund certificates of a closed-end fund wish to hold at least 35%, 45%, 55%, 65%, 75% of voting shares of a public company or outstanding fund certificates of a closed-end fund;

c) Unless all voting shares of a public company or outstanding fund certificates of a closed-end fund have been bid for, the organization or individual and their related persons defined in Points a, b, c, d, e and g Clause 46 Article 4 of this Law that are holding at least 80% of voting shares of a public company or outstanding fund certificates of a closed-end fund shall buy the shares or fund certificates being held by the remaining shareholders or investors within 30 days at the same offered price and with the same payment method in the tender offer.

2. Tender offer is not mandatory to the entities mentioned in Clause 1 of this Article in the following cases:

a) The purchase of shares or closed-end fund certificates results in the holdings specified in Clause 1 of this Article under an issuance plan approved by the General Meeting of Shareholders of the public company or the representative board of the closed-end fund;

b) The receipt of transfer of voting shares or outstanding closed-end fund certificates results in the holdings specified in Clause 1 of this Article as approved by the General Meeting of Shareholders of the public company or the representative board of the closed-end fund. In this case, the General Meeting of Shareholders or representative board of the closed-end fund shall identify the transferors and transferees;

c) The transfer of shares between groups of companies, including business corporations, general companies, parent companies, subsidiaries does not result in cross ownership as defined by the Law on Enterprises;

d) Shares are acquired through auction of publicly offered securities or offering upon transfer of state capital or a state-owned enterprise’s stakes in another enterprise;

dd) Shares are acquired through split-off, split-up, consolidation or merger of enterprises;

e) Giveaway, inheritance of shares or closed-end fund certificates;

g) Transfer of shares or closed-end fund certificates under an effective court judgment, court decision or arbitral decision.

3. The Government shall elaborate tender offers of shares of public companies and closed-end fund certificates.

Article 36. Share repurchase by a public company

1. In order to repurchase its own shares, a public company shall satisfy the following requirements:

a) There is a decision of the General Meeting of Shareholders to approve the share repurchase to reduce its charter capital and a repurchase plan which specifies the repurchase quantity, time and price;

b) The company has sufficient funds to repurchase its shares from the following sources: share premium, development investment funds, undistributed post-tax profits, other equity funds used for charter capital increase as prescribed by law;

c) A securities company is assigned to carry out the transaction, unless the repurchasing company is a member of Vietnam Exchange (VNX)

d) All conditions are satisfied if the public company engages in conditional business lines;

dd) It does not fall in the case specified in Clause 3 of this Article.

2. The requirements specified in Points a, b, c, d Clause 1 of this are waived in the following cases:

a) The share repurchase is carried out at the request of shareholders as prescribed by the Law on Enterprises;

b) The employees’ shares are repurchased in accordance with regulations on employee share ownership or fractional shares are repurchased under a scrip issue plan or plan for share issuance from equity;

c) The share repurchase is meant to fix a transaction error or is an odd lot buyback.

3. A public company must not repurchase its own shares in the following cases:

a) The company has overdue debts according to the latest audited annual financial statements. In case the expected repurchase date is later than 06 months from the end of the fiscal year, overdue debts will be identified according to the latest audited or reviewed biannual financial statements, except for the case in Point c Clause 2 of this Article;

b) Shares are being offered or issued to raise additional capital, except for the cases specified in Point c Clause 2 of this Article;

c) The company’s shares are being offered in a tender offer, except for the cases specified in Clause 2 of this Article;

d) There was a share repurchase or an additional share issuance to increase capital over the last 06 months, except for the cases in Clause 2 of this Article.

4. Unless shares are repurchased according to the investors’ holdings in the company, under an effective court decision, court judgment or arbitral decision, or through order matching, a company must not repurchase shares from:

a) Internal actors and their related persons defined by this Law;

b) Holders of shares restricted from transfer as prescribed by law and the company’s charter;

c) Major shareholders as prescribed by this Law.

5. A public company that repurchases its own shares as prescribed in Clause 1 and Point a Clause 2 of this Article shall follow procedures for reducing its charter capital in proportion to the total value of shares repurchased within 10 days from the day on which payment for the repurchased shares is fully made.

6.[28] Repurchase of shares from the company’s employees in accordance with regulations on employee share ownership shall be subject to the following provisions:

a) Total quantity of employees’ shares repurchased by the company must be reported to the nearest annual the General Meeting of Shareholders;

b) The company is not required to follow procedures for reducing its charter capital in corresponding to the number of repurchased shares.

7. A securities company or public company that repurchases its own shares may sell the shares right after they are repurchased in the following cases:

a) The repurchase of shares by a securities company is meant to fix a transaction error or is an odd lot buyback;

b) The public company repurchases fractional shares under a scrip issue or plan for share issuance from equity;

c) An odd lot buyback is carried out by a public company at the request of its shareholders.

8. The Minister of Finance shall promulgate specific regulations on share repurchase by public companies.

Article 37. Reporting on, disclosing information about and execution of share repurchase

1. A public company mentioned in Clause 1 Article 36 of this law, before repurchasing its own shares, shall send the following documents to SSC:

a) A report on the share repurchase;

b) A decision of the General Meeting of Shareholders to approve the share repurchase and the repurchase plan;

c) The document confirming the transaction of the securities company, unless the repurchasing company is a member of VNX;

d) A decision of the Board of Directors to approve the share repurchase plan;

dd) The latest audited financial statements;

e) Documents proving that the company has sufficient funds to repurchase shares;

g) Documents proving fulfillment of all conditions for share repurchase as prescribed by law if the public company engages in conditional business lines.

2. A report on the share repurchase shall contain:

a) Purposes of the repurchase;

b) Estimated repurchase quantity;

c) Sources of funding for repurchase;

d) Method of transaction;

dd) Expected execution date;

e) Pricing method.

3. Within 07 working days from the receipt of the documents as specified in Clause 1 of this Article, SSC shall send a notice of receipt to the public company if the documents are adequate and valid, or a request for supplementation if the documents are not fully valid or adequate. The supplementation time shall not be included in the time limit specified in this Clause. In case of rejection, SSC shall send a written notice and provide explanation.

4. Within 07 working days from the date of the SSC’s notice, the public company shall disclose the information specified in Clause 2 of this Article on its website and the media of SSC and VNX. The public company may initiate the share repurchase after 07 working days from the day on which information is disclosed.

5. Within 10 working days from the end of the share repurchase, the public company shall send a report to SSC and publicly disclose information. In case the public company does not repurchase all the expected quantity of shares, it shall submit a report and explanation.

6. The public company shall complete the share repurchase within the time limit specified in the information disclosure statement, which must not exceed 30 days from the beginning date.

7.[29] The public company shall not offer shares to increase its charter capital within 06 months from the end of its share repurchase, unless it repurchases shares from employees who leave the company under the employee share ownership plan or a securities company repurchases its shares when fixing transaction errors.

Article 38. Cancellation of public company status

1.[30] The status of a public company shall be cancelled in one of the following cases:

a) It no longer meets one of eligibility requirements for public company laid down in point a clause 1 Article 32 of this Law;

b) It fails to make disclosure of information on audited financial statements for 02 consecutive years;

c) It fails to make disclosure of information on resolutions of annual the General Meeting of Shareholders for 02 consecutive years;

d) Within 01 year after SSC confirms the registration of the public company or upon completion of the public offering, the company fails to follow procedures for registration of shares at VSDC or fails to follow procedures for listing or registration for trading of shares on Stock Exchanges.

2.[31] Within 15 days from the day on which the public company fails to meet one of the requirements laid down in point a clause 1 Article 32 of this Law, it shall be required to submit written report on such failure to SSC.

In case the public company still fails to fully meet the eligibility requirements for public company after 01 year from the day on which it no longer fully meets the requirements laid down in point a clause 1 Article 32 of this Law, it shall submit an application for cancellation of public company status to SSC for considering and cancelling its public company status.

In case the public company fails to submit required application or reports to SSC as prescribed in this clause, SSC shall consider cancelling its public company status on the basis of the list of its shareholders provided by VSDC or its audited latest annual financial statements.

3. The company shall fully comply with regulations on public companies until SSC issues a notice of cancellation of public company status.

4. Within 07 working days from the receipt of SSC’s notice of cancellation of public company status, the company shall announce such cancellation of public company status on its website and the media of SSC and VNX, and follow procedures for delisting or deregistration as prescribed by law.

5.[32] The Minister of Finance of Vietnam shall promulgate regulations on cancellation of public company status, cancellation procedures and processes, and cancellation of public company status in case of reorganization, dissolution and bankruptcy.

Article 39. Application for cancellation of public company status

In the case specified in Clause 2 Article 38 of this Law, the public company shall submit an application for cancellation of public company status to SSC. Such an application consists of:

1. The enterprise registration certificate;

2. The notice that the public company no longer fully satisfies the requirements in Point a Clause 1 Article 32 of this Law;

3.[33] The list of shareholders of the public company that fails to meet shareholder structure requirement, provided by VSDC or compiled by the public company that does not yet follow procedures for registration of securities at VSDC;

4.[34] The audited latest annual financial statements or written certification of equity made by an accredited audit organization, if the public company no longer meets the requirement regarding contributed charter capital or equity. In case the company’s charter capital is increased after the end of the latest fiscal year, the audited or reviewed financial statements of the latest period are required.

Section 2. ADMINISTRATION OF PUBLIC COMPANIES

Article 40. Rules for administration of public companies

Administration of public companies shall comply with regulations of this Law, the Law on Enterprises, relevant laws and the following rules:

1. Maintain a reasonable and effective administration structure;

2. Ensure effectiveness of the Board of Directors and the Board of Controllers; strengthen the accountability of the Board of Directors to the company and its shareholders;

3. Ensure the rights and equality of shareholders;

4. Ensure the roles of investors, the securities market and intermediate organizations in assisting the company administration;

5. Respect and protect the lawful rights and interests of the parties in company administration;

6. Punctually, adequately, accurately and transparently disclose information about the company’s operations; ensure equal accessibility of information to all shareholders.

Article 41. Contents of public company administration

1. Shareholders of a public company shall:

a) Have the right to equal treatment;

b) Have accessibility to information periodically and irregularly published by the company as prescribed by law;

c) Have their the lawful rights and interests protected; have the right to request suspension or invalidation of a Resolution or decision of the General Meeting of Shareholders or Board of Directors as prescribed by the Law on Enterprises;

d) Not take advantage of the major shareholder’s status to influence rights and interests of the company and other shareholders as prescribed by law and the company’s charter; disclose information as prescribed by law;

dd) Have other rights and obligations prescribed by law and the company's charter.

2. The meetings of the General Meeting of Shareholders shall be organized as follows:

a) The Board of Directors, the Board of Controllers and the convener shall follow the procedures for convening the General Meeting of Shareholders specified in the Law on Enterprises, the company’s charter and the company administration regulations; prepare the place and set a reasonable time for the shareholders to attend the meeting of the General Meeting of Shareholders;

b) The company administration regulations shall provide for application of modern information technology to enable shareholders to attend meetings online, vote electrically or through another method as prescribed by the Law on Enterprises and the company’s charter;

c) The public company shall invite representatives of the accredited audit organization that audited its annual financial statements to attend the annual General Meeting of Shareholders in case the audit report contains qualified opinions;

d) Other regulations of law and the company’s charter shall be complied with.

3. Composition and responsibilities of the Board of Directors:

a) There should be a balance between the number of executive members, non-executive members and independent members of the Board of Directors of a public company in order to ensure its independence;

b) The Board of Directors shall be accountable to the shareholders for the company’s operation; ensure the company’s compliance with law, its charter and internal regulations; develop the internal regulations on company administration and submit it to the General Meeting of Shareholders for approval; designate executive officers; and have other responsibilities prescribed by law and the company’s charter;

c) The Board of Directors shall hold a meeting at least once per year following the procedures specified in the company’s charter and the company’s administration regulations. The organization, agenda and documents of a meeting of the Board of Directors shall be informed in advance to its members as prescribed by law and the company’s charter.

4. Designation and nomination of members of the Board of Directors shall comply with the Law on Enterprises, relevant laws and the following regulations:

a) The public company shall disclose information about the candidates for members of the Board of Directors at least 10 days before the planned date of the meeting of the General Meeting of Shareholders on the company’s website so that its shareholders can learn about these candidates before voting;

b) In case the quantity of candidates is not sufficient as prescribed by the Law on Enterprises, the current Board of Directors may nominate additional candidates or hold a nomination as prescribed by the company’s charter and the company’s administration regulations.

5. Members of the Board of Directors shall have the following rights and responsibilities:

a) Be provided with information and documents about the financial status and performance of the company and its units;

b) Perform their duties in a truthful and cautious manner for the best interests of the company and its shareholders;

c) Fully attend meetings of the Board of Directors and comment on the raised issues;

d) Fully and promptly inform the Board of Directors of the incomes from the subsidiaries, associate companies and other organizations;

dd) Report and disclose information when trading the company’s shares as prescribed by law;

e) Perform other rights and responsibilities prescribed by law and the company’s charter.

6. A public company shall comply with the following regulations on transparency and prevention of conflict of interest:

a) Members of the Board of Directors, members of the Board of Controllers (Controllers), General Director (Director) and other executive officers shall disclose their related interests; must not use the information that is obtained due to their positions for selfish purpose or to serve other organizations or individuals;

b) The public company shall implement necessary measures to prevent members of the Board of Directors, members of the Board of Controllers (Controllers), General Director (Director), other executive officers, shareholders and related persons from interfering with the company’s operation, causing damage to the company; ensure compliance with regulations on transactions with shareholders, executive officers and their related persons; protect the lawful rights and interests of people with relevant interests;

c) The public company shall fully, accurately and promptly provide periodic and irregular information and about the company’s business operation, finance and administration, and other information for the shareholders and the public if such information may affect the securities prices, shareholders’ and investors’ decision making;

d) The information disclosed and method of information disclosure shall comply with this Law, the company’s charter and regulations on information disclosure.

7. The Government shall elaborate this Article.

Chapter IV

SECURITIES MARKET

Article 42. Organization of securities market

1. VNX and its subsidiaries are entitled to organize a market for listed securities; securities of state-owned enterprises, wholly state-owned single-member limited liability companies which are converted into joint stock companies; securities of other enterprises that are not qualified for listing; securities of startups; derivatives and other kinds of securities as prescribed by the Government.

2. No other organizations and individuals than VNX and its subsidiaries may organize and operate the securities market.

Article 43. Establishment and operation of VNX and its subsidiaries

1. VNX is an enterprise that is established and operating in accordance with this Law and the Law on Enterprises. Over 50% of charter capital or voting shares of VNX shall be held by the State.

2. The Prime Minister shall issue decisions on establishment, dissolution, operating model, type of ownership, functions, rights and obligations of VNX, and establishment of its subsidiaries as proposed by the Minister of Finance.

3. VNX and its subsidiaries shall bear the management and supervision of SSC.

Article 44. Organizational structure of VNX

1. The Prime Minister shall decide the organizational structure of VNX in accordance with this Law, the Law on Enterprises and relevant laws.

2. The Chairperson of the Board of Members, the Chairperson of the Board of Directors, General Director (Director) of VNX shall be designated or appointed and dismissed by the Minister of Finance at the request of the Board of Members or Board of Directors of VNX and according to comments of the President of SSC.

3. Rights and duties of the Board of Members or the Board of Directors, General Director (Director), the Board of Controllers (Controllers) shall comply with regulations of law and the charter of VNX.

Article 45. Charter of VNX

1. The charter of VNX shall be approved, or promulgated, amended by the Minister of Finance at the request of the Board of Members or Board of Directors of VNX and according to comments of the President of SSC.

2. The Charter of VNX shall have the following contents:

a) Names and addresses of the headquarters, subsidiaries and branches;

b) Objectives, operating scope and available services;

c) Charter capital; method for increasing, decreasing charter capital or stake transfer;

d) Names, addresses and basic information of the founding shareholders, capital contributors or owners;

dd) Stakes or shares and capital contributed by the founding shareholders, capital contributors or owners;

e) Legal representative;

g) The organizational structure;

h) Rights and obligations of VNX;

i) Rights and obligations of capital contributors, owners or shareholders;

k) Rights and obligations of the Board of members, Board of Directors, General Director (Director), and the Board of Controllers (Controllers);

l) Formalities for approving decisions of VNX;

m) Procedures for revising the Charter;

n) Applied accounting and audit regulations;

o) Establishment and use of funds; rules for use of profits, settlement of losses and other financial regulations;

p) Rules for settlement of internal disputes.

Article 46. Rights and obligations of VNX

1. VNX has the rights to:

a) Promulgate its regulations on listing and trading securities, disclosing information, regulations on its members and other regulations on organization and operation of the securities market after they are approved by SSC;

b) Organize and operate the securities market;

c) Put securities under alert, control and restriction in accordance with regulations of law and its regulations;

d) Suspend or terminate trading of certain securities in case of abnormal fluctuation in their prices or trading quantity without rectification by listed or registered organizations, which result in the securities being put under alert, control or restriction, or in case the suspension or termination is necessary to protect the investors’ the lawful rights and interests and ensure the stability and safety of the securities market;

dd) Approve, change, cancel listing or registration of securities, and supervise the fulfillment of conditions for listing of securities of listed organizations;

e) Grant and cancel membership of members of VNX;

g) Provide auction, bidding services; services involving market information and information about listed or registered securities; technological infrastructure development services for the securities market, and other relevant services specified in its Charter;

h) Act as a mediator to settle securities-related disputes at the request of its members;

i) Carry out inspections and take actions against violations committed by its members, listed organizations and registered organizations in accordance with its regulations;

l) Request regulatory authorities to provide information about its members, listed organizations and registered organizations for information disclosure purposes as prescribed by law;

l) Exercise other rights prescribed by law and its charter.

2. VNX has the obligations to:

a) Ensure the transparency, fairness, order, safety and efficiency of securities trading on the securities market;

b) Comply with regulations of law on accounting, audit, statistics, financial obligations, reporting, information disclosure;

c) Supervise the trading of securities and fulfillment of obligations of its members, information disclosure by listed organizations, registered organizations and the investors that have to disclose information as prescribed in Article 118 of this Law;

d) Issue criteria for supervision of transactions and trading indicators applied to its members after they are approved by SSC;

dd) Propose to SSC measures for responding to events or incidents that affect the safety, stability and integrity of the securities market; violations committed by investors, its members, listed organization or registered organizations;

e) Cooperate in dissemination of knowledge about securities and the securities market among investors;

g) Provide information for and cooperate with VSDC in securities activities; cooperate with competent authorities in investigations and taking of actions against violations against regulations of law on securities and the securities market;

h) Fulfill other obligations as prescribed by law and its charter.

3. Executives and employees of VNX, in performance of their duties, shall comply with regulations of law on securities and the securities market, code of professional ethics, information confidentiality regulations and relevant laws.

4. The Prime Minister shall decide the entities responsible for the fulfillment of rights and obligations of VNX and its subsidiaries as prescribed by this Law and proposed by the Minister of Finance.

Article 47. Members OF VNX

1. Members of VNX include:

a) Securities companies recognized as trading members by VNX;

b) Commercial banks, FBBs and other organizations recognized as special trading members by VNX.

2. Members of VNX have the rights to:

a) Use the securities trading system and services provided by VNX and its subsidiaries;

b) Receive information on securities market from VNX and its subsidiaries;

c) Request VNX to act as a mediator to settle their securities-related disputes;

d) Raise issues relevant to securities trading by VNX and its subsidiaries;

dd) Exercise other rights prescribed by law and VNX’s regulations.

3. Members of VNX have the obligations to:

a) Have their securities trading and information disclosure supervised by VNX and its subsidiaries in accordance with VNX’s regulations;

b) Disclose information in accordance regulations of law and VNX’s regulations;

c) Assist other trading members at the request of VNX and its subsidiaries where necessary;

d) Fulfill other obligations as prescribed by law and VNX’s regulations.

4. The Government shall specify eligibility and documentation requirements, and procedures for becoming a member of VNX.

Article 48. Listing and registration of securities

1. Publicly offered securities, shares of public companies, closed-end fund certificates, ETF certificates, covered warrants, futures contracts and options contracts approved by SSC shall be listed or registered on the securities trading system.

2. Debt instruments of the Government, Government-backed bonds and municipal bonds shall be listed on the securities trading system at the request of the issuers or authorized issuers as prescribed by law.

3. [35] (abrogated)

4. The Government shall specify other kinds of securities that have to be listed or registered; classification of listed securities; conditions for listing securities; documents and procedures for listing and registering securities; change cancellation of listing and registration of securities by Vietnamese and foreign issuers; overseas listing of securities of Vietnamese issuers.

Article 49. Suspension, termination, restoration of operations of VNX and its subsidiaries

1. SSC will suspend, terminate some or all operations of VNX and its subsidiaries in case of:

a) A war, natural disaster or major fluctuation of the economy, malfunction of the trading system or any other force majeure event that affects the normal operation of the securities market;

b) Abnormal fluctuation of the securities market or it is necessary to protect the investors’ the lawful rights and interests and ensure the stability and safety of the securities market.

2. SSC will restore some or all transactions of VNX and its subsidiaries when the causes of the suspension or termination have been rectified.

Article 50. Securities trading

1. Listed and registered securities shall be traded adopting order matching, put-through and other trading methods specified in the trading regulations of VNX.

2. Listed and registered securities shall not be traded outside the securities trading system organized by VNX and its subsidiaries, except for non-trading transactions or other transactions that cannot be carried out through the securities trading system.

3. The trading of new securities, changes of a trading method and application of a new trading method or inauguration of a new trading system are subject to approval by SSC.

4. The Minister of Finance shall promulgate specific regulations on securities trading, supervision of securities trading, identification of non-trading transactions and transactions that cannot be carried out through the securities trading system.

5. The Prime Minister shall consider securities trading with foreign securities exchanges at the request of the Minister of Finance.

Article 51. Participation of foreign investors and foreign-invested business organizations in Vietnam’s securities market

1. Foreign investors and foreign-invested business organizations that participate in Vietnam’s securities market shall comply with regulations of laws on securities and securities market regarding foreign holdings, conditions and procedures for investment.

2. The Government shall promulgate specified regulations on foreign holdings, conditions and procedures for participation of foreign investors and foreign-invested business organizations in Vietnam’s securities market.

Chapter V

REGISTRATION, DEPOSITING, CLEARING AND SETTLEMENT OF SECURITIES

Article 52. Establishment and operation of Vietnam Securities Depository and Clearing Corporation (VSDC)

1. VSDC is an enterprise that is established and operates in accordance with this Law, and the Law on Enterprises. Over 50% of charter capital or voting shares of VSDC shall be held by the State.

2. The Prime Minister shall issue decisions on establishment, dissolution, operating model, type of ownership, functions, rights and obligations of VSDC as proposed by the Minister of Finance.

3. VSDC and its subsidiaries[36] shall bear the management and supervision of SSC.

Article 53. Organizational structure of VSDC

1. The Prime Minister shall decide the organizational structure of VSDC in accordance with this Law, the Law on Enterprises and relevant laws.

2. The Chairperson of the Board of Members, or the Chairperson of the Board of Directors, General Director (Director) of VSDC shall be designated or appointed and dismissed by the Minister of Finance at the request of the Board of Members or Board of Directors of VSDC and according to comments of the President of SSC.

3. Rights and duties of the Board of Members or the Board of Directors, General Director (Director), the Board of Controllers (Controllers) shall comply with regulations of law and the charter of VSDC.

Article 54. Charter of VSDC

1. The charter of VSDC shall be approved, or promulgated, amended by the Minister of Finance at the request of the Board of Members or Board of Directors of VSDC and according to comments of the President of SSC.

2. The Charter of VSDC shall have the following contents:

a) Names and addresses of the headquarters and branches;

b) Objectives, operating scope and available services;

c) Charter capital; method for increasing, decreasing charter capital or stake transfer;

d) Names, addresses and basic information of the founding shareholders, capital contributors or owners;

dd) Stakes or shares and capital contributed by the founding shareholders, capital contributors or owners;

e) Legal representative;

g) The organizational structure;

h) Rights and obligations of VSDC;

i) Rights and obligations of capital contributors, owners or shareholders;

k) Rights and obligations of the Board of Members or Board of Directors, General Director (Director), and the Board of Controllers (Controllers);

l) Method for ratification of VSDC’s decisions;

m) Procedures for revising the Charter;

n) Applied accounting and audit regulations;

o) Establishment and use of funds; rules for use of profits, settlement of losses and other financial regulations;

p) Rules for settlement of internal disputes.

Article 55. Rights and obligations of VSDC

1. VSDC has the rights to:

a) Issue regulations on securities registration, depositing, clearing and settlement, and other operational regulations after they are approved by SSC;

b) Provide services including securities registration, depositing, clearing and settlement; registration of collateral for securities registered at VSDC upon request of clients; provide other services specified in VSDC’s charter;

c) Issue domestic ticker symbols and international securities identification numbers to securities registered at VSDC;

d) Approve, change, cancel registration of securities at VSDC;

dd) Grant and cancel membership of depository members of VSDC; suspend depository members from providing securities depository services;

e) Use various sources to assist payment in case a member of VSDC is temporarily insolvent as prescribed by law;

g) Exercise other rights prescribed by law and VSDC’s charter.

2. VSDC has the obligations to:

a) Ensure availability of premises and equipment serving the registration, depositing, clearing and settlement of securities;

b) Comply with regulations of law on accounting, audit, statistics, financial obligations, reporting, information disclosure;

c) Supervise the registration, depositing, clearing and settlement of securities, holdings of foreign investors, and fulfillment of obligations of VSDC’s members;

d) Establish the process and risk management for each operation;

dd) Implement necessary measures to protect the data, retain original documents about the registration, depositing, clearing and settlement of securities in accordance with regulations of law on accounting and statistics;

e) Provide information about holders of securities of public companies/issuers at the request of such public companies/issuers and competent authorities as prescribed by law;

g) Protect confidentiality of information about clients’ holdings; refuse to freeze, hold, transfer asset, provide or copy information about clients’ holdings without their consensus, unless it is requested by a competent authority or the auditor that audits the financial statements of VSDC or a depository member in accordance with regulations of law;

h) Cooperate in dissemination of knowledge about securities and the securities market among investors;

i) Provide information for and cooperate with VNX in securities activities; cooperate with competent authorities in investigations and taking of actions against violations against regulations of law on securities and the securities market;

k) Manage assets of one client separately from those of any other client and from VSDC's assets; separately manage assets of compensation funds, clearing funds, and risk management funds as prescribed by law;

l) Pay compensation to clients if the failure to fulfill VSDC’s obligations causes damage to the lawful rights and interests of clients, except in force majeure events;

m) Operate in the interests of depositors and securities owners;

n) Fulfill other obligations prescribed by law and VSDC’s charter.

3. Executives and employees of VSDC, in performance of their duties, shall comply with regulations of law on securities and the securities market, code of professional ethics, information confidentiality regulations and relevant laws.

4.[37] VSDC shall decide the establishment of its subsidiaries, and organize or assign some of its rights and obligations, as defined in this Law, to these subsidiaries after obtaining approval from the Ministry of Finance of Vietnam.

Article 56. Members OF VSDC

1. Members OF VSDC include:

a) Depository members include securities companies, commercial banks, FBBs licensed to provide securities depositing services by SSC and accepted by VSDC as depository members;

b) Clearing members include securities companies, commercial banks, FBBs issued with certificates of eligibility to provide securities clearing and settlement services by SSC and accepted by VSDC as clearing members.

2. Depository members have the rights to:

a) Provide securities depositing and settlement services for clients;

b) Exercise other rights prescribed by law and VSDC’s regulations.

3. Depository members have the obligations to:

a) Fulfill the obligations specified in Points b, d, dd, g, h, i, l, m Clause 2 Article 55 of this Law;

b) Ensure availability of premises and equipment serving securities depositing and payment;

c) Contribute to the compensation fund as prescribed by law;

d) Separately manage assets of clients and assets of depository members; promptly and accurately record assets, rights to assets and interests relevant to assets deposited by clients;

dd) Maintain fulfillment of conditions for provision of securities depository services;

e) Comply with reporting regulations and fulfill other obligations prescribed by law and VSDC’s regulations.

4. Clearing members have the rights to:

a) [38] Carry out clearing and settlement for securities transactions conducted on the securities trading system. In case of derivative transactions, clearing members that are commercial banks or foreign bank branches shall only make clearing and settlement for their own derivative transactions;

b) Request investors to fully and punctually pay the deposits; use deposited assets of investors to fulfill the obligations to VSDC;

c) Close positions, liquidate open positions of investors; use margins of insolvent investors to pay for their open positions;

d) Exercise other rights prescribed by law and VSDC’s regulations.

5. Clearing members have the obligations to:

a) Fully and punctually provide margins to VSDC; contribute to the clearing fund and risk management fund as prescribed by law;

b) Establish and maintain the internal control and risk management systems; separately manage assets and positions of investors;

c) Fulfill other obligations prescribed by law and VSDC’s regulations.

6. The Government shall promulgate detailed regulations on provision of securities clearing and settlement services by VSDC and its members; conditions, documentation requirements and procedures or becoming members of VSDC.

Article 57. Requirements for securities depository registration

1. A commercial bank or FBB may apply for securities depository registration when it:

a) has the license for establishment and operation in Vietnam which allows provision of securities depository services;

b) has satisfactory capital adequacy ratios as prescribed by banking laws and has profit in the last year; and

c) has the premises and equipment serving securities depositing and settlement.

2. A securities company may apply for securities depository registration when it is licensed for securities brokerage.

Article 58. Application for securities depository registration

1. A commercial bank’s or FBB’s application for securities depository registration shall consist of:

a) An application form;

b) The applicant’s license for establishment and operation;

c) The description of the applicant’s premises and equipment serving securities depositing and settlement;

d) Documents proving the applicant’s satisfactory capital adequacy ratios prescribed by banking law;

dd) The latest audited annual financial statements.

2. A securities company’s application for securities depository registration shall consist of the documents specified in Point a and Point c Clause 1 of this Article

Article 59. Time limit for issuance of certificate of securities depository registration

1. Within 15 days from the receipt of an adequate and valid application, SSC shall decide whether to issue a certificate of securities depository registration, or reject the application and provide explanation in writing.

2. Within 12 months from the issuance date of the certificate, the certificate holder shall complete the procedures for depository member registration at VSDC and initiate the securities depository operation.

Article 60. Suspension of securities depository operation, revocation of certificate of securities depository registration

1. VSDC will suspend a depository member for up to 90 days if such member:

a) Regularly fails to fulfill its obligations specified in this Law and VSDC’s regulations; or

b) Causes heavy damage to its clients.

2. SSC will revoke the certificate of securities depository registration from a securities company, commercial bank or FBB if:

a) The certificate holder fails to rectify the violations mentioned in Clause 1 of this Article by the end of the suspension period;

b) The securities depository operation is not initiated within 12 months from the issuance date of the certificate;

c) The certificate holder has its license for establishment and operation revoked;

d) The certificate holder no longer exists or is converted as prescribed by the Law on Enterprises;

dd) The certificate holder wishes to terminate its securities depository operation and the termination is accepted by SSC;

e) The requirements for registration of securities depository operation specified in Article 57 of this Law are not fully satisfied.

3. After the certificate of securities depository registration is revoked, the depository member shall follow procedures for closing its securities depository account in accordance with VSDC’s regulations.

Article 61. Securities registration

1. Securities of public companies and other organizations listed or registered for trading on the securities trading system shall be registered at VSDC.

2. Securities of other issuers the transfer of which is brokered by VSDC under authorization shall be registered at VSDC.

3. Public companies and issuers mentioned in Clause 1 and Clause 2 of this Article shall register their information, securities and securities holders with VSDC.

4. VSDC shall compile and keep a Register of holders of securities registered at VSDC.

5. VSDC shall compile a list and grant access to securities holders according to their holdings as informed by the public companies and issuers. Only the holders on the Register of securities holders compiled on the record date as notified by public companies or issuers will be entitled to the rights associated with the securities they are holding.

Article 62. Securities depositing

1. Securities of public companies and other organizations listed or registered for trading on the securities trading system shall be deposited at VSDC before they can be traded, unless otherwise prescribed by the Minister of Finance.

2. VSDC shall separately manage securities of each depository member.

3. VSDC shall register collateral for the securities registered at VSDC in accordance with regulations of the Government.

4. The Minister of Finance shall promulgate regulations on provision of securities depository services, transfer of deposited securities for issuance of depositary receipts, and listing of securities in foreign securities markets.

Article 63. Securities clearing and settlement

1.[39] Clearing and determination of obligations to pay money and deliver securities shall be carried out through VSDC or its subsidiaries.

2. Delivery of securities shall be made on the system of depository accounts opened at VSDC and money payment for securities shall be made through settlement banks provided that the delivery versus payment (DvP) rule must be abided by.

3. The Minister of Finance shall specify measures taken in case a member of VSDC is temporarily unable to maintain its solvency for securities trading.

Article 64. Establishment, transfer of ownership and other rights to securities

1. The establishment and transfer of ownership and other rights to the securities registered at VSDC shall be carried out in accordance with regulations of law on securities and securities market.

2. Transfer of ownership of securities deposited at VSDC shall be effective on the date of the entry on the securities depository account at VSDC.

3. Transfer of ownership of the securities mentioned in Clause 1 Article 61 of this Law that are not yet deposited at VSDC shall be effective on the date of the entry on VSDC’s Register of securities holders.

Article 65. Protection of clients’ assets

1. Securities and other assets of clients under management of VSDC or its members, deposits at settlement banks for securities trading of depository members are assets of their owners and are not assets of VSDC, its members or settlement banks.

2. None of VSDC, its members and settlement banks may use securities and other assets mentioned in Clause 1 of this Article to pay their debts.

Article 66. Compensation fund

1. The compensation fund is contributed by depository members to pay on behalf of the depository members that are temporarily unable to pay for their securities transactions.

2. The compensation fund shall be managed by VSDC. Assets of the compensation fund and assets of VSDC shall be separately managed.

3. Methods of contribution, contribution amounts, management and use of the compensation fund shall comply with regulations of the Minister of Finance.

Article 67. Clearing fund

1. The clearing fund is contributed by depository members to pay damages and settle securities transactions conducted in the name of the depository members in case the depository members or investors become insolvent.

2. The clearing fund shall be managed by VSDC. Assets of the clearing fund and assets of VSDC shall be separately managed.

3. Methods of contribution, contribution amounts, management and use of the clearing fund shall comply with regulations of the Minister of Finance.

Article 68. Suspension, termination, restoration of securities registration, depositing, clearing and settlement functions of VSDC and its subsidiaries[40]

1. SSC shall decide partial or full suspension or termination of securities registration, depositing, clearing and settlement functions of VSDC and its subsidiaries[41] in the following cases:

a) In case of a war, natural disaster or major fluctuation of the economy, malfunction of the registration, depositing, clearing and settlement system or any other force majeure event that affects the securities registration, depositing, clearing and settlement functions of VSDC and its subsidiaries[42];

b) Suspension or termination is deemed necessary to protect the investors’ lawful rights and interests and ensure the stability and safety of the securities registration, depositing, clearing and settlement system.

2. SSC shall decide partial or full restoration of securities registration, depositing, clearing and settlement functions of VSDC and its subsidiaries[43] when the causes of the suspension or termination have been eliminated.

Article 69. Settlement banks

1. Settlement banks include SBV and commercial banks that provide payment services for securities transactions on the securities trading system.

2. In order to be appointed as a settlement bank by SSC, a commercial bank shall have:

a) A license for establishment and operation in Vietnam as prescribed by law;

b) A charter capital of over VND 10.000 billion;

c) Profit in the last 02 years;

d) Satisfactory capital adequacy ratios prescribed by banking laws;

dd) Physical and technical infrastructure facilities qualified for payment transactions and connected to the system of VSDC;

e) A clearing and settlement system connected to the clearing and settlement system of SBV; and

g) Physical and technical infrastructure facilities capable of retention of transaction information for at least 10 years and provision of such information for SSC or VSDC within 48 hours upon request.

3. A settlement bank has the following rights and obligations:

a) Separate payments for securities transactions on the securities trading system from other payments of the bank in accordance with regulations of law on securities and securities market;

b) Comply with reporting regulations and fulfill other obligations as prescribed by law;

c) Maintain its fulfillment of the conditions specified in Clause 2 of this Article.

4. The Government shall promulgate regulations on documentation requirements and procedures for registration of settlement banks.

Chapter VI

SECURITIES COMPANIES AND FUND MANAGEMENT COMPANIES

Section 1. SECURITIES TRADING LICENSE

Article 70. Power to issue, reissue, revise, revoke securities trading licenses

SSC has the power to issue, reissue, revise, revoke securities trading licenses of securities companies, fund management companies, and branches in Vietnam of foreign securities companies and fund management companies.

Article 71. Enterprise registration, business registration

1. After being granted the securities trading license, the license holder that is a securities company or fund management company shall apply for enterprise registration in accordance with the Law on Enterprises, and the license holder that is a branch in Vietnam of a foreign securities company or fund management company shall apply for business registration at a business registration authority.

2. Securities companies and fund management companies shall be limited liability companies or joint-stock companies as prescribed by the Law on Enterprises.

3. The Government shall elaborate this Article.

Article 72. Operations of securities companies

1. A securities company shall be licensed to perform one, some or all of the following operations:

a) Securities brokerage;

b) Proprietary trading;

c) Securities underwriting;

d) Securities investment consultancy.

2. A securities company shall only be licensed for proprietary trading when it is licensed for securities brokerage.

3. A securities company shall only be licensed for securities underwriting when it is licensed for proprietary trading.

Article 73. Operations of fund management companies

1. Operations of a fund management company include:

a) Management of securities investment funds;

b) Management of securities investment portfolios;

c) Securities investment consultancy.

2. The licensing of the operations mentioned in Clause 1 of this Article may be included in the one securities trading license issued to the fund management company.

Article 74. Requirements for issuing securities trading license to a securities company

1. Capital requirements: capital contribution is made in VND; minimum amount of charter capital for each business operation of the securities company in Vietnam is conformable with regulations of the Government.

2. Requirements regarding shareholders and contributing members:

a) Shareholders and contributing members that are individuals are qualified for establishment and management of enterprises in Vietnam as prescribed by the Law on Enterprises;

b) Shareholders and contributing members that are organizations must be lawfully operating juridical persons; have profitable business in 02 years prior to the year in which the license is applied for; and have the latest annual financial statements audited and received unqualified opinions;

c) Shareholders and contributing members holding at least 10% of charter capital of 01 securities company and their related persons (if any) do not hold more than 5% of charter capital of another securities company;

d) Shareholders and contributing members that are foreign investors shall satisfy the requirements specified in Article 77 of this Law.

3. Requirements regarding structure of shareholders and contributing members:

a) At least 02 founding shareholders and contributing members shall be organizations. The owner of the securities company that is a single-member limited liability company shall be an insurer or commercial bank or foreign organization that satisfies the requirements specified in Clause 2 Article 77 of this Law;

b) Total capital contributed by organizations shall be at least 65% of charter capital; capital contributed by insurers and commercial banks shall be at least 30% of charter capital.

4. Infrastructure facility requirements:

a) The premises are adequate for securities trading;

b) Available physical and technical infrastructure facilities, equipment and technologies are adequate for securities trading processes.

5. Personnel requirements:

There is a General Director (Director), at least 03 employees having suitable securities practicing certificates for each of the licensed operations, and at least 01 employee in charge of compliance management. The General Director (Director) shall:

a) Not be facing criminal prosecution, serving an imprisonment sentence or being banned from securities trading as prescribed by law;

b) Have at least 02 years’ experience of working in specialized departments of finance, securities, banking, insurance organizations or in finance, accounting, investment departments of other organizations;

c) Have the practicing certificate for financial analysis or asset management;

d) Not incur any administrative penalties for securities- and securities market-related offences in the last 06 months prior to the application date.

The Deputy General Directors (Deputy Directors) in charge of specific operations shall satisfy the requirements specified in Points a, b, d of this Clause and have practicing certificates suitable for their operations.

6. There is a draft charter conformable with Clause 1 Article 80 of this Law.

Article 75. Requirements for issuing securities trading license to a fund management company

1. Capital requirements: capital contribution is made in VND; minimum amount of charter capital required for the securities trading license of the fund management company in Vietnam is conformable with regulations of the Government.

2. Requirements regarding shareholders and contributing members:

a) Shareholders and contributing members shall satisfy the requirements specified in Point a and Point b Clause 2 Article 74 of this Law;

b) Shareholders and contributing members that are foreign investors shall satisfy the requirements specified in Article 77 of this Law;

c) Shareholders and contributing members holding at least 10% of charter capital of 01 fund management company and their related persons (if any) do not hold more than 5% of charter capital of another fund management company.

3. Requirements regarding structure of shareholders and contributing members:

a) At least 02 founding shareholders and contributing members shall be organizations. The owner of the fund management company that is a single-member limited liability company shall be an insurer or commercial bank or securities company or foreign organization that satisfies the requirements specified in Clause 2 Article 77 of this Law;

b) Total capital contributed by organizations shall be at least 65% of charter capital; capital contributed by insurers, commercial banks and securities companies shall be at least 30% of charter capital.

4. Infrastructure facility requirements:

a) The premises are adequate for securities trading;

b) Available physical and technical infrastructure facilities, equipment and technologies are adequate for securities trading processes.

5. Personnel requirements:

There is a General Director (Director), at least 05 employees having funding management certifications, and at least 01 employee in charge of compliance management. The General Director (Director) shall:

a) Not be facing criminal prosecution, serving an imprisonment sentence or being banned from securities trading as prescribed by law;

b) Have at least 04 years’ experience of working in specialized departments of finance, securities, banking, insurance organizations or in finance, accounting, investment departments of other organizations;

c) Have the practicing certificate for asset management or equivalent as prescribed by the Government;

d) Not incur any administrative penalties for securities- and securities market-related offences in the last 06 months prior to the application date.

The Deputy General Directors (Deputy Directors) in charge of specific operations shall satisfy the requirements specified in Points a, b, d of this Clause and have practicing certificates suitable for their operations.

6. There is a draft charter conformable with Clause 1 Article 80 of this Law.

Article 76. Requirements for issuing securities trading license to branches in Vietnam of foreign securities companies and fund management companies

1. A foreign securities company may establish a branch in Vietnam when the following requirements are satisfied:

a) The company fully satisfies the requirements specified in Clause 2 Article 77 of this Law and is not holding more than 49% of charter capital of any securities company or fund management company in Vietnam;

b) The capital provided for the branch in Vietnam satisfies the requirements in Clause 1 Article 74 of this Law;

c) The branch in Vietnam satisfies the infrastructure facility and personnel requirements specified in Clause 4 and Clause 5 Article 74 of this Law.

2. A foreign fund management company may establish a branch in Vietnam when the following requirements are satisfied:

a) It has obtained a license for management of public funds and approval for establishment of a branch in Vietnam from the home country’s securities authorities;

b) The home country’s licensing authority and SSC have entered into a bilateral or multilateral agreement on information exchange and cooperation in management, inspection, supervision of securities and securities market-related activities with a remaining validity period of at least 05 years;

c) The foreign company is not holding more than 5% of charter capital of 01 fund management company in Vietnam, whether directly or indirectly, with or without related persons;

d) The capital provided for the branch in Vietnam satisfies the requirements in Clause 1 Article 75 of this Law;

dd) The branch in Vietnam satisfies the infrastructure facility and personnel requirements specified in Clause 4 and Clause 5 Article 75 of this Law;

e) All of the requirements specified in Point c Clause 2 Article 77 of this Law are satisfied.

3. Each foreign securities company or fund management company may establish 01 branch in Vietnam.

Article 77. Participation by foreign investors in securities companies and fund management companies

1. Foreign investors may contribute capital, buy shares or stakes in securities companies and fund management companies according to the following principles:

a) A foreign investor that is an organization satisfying the requirements specified in Clause 2 of this Article and its related persons may hold up to 100% of charter capital of a securities company or fund management company. In case the requirements in Clause 2 of this Article are not fully satisfied, the foreign investor that is an organization and its related person may only hold up to 49% of charter capital of a securities company or fund management company;

b) A foreign investor that is an individual and his/her related persons may hold up to 49% of charter capital of a securities company or fund management company;

c) Foreign investors shall comply with regulations in Point c Clause 2 Article 74 and Point c Clause 2 Article 75 of this Law.

2. In order to hold 100% of charter capital of a securities company or fund management company by contributing capital or buying shares/stakes, a foreign organization shall:

a) Be licensed and has been continuously operating in the field of banking, securities, insurance for 02 years before the year in which capital is contributed or shares/stakes are purchased;

b) The home country’s licensing authority and SSC have entered into a bilateral or multilateral agreement on information exchange and cooperation in management, inspection, supervision of securities and securities market-related activities;

c) The organization has maintained profitable business in 02 years prior to the year in which capital is contributed or shares/stakes are purchased, and its latest annual financial statements have been audited and received unqualified opinions.

3. Foreign securities companies and fund management companies may establish branches and representative offices in accordance with Article 76 and Article 78 of this Law.

Article 78. Representative offices in Vietnam of foreign securities companies and fund management companies

1. A foreign securities company or foreign fund management company may establish a representative office in Vietnam when:

a) It is licensed and has been lawfully operating in its home country;

b) The home country’s licensing authority and SSC have entered into a bilateral or multilateral agreement on information exchange and cooperation in management, inspection, supervision of securities and securities market-related activities, the foreign securities company or foreign fund management company has been managing investment funds in Vietnam; the remaining operating period is at least 01 year.

2. The representative office in Vietnam of a foreign securities company or fund management company has one, some or all of the following activities:

a) Act as a communication office and engage in market research;

b) Facilitate development of projects for cooperation in securities and securities market in Vietnam;

c) Expedite and supervise implementation of agreements signed by and between the company and Vietnamese business organizations;

d) Expedite and supervise execution of the projects in Vietnam funded by the company.

3. Representative offices of foreign securities companies and foreign fund management companies shall not be allowed to trade securities.

4. SSC shall consider issuing certificates of registration; manage and supervise operation of representative offices in Vietnam of foreign securities companies and foreign fund management companies.

Article 79. Documentation requirements and procedures for issuance, re-issuance, revision, revocation of securities trading license and certificate of registration

1. The Government shall promulgate regulations on documentation requirements and procedures for issuance, re-issuance, revision, revocation of securities trading licenses of securities companies, fund management companies, branches in Vietnam of foreign securities companies and fund management companies, and certificates of registration of representative offices in Vietnam of foreign securities companies and fund management companies.

2. Within 30 days from the receipt of the satisfactory application, SSC shall decide whether to issue the securities trading license or the certificate of registration. In case of rejection, SSC shall send a written notice and provide explanation.

Article 80. Charter of securities companies and fund management companies

1. The charters of securities companies and fund management companies must not contravene regulations of this Law and the Law on Enterprises.

2. Securities companies and fund management companies shall upload the full text of their charters to their websites.

Article 81. Contents of securities trading license

1. A securities trading license issued to a securities company or fund management company shall have the following contents:

a) Company’s name;

b) Headquarters address;

c) Business operations;

d) Charter capital;

dd) Legal representative.

2. A securities trading license issued to a branch in Vietnam of a foreign securities company or foreign fund management company shall have the following contents:

a) Name, address and business operations of the branch;

b) Name of its parent company;

c) Headquarters address of its parent company;

d) Capital provided for the branch;

dd) The branch manager.

3. Any changes in the contents of a securities trading license as prescribed in Clause 1 and Clause 2 of this Article are subject to approval by SSC.

4. Within 10 days from the day on which SSC approves the changes mentioned in Clause 3 of this Article, the license holder shall inform the changes to the business registration authority in accordance with enterprise laws.

Article 82. Names of securities companies and fund management companies

1. Names of securities companies and fund management companies shall comply with regulations of the Law on Enterprises, Clause 2 and Clause 3 of this Article.

2. Name of a securities company consists of the following elements from left to right:

a) Type of business;

b) The phrase “chứng khoán” (“securities”);

c) The company’s proper name.

3. Name of a fund management company consists of the following elements from left to right:

a) Type of business;

b) The phrase “quản lý quỹ” (“fund management”);

c) The company’s proper name.

4. An organization that is not a securities company or fund management company must not use the phrase “chứng khoán” or “quản lý quỹ” in its name, or any other phrases and terms that may create a false impression that it is a securities company or fund management company.

Article 83. Information disclosure

Securities companies, fund management companies, branches and representative offices in Vietnam of foreign securities companies and foreign fund management companies must disclose information on their operation on the media of SSC and 01 online newspaper or 03 continuous issues of a printed newspapers at least 30 days before its expected inauguration date. Information to be disclosed includes:

1. The securities trading license or the certificate of registration issued by SSC;

2. The official inauguration date.

Article 84. Official inauguration date

1. Securities companies, fund management companies, branches and representative offices in Vietnam of foreign securities companies and fund management companies shall inaugurate within 12 months after they are licensed.

2. Securities companies, fund management companies, branches and representative offices in Vietnam of foreign securities companies and fund management companies shall not be allowed to trade securities before their official inauguration dates.

3. A securities company or fund management company may start to operate after:

a) It has been granted enterprise registration as prescribed in Article 71 of this Law;

b) It has processes for operation, risk management, internal control;

c) The charter has been approved by General Meeting of Shareholders, the Board of Members or the owner.

4. The branch in Vietnam of a foreign securities company or fund management company may start to operate after the requirements in Point a and Point b Clause 3 of this Article are satisfied.

5. The licensed securities companies, fund management companies, branches in Vietnam of foreign securities companies and fund management companies shall send notices of their fulfillment of requirements in Clause 3 and Clause 4 of this Article to SSC at least 15 days before their official inauguration date. SSC will suspend the official inauguration of securities companies, fund management companies, branches in Vietnam of foreign securities companies and fund management companies that fail to fully satisfy the requirements in Clause 3 and Clause 4 of this Article.

Section 2. OPERATION OF SECURITIES COMPANIES AND FUND MANAGEMENT COMPANIES

Article 85. Maintenance of fulfillment of requirements for issuance of securities trading license

1. Maintenance of fulfillment of requirements for issuance of the securities trading license shall be subject to the following provisions:

a) Securities companies shall maintain their fulfillment of the licensing requirements specified in Clause 1, Point c and Point d Clause 2, Clause 4 and Clause 5 Article 74 of this Law;

b) Branches in Vietnam of foreign securities companies shall maintain their fulfillment of the licensing requirements specified in Point b and Point c Clause 1 Article 76 of this Law;

c) Fund management companies shall maintain their fulfillment of the licensing requirements specified in Clause 1, Point b and Point c Clause 2, Clause 4 and Clause 5 Article 75 of this Law;

d) Branches in Vietnam of foreign fund management companies shall maintain their fulfillment of the licensing requirements specified in Points c, d and dd Clause 2 Article 76 of this Law.

2. Within 30 days from the day the requirements mentioned in Clause 1 of this Article are no longer satisfied or the equity falls below the required minimum charter capital, the Board of Directors, the Board of Members or the owner of the securities company, fund management company, branch in Vietnam of the foreign securities company or fund management company shall consider approving the rectification plan and send a report to SSC. The maximum time limit for rectification shall be 06 months for equity and 03 months for other requirements from the day on which the requirements are no longer fulfilled.

3. During the rectification period:

a) a securities company must not: expand its business; distribute profit; repurchase shares, except shares from its employees under regulations on employee share ownership or for correction of transaction errors;

b) a fund management company must not: add new securities activities; distribute profits; raise capital to establish funds; establish securities investment companies; increase charter capital of closed-end funds, private funds and securities investment companies under its management; sign new investment management contracts; extend or receive additional capital from its existing clients; establish branches or representative offices; make overseas investment;

c) a branch in Vietnam of a foreign securities company or fund management company must not transfer its profit overseas.

Article 86. Operation of securities companies, fund management companies, branches and representative offices in Vietnam of foreign securities companies and foreign fund management companies

1. A securities company licensed to provide securities brokerage services may:

a) Receive and manage securities trading accounts of individuals; distribute securities or act as securities distribution agent; manage securities trading account; manage other enterprises’ lists of securities holders;

b) Provide online securities trading services; provide or cooperate with credit institutions in granting loans for purchase of securities or securities lending; provide or cooperate with credit institutions in advancing payment for securities; securities depository; provide securities clearing and settlement services; provide other derivative-related services.

2. A securities company licensed for proprietary trading may trade securities on its proprietary trading account, make investment, contribute capital, issue and offer financial products.

3. A securities company licensed for securities underwriting may provide securities offering consultancy services; perform pre-offering procedures; act as an agent for securities depository, payment, transfer; provide consultancy on restructuring, consolidation, acquisition, rearrangement of enterprises; provide consultancy of enterprise administration, business strategies; provide consultancy on offering, listing, registration of securities; provide consultancy on enterprise equitization.

4. A securities company licensed to provide securities investment consultancy services may provide services for its clients in accordance with Clause 32 Article 4 of this Law.

5. In addition to the services specified in Clause 1, 2, 3, 4 of this Article, a securities company may only provide other financial services conformable with regulations of law after a written report is submitted to SSC. SSC is entitled to suspend or terminate provision of other financial services of a securities company if it is not conformable with law or poses a risk to the securities market system.

6. A fund management company may mobilize and manage foreign investment funds in Vietnam; manage voluntary pension funds in accordance with relevant laws; provide online securities trading services.

7. A branch in Vietnam of a foreign securities company may only provide securities investment consultancy services. A branch in Vietnam of a foreign fund management company may only provide asset management services for capital raised overseas.

8. The Minister of Finance shall promulgate specific regulations on operation of securities companies, fund management companies, branches and representative offices in Vietnam of foreign securities companies and foreign fund management companies; permitted services; suspension and termination of other financial services of securities companies specified in Clauses 1, 2, 3, 4, 5 of this Article.

Article 87. Operations subject to approval by SSC

1. A securities company or fund management company shall obtain a written approval of SSC before initiating the following operations:

a) Suspension of operation, except for force majeure events;

b) Offering and listing securities of the company overseas;

c) Making indirect outward investments;

d) Establishing, closing a branch or representative office in Vietnam or overseas; establishing an overseas subsidiary; changing business operations at the branch; establishing or closing a transaction office;

dd) Changing the name or location of a branch, representative office or transaction office;

e) Provision of the services mentioned in Point b Clause 1 Article 86 of this Law.

2. Suspension of the branch in Vietnam of a foreign securities company or fund management company in the cases specified in Point a Clause 1 of this Article is subject to written approval by SSC.

3. The Government shall elaborate requirements, documentation and procedures for approving the operations specified in this Article.

Article 88. Management of clients’ assets

1. Clients’ assets under management of a securities company include securities trading deposits, securities that are deposited or kept at the company, and relevant rights. These assets are owned by the clients and are not considered assets of the securities company.

2. Assets entrusted by a client on the depository account of a fund management company are under ownership of the client and not considered assets of the fund management company.

3. In case a securities company or fund management company is dissolved or goes bankrupt, clients’ assets shall be returned to the clients after deducting the clients’ liabilities to the company.

4. The Minister of Finance shall elaborate the management of clients’ assets in securities companies and fund management companies.

Article 89. Obligations of securities companies and branches in Vietnam of foreign securities companies

1. Establish systems for internal control, risk management, supervision and preventing of conflict of interests within the company and in transactions with relevant persons.

2. Make sure employees in specialized departments have appropriate securities practicing certifications.

3. Separately manage assets of each client, assets of clients and assets of the company.

4. Sign contracts with clients when providing services to them; provide adequate and truthful information to clients.

5. Give priority to execution of clients’ orders over the company’s orders.

6. Collect information about financial status, investment purposes, risk tolerance of clients; make sure the recommendations and consultancy given by the company are appropriate for financial status, investment purposes, risk tolerance of each client, unless information is not provided or not fully and accurately provided by the client.

7. Update and fully information about the clients; documents about transactions of the clients and the company.

8. Comply with regulations of law on accounting, audit, statistics, financial obligations.

9. Disclose information and report fully, punctually and accurately as prescribed by law.

10. Develop an information technology system and backup database to ensure safe and continuous operation.

11. Supervise securities transactions in accordance with regulations of the Minister of Finance.

12. Perform other obligations prescribed by this Law and relevant laws.

Article 90. Obligations of fund management companies and branches in Vietnam of foreign fund management companies

1. Fulfill the obligations specified in Clauses 1, 2, 4, 5, 6, 7, 8, 9, 10 and 12 Article 89 of this Law.

2. Mange securities investment funds and securities portfolios in accordance with this Law, charters of the securities investment funds, contracts signed with trustors and contracts signed with supervisory banks.

3. Determine the net asset value of securities investment funds in accordance with Article 106 of this Law, charters of securities investment funds and contracts signed with trustors.

4. The fund management company shall deposit all trusted assets; separate assets of each trustor; separate assets of trustors and assets of the company.

Article 91. Restrictions on securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies

1. Do not comment on or guarantee income or profit on the clients’ investment; do not make no-loss guarantee, except investment in fixed income securities.

2. Do not reveal information about a client unless the provision of information is agreed by the client or requested by a competent authority.

3. Do not make clients and investors confused about securities prices.

4. Founding shareholders and capital contributors upon establishment of the securities company or fund management company must not transfer their shares or stakes within 03 years from the licensing date, except transfer between those shareholders or contributors.

5. Securities companies, fund management companies, branches and representative offices in Vietnam of foreign securities companies and foreign fund management companies shall provide their services in their own names; must not use the names of others or allow others to use their names to provide securities services.

6. A securities company must not contribute capital or purchase shares/stakes of another securities company in Vietnam, unless the purchase results in:

a) Consolidation or merger of the latter;

b) Ownership or joint ownership (with related persons) of up to 5% of voting shares of a listed or registered securities company.

7. A fund management company must not contribute capital or purchase shares/stakes of another fund management company in Vietnam, unless the purchase results in:

a) Consolidation or merger of the latter;

b) Ownership or joint ownership (with related persons) of up to 5% of voting shares of a listed or registered fund management company.

Article 92. Financial safety

1. Securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies shall maintain financial safety indicators.

2. The Minister of Finance shall elaborate the financial safety indicators of securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies, and measures to be taken when financial safety indicators are not maintained.

Companies that fail to maintain their financial safety indicators shall be put under alert, control or special control by SSC and be subject to remedial measures accordingly.

Section 3. REORGANIZATION, SUSPENSION AND REVOCATION OF SECURITIES TRADING LICENSES

Article 93. Reorganization of securities companies and fund management companies

1. Reorganization of a securities company or fund management company is subject to approval by SSC. Within 30 days from the receipt of the complete and valid application, SSC shall decide whether to approve the reorganization of the securities company or fund management company. In case of rejection, SSC shall send a written notice and provide explanation.

2. After approval is granted by SSC as prescribed in Clause 1 of this Article, the company shall initiate the reorganization in accordance with the Law on Enterprises and the following regulations:

a) The reorganization must not affect the lawful rights and interests of clients; ensure continuity and safety of transactions;

b) The securities company or fund management company that is established after the reorganization shall inherit the rights and obligations of the reorganized company as prescribed by law;

c) The reorganized company shall disclose information to its clients in full.

3. The Government shall specify the requirements, documentation and procedures for approving reorganization of securities companies and fund management companies.

4. The company established after the reorganization shall apply for issuance or revision of the securities trading license in accordance with this Law.

Article 94. Suspension of securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies

1. SSC will suspend one, some or all of the operations of a securities company, fund management company, the branch in Vietnam of a foreign securities company or foreign fund management company in the following cases:

a) The application for issuance or revision of the securities trading license contains false information;

b) The issues mentioned in Article 92 of this Law are not resolved;

c) The company operates against the license;

d) The requirements specified in Clause 1 Article 85 of this Law are not satisfied or the equity is still smaller than minimum charter capital after expiration of the time limit specified in Clause 2 Article 85 of this Law.

2. After 06 months from the effective date of the suspension decision, if the securities company fails to rectify the causes of the suspension specified in Point b or Point d Clause 1 of this Article, SSC will issue a decision to terminate the suspended operations.

3. During the suspension period, the company or branch shall:

a) Not conclude new or renew contracts relevant to the suspended operations; finalize or convert accounts if requested by the clients;

b) Prepare a rectification plan and report the implementation thereof at the request of SSC;

c) In case proprietary trading is suspended, the securities company may only sell and must not make new investments, except for purchases for fixing transaction errors, odd lot transactions or exercise of rights of the securities it is holding as prescribed by law.

Article 95. Revocation of securities trading licenses of securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies

1. A securities company, fund management company, branch in Vietnam of a foreign securities company or foreign fund management company will have its securities trading license revoked in the following case:

a) The company or branch does not officially come into operation within 12 months from the licensing date; fails to resume operation after the suspension is lifted by SSC; fails to perform the fund management function for 02 consecutive years;

b) The company or branch submits a written request for revocation of the securities trading license;

c) All securities trading operations of the securities company are terminated according to Clause 2 Article 94 of this Law; the fund management company, branch in Vietnam of the foreign securities company or foreign fund management company fails to rectify the causes of suspension specified in Point b, Point d Clause 1 Article 94 of this Law within 06 months from the suspension date;

d) The violations mentioned in Point a and Point c Clause 1 Article 94 of this Law are not rectified within 60 days from the suspension date;

dd) The company or branch undergoes dissolution, bankruptcy, consolidation, split-up or merger.

2. In the cases specified in Point c and Point d Clause 1 of this Article, SSC is entitled to appoint another securities company or fund management company to complete the ongoing transactions and contracts of license holder, in which case the license holder and the appointed company are naturally in an authorization relationship.

3. When the license is revoked, the license holder shall:

a) Immediately terminate all operations in the license and make an announcement on 01 online newspaper or 03 consecutive issues of a printed newspaper;

b) Finalize assets of clients received and managed by the securities company, or assets on the depository account of the fund management company;

c) Submit a report to SSC after clients’ assets are finalized.

4. SSC shall disclose information about revocation of licenses and request the business registration authorities to collect the certificate of enterprise registration and certificate of business registration.

Article 96. Dissolution, bankruptcy of securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies 

1. Dissolution of securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies shall comply with regulations of this Law and the Law on Enterprises.

2. The Government shall elaborate the finalization of assets of clients specified in Point b Clause 3 Article 95 of this Law; documents and procedures for dissolution of securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies.

3. Bankruptcy laws shall apply to bankruptcy of securities companies and fund management companies.

Section 4. SECURITIES PRACTICING

Article 97. Securities practicing certificates

1. Securities practicing certificates include:

a) Securities brokerage certificate;

b) Financial analysis certificate;

c) Fund management certificate.

2. A securities practicing certificate will be granted to an individual who:

a) has full legal capacity; is not facing criminal prosecution and is not being banned from securities practice as prescribed by law;

b) has a bachelor’s degree or higher;

c) has professional competency in securities; and

d) passes the test for the securities practicing certificate. Foreigners who have securities qualifications and foreign certified securities professionals need to pass the test on regulations and laws on securities and securities market of Vietnam.

3. A securities practicing certificate will be revoked if its holder:

a) no longer satisfies the requirements specified in Clause 2 of this Article;

b) commits any of the offences specified in Article 12 or Clause 2 Article 98 of this Law; or

c) fails to work as a certified securities professional for 03 consecutive years.

4. The securities practicing certificate will not be reissued once revoked in the case specified in Point b Clause 3 of this Article.

5. The Government shall elaborate the requirements, documentation and procedures for issuance, reissuance and revocation of securities practicing certificates, management and supervision of certified securities professionals.

Article 98. Responsibilities of certified securities professionals

1. Holders of securities practicing certificates shall only operate as representatives of securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies, or securities investment companies.

2. A certified securities professional must not:

a) Simultaneously work for 02 or more securities companies, fund management companies, branches in Vietnam of foreign securities companies or foreign fund management companies, or securities investment companies;

b) Open, manage securities trading accounts at the securities company for which he/she works, unless it does not provide securities brokerage services;

c) Act beyond the authorization of the company for which he/she works.

3. Certified securities professionals shall attend training courses in securities and securities market, trading systems, and new securities organized by SSC, VNX and its subsidiaries, and VSDC.

4. Securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies, and investment companies are responsible for operation of their certified securities professionals.

Chapter VII

SECURITIES INVESTMENT FUNDS, INVESTMENT COMPANIES AND SUPERVISORY BANKS

Section 1. GENERAL PROVISIONS ON SECURITIES INVESTMENT FUNDS

Article 99. Types of securities investment funds

1. Securities investment funds include public funds and private funds.

2. Public funds include open-end funds and closed-end funds.

Article 100. Establishment and operation of securities investment funds

1. The establishment of and public offering of fund certificates of public funds hall be carried out by fund management companies in accordance with Article 108 of this Law and have to be registered with SSC.

2. The establishment of private funds shall be carried out by fund management companies in accordance with Article 113 of this Law and have to be registered with SSC.

3. The Government shall elaborate the requirements, documentation and procedures for offering, establishment, reorganization and dissolution of the securities investment funds mentioned in Article 99 and Article 114 of this Law.

4. Operations of funds of the types specified in Article 99 and Article 114 of this Law shall comply with regulations of the Minister of Finance and relevant laws.

Article 101. Rights and obligations of investors participating in securities investment funds

1. Investors have the rights to:

a) Benefit from investments of the securities investment fund in proportion to their contributions;

b) Receive interests and assets lawfully distributed from liquidation of assets of the securities investment fund;

c) Request the fund management company to repurchase open-end fund certificates;

d) File lawsuits against the fund management company, supervisory bank or relevant organizations if they violate their the lawful rights and interests;

dd) Execute their rights through the General Meeting of Investors;

e) Transfer fund certificates in accordance with the fund’s charter;

g) Exercise other rights prescribed by law and the fund’s charter.

2. Investors have the obligations to:

a) Comply with decisions made by the General Meeting of Investors;

b) Fully pay for the fund certificates;

c) Fulfill other obligations prescribed by law and the charter of the securities investment fund.

Article 102. General Meeting of Investors of securities investment funds

1. General Meeting of Investors consists of all investors and is the supreme decision-making body of a securities investment fund.

2. The General Meeting of Investors has the following rights and obligations:

a) Elect, dismiss the Chairperson and members of the representative board of the securities investment fund;

b) Decide the remunerations and operating expenses of the representative board;

c) Decide fundamental changes in investment policies, profit distribution plan and investment objectives of the fund; decide change of the fund management company and supervisory bank; change of payments to the fund management company and supervisory bank;

d) Decide revisions to the fund’s charter;

dd) Decide split-up, split-off, consolidation, merger, dissolution of the securities investment fund; change of the charter capital or operating period of the securities investment fund;

e) Request the fund management company and supervisory bank to present transaction documents at its meetings;

g) Approve annual reports on the fund’s finance, assets and operation; approve selection of accredited audit organization to audit the fund’s annual financial statements;

h) Take actions against violations committed by the fund management company, supervisory bank and representative board if they cause damage to the fund;

i) Exercise other rights and perform other obligations as prescribed by law and the fund’s charter.

3. General Meetings of Investors of securities investment funds shall be convened on an annual and ad hoc basis.

4. The Minister of Finance shall elaborate the procedures for convening, conducting General Meetings of Investors of securities investment funds and procedures for approving decisions thereof.

Article 103. Charters of securities investment funds

1. The charter of a securities investment fund shall be drafted by the fund management company and ratified by the General Meeting of Investors.

2. The charter of a securities investment fund shall contain the following information:

a) Names of the fund, the fund management company and the supervisory bank;

b) Establishment date of the fund;

c) Objectives; investment fields; operating period of the fund;

d) Decide revisions to the fund’s charter;

dd) Rights and obligations of the fund management company and supervisory bank; cases of change of the fund management company and supervisory bank; regulations on authorizing the fund management company to sign the supervision contract with the supervisory bank;

e) Regulations on representative board and General Meeting of Investors of the fund;

g) Limits on investments of the fund;

h) Regulations on registration of fund certificate ownership and storage of investor register of the fund;

i) Regulations on selection of the supervisory bank; selection and change of the accredited audit organization;

k) Regulations on transfer, issuance, repurchase of open-end fund certificates; regulations on listing of closed-end fund certificates;

l) Costs and incomes of the fund; payments and extra payments to the fund management company and the supervisory bank; cases of and methods for distributing the fund’s income among investors;

m) Method for determination of net asset value of the fund and of each fund certificate;

n) Regulations on settlement of conflicts of interest;

o) Reporting regulations;

p) Regulations on dissolution of the fund;

q) Commitment of the supervisory bank and fund management company to fulfill their obligations to the fund and investors, and to comply with the fund’s charter;

r) Formalities for revising the fund’s charter.

3. The Minister of Finance shall issue model charter of securities investment funds.

Article 104. Dissolution of securities investment funds

1. A securities investment fund shall be dissolved in the following cases:

a) The operating period specified in the fund’s Charter expires;

b) The General Meeting of Investors decides to dissolve the fund ahead of schedule;

c) The fund management company has its securities trading license revoked or is dissolved or goes bankrupt and a substitute fund management company is not appointed by the representative board of the fund within 02 months from the event;

d) The supervisory bank has its certificate of securities depository registration revoked or is dissolved or goes bankrupt, or the supervision contract between the supervisory bank and the fund management company is terminated and a substitute supervisory bank is not appointed by the fund management company within 02 months from the event;

dd) The net asset value of the fund is under VND 10 billion for 06 consecutive months;

e) Other cases specified in the fund’s charter.

2. Within 03 months before the dissolution date in the cases specified in Point a and Point b Clause 1 of this Article, or 30 days in the cases specified in Points, c, d, dd, e Clause 1 of this Article, the fund management company or supervisory bank and the fund’s representative board shall convene the General Meeting of Investors to ratify the dissolution plan.

3. The fund management company and supervisory bank shall be responsible for liquidation of the fund’s assets and distribution of the assets among investors in accordance with the plan ratified by the General Meeting of Investors.

4. The revenue from liquidation of the fund’s assets and other assets minus (-) dissolution costs shall be used in the following order of priority:

a) Financial obligations to the State;

b) Payables to the fund management company, the supervisory bank, and other payables;

c) Payments to investors in proportion to their capital contribution in the fund.

5. Within 05 working days from the completion of the dissolution, the fund management company and the supervisory bank shall submit a dissolution report to SSC.

Article 105. Consolidation and merger of securities investment funds

A securities investment fund may be consolidated into or merged with another fund of the same type under the decision of its General Meeting of Investors. A private fund established after the consolidation or merger shall not have more than 99 members.

Article 106. Determination of net asset value of securities investment fund

1. The net asset value or a securities investment fund shall be determined by the fund management company and confirmed by the supervisory bank; the net asset value of the private fund shall be confirmed by the supervisory bank or depository bank.

2. The net asset value of securities investment fund shall be determined as follows:

a) Prices of listed and registered securities shall be closing price or average price of the latest trading date before the valuation date;

b) For securities mentioned in Point a of this Clause that are not traded for more than 15 days before the valuation dates, and securities other than those mentioned in Point a of this Clause, the valuation shall be based upon the valuation process and method specified in the fund’s charter. The valuation process and method must be confirmed by the supervisory bank, and approved by the fund’s representative board and General Meeting of Investors. The valuating parties must be independent from the fund management company and the supervisory bank or depository bank;

c) Liquid assets including dividends and interests shall have the values written on the accounting books on valuation date.

3. The net asset value of a securities investment fund shall be periodically published in accordance with Clause 1 Article 124 of this Law.

Article 107. Reports on securities investment funds

The fund management company shall submit periodic and irregular reports on investment portfolio, investments and financial status of the securities investment fund to SSC.

Section 2. PUBLIC FUNDS AND PRIVATE FUNDS

Article 108. Raising capital to establish public funds

1. The capital for establishment of a public fund shall be raised within 90 days from the effective date of the certificate of public offering of fund certificates. A public fund will be established if the following requirements are satisfied:

a) There are at least 100 investors, not including professional investors in fund certificates, except exchange traded fund (ETF);

b) The total value of fund certificates sold is at least VND 50 billion.

2. The entire capital contributed by investors shall be transferred to a separate account under management of the supervisory bank and shall not be used until capital is fully raised. The fund management company shall submit SSC a capital raising report verified by the supervisory bank within 10 days from the completion date of capital raising.

3. In case the requirements specified in Clause 1 of this Article are not fully satisfied, the fund management company shall return the money to the investors in full within 15 days from the completion date of capital raising. The fund management company shall pay the costs and bear other financial obligations of the capital raising.

Article 109. Representative board of public fund

1. The representative board of a public fund represents the interests of the investors and shall be elected by General Meeting of Investors. Rights and obligations of the representative board shall be specified in the fund’s charter.

2. Decisions of the representative board shall be ratified by voting at the meeting, questionnaire survey or another method specified in the fund’s charter. Each member of the representative board of a public fund has 01 vote.

3. The representative board of a public fund shall have 03 – 11 members, two thirds of whom shall be independent members who are not related persons of the fund management company and the supervisory bank.

4. The term of office, requirements, quantity, designation, dismissal, addition of members of the representative board, designation of the chairperson of the board, procedures for meeting and ratifying decisions of the board shall be specified in the fund’s charter.

Article 110. Limits on public funds

1. The fund management company must not use a public fund’s capital and assets to:

a) Invest in fund certificates of the same public fund;

b) Invest in more than 10% of the total value of outstanding securities of an issuer, except Government bonds;

c) Invest more than 20% of the public fund's total asset in outstanding securities of an issuer, except Government bonds;

d) Invest more than 10% of the closed-end fund in real estate, unless it is a real estate investment fund; invest the open-end fund’s capital in real estate;

dd) Invest more than 30% total assets of a public fund in companies in the same group of: parent company-subsidiaries; companies holding more than 35% of each other’s shares/stakes ; subsidiaries of the same parent company;

e) Lend money or provide loan guarantees;

g) Other limits on investments in other securities investment funds and each type of fund shall be specified by the Minister of Finance.

2. A fund management company must not lend money to sponsor a public fund, except for short-term loans prescribed by banking laws for covering necessary costs of the public fund or pay for transactions of fund certificates with investors. The total value of short-term loans given by a public fund must not exceed 5% of its net asset value at any time and the loan term shall not exceed 30 days.

3. A public fund’s investments may only exceed the limits specified in Points b, c, d, dd and g Clause 1 of this Article for the following reasons:

a) Price fluctuation of the assets in the fund’s investment portfolio;

b) Making payments of the fund as prescribed by law;

c) Consolidating and merging issuers;

d) The fund is newly established or established from a division, consolidation or acquisition of funds within the last 06 months from its licensing date;

dd) The fund is undergoing dissolution.

4. The fund management company shall submit reports to SSC and disclose information about the investments beyond the limits specified in Clause 1 of this Article. Within 03 months from the day on which the limits are exceeded, the fund management company shall adjust the investment portfolio within the limits in Clause 1 of this Article.

Article 111. Open-end funds

1. On behalf of the open-end fund, the fund management company shall repurchase open-end fund certificates from investors and issue additional open-end fund certificates within the maximum capital contribution at a frequency and time specified in the fund’s charter.

2. The fund management company is not required to repurchase open-end fund certificates on behalf of the open-end fund in any of the following events:

a) The repurchase is not possible due to force majeure events;

b) It is impossible to determine the net asset value of the open-end fund on the date of valuation for repurchase due to suspension of trading of securities in the fund’s investment portfolio;

c) Other events specified in the fund’s charter.

3. The fund management company shall submit a report to SSC within 24 hours from the occurrence of any of the events mentioned in Clause 2 of this Article and repurchase open-end fund certificates after the end of the event.

Article 112. Closed-end funds

1. An increase in capital of a closed-end fund is subject to approval by SSC and fulfillment of the following conditions:

a) The fund’s charter allows increase in the fund’s capital;

b) The fund’s profit in the year preceding the year in which capital increase is proposed is a positive number;

c) The fund management company has not incurred any administrative penalties for securities-related offences in the last 02 years prior to the proposal date;

d) The plan for issuance of additional closed-end fund certificates is approved by General Meeting of Investors.

2. Closed-end fund certificates may only be issued to existing investors of the fund through issuance of call option for closed-end fund certificates. In case the existing investors do not buy all the call options, the fund certificates may be issued to external investor.

3. Change in operating period is subject to approval by SSC and fulfillment of the following conditions:

a) The change is approved by the General Meeting of Investors;

b) The net asset value of the fund valuated before the proposal date is not smaller than VND 50 billion.

Article 113. Establishment of private funds

1. The private fund shall be established by members by contributing capital under a capital contribution contract.

2. The establishment of a private fund is subject to fulfillment of the following conditions:

a) The contributed capital is not smaller than VND 50 billion;

b) There are 02 – 99 capital contributors who are all professional securities investors;

c) The fund is managed by a fund management company;

d) The private fund’s assets are deposited at 01 depository bank that is independent from the fund management company.

Section 3. SECURITIES INVESTMENT COMPANIES

Article 114. Securities investment companies

1. A securities investment company is a securities investment fund that is organized in the form of a joint-stock company to invest in securities. A securities investment company can be a private investment company or public investment company.

2. Securities investment companies shall be licensed by SSC. After being licensed by SSC, the securities investment company shall apply for enterprise registration in accordance with the Law on Enterprises.

Article 115. Establishment and operation of securities investment companies

1. A securities investment company will be licensed if:

a) It has a capital of at least VND 50 billion;

b) The General Director (Director) and employees working in specialized departments have securities practicing certificates if the company manages its own capital.

2. A public securities investment company shall comply with the following regulations:

a) The investment limits specified in Article 110 of this Law;

b) Regulations on asset valuation and reporting in Article 106 and Article 107 of this Law;

c) Obligations of public companies specified in Points a, b, c Clause 1 and Clause 2 Article 34 of this Law;

a) The securities investment company‘s assets shall be deposited at 01 depository bank.

Section 4. SUPERVISORY BANKS

Article 116. Supervisory banks

1. Supervisory bank is a commercial bank that has the certificate of securities depository registration granted by SSC, provides depository services and supervises the management of public funds and securities investment companies.

2. Supervisory banks shall supervise operations of fund management companies that are relevant to the public funds and securities investment companies that are the banks’ clients. A supervisory bank has the following obligations:

a) Discharge the obligations specified in clause 3 Article 56 of this Law;

b) Deposit assets of public funds and securities investment companies; separately manage assets of public funds, securities investment companies and assets of the bank;

c) Supervise to compliance of this law, charters of securities investment funds and charters of securities investment companies by fund management companies and their General Directors (Directors);

d) Manage revenues, expenses, payments and transfer of assets of public funds and investment companies at the request of the fund management companies or General Director (Director) of the securities investment companies;

dd) Verify reports prepared by fund management companies and securities investment companies that are relevant to the public funds or securities investment companies;

e) Supervise reporting and information disclosure by fund management companies and securities investment companies in accordance with this Law;

g) Report to SSC in case a fund management company, securities investment company, organization or individual commits violations against the law, the fund’s charter or the securities investment company’s charter;

h) In cooperation with fund management companies and securities investment companies, periodically examine accounting books, financial statements and transactions of public funds and investment companies;

i) Fulfill other obligations prescribed by law, the charter of the securities investment fund and securities investment company.

Article 117. Limits on supervisory banks

1. Supervisory banks, their Boards of Directors, executives and employees that supervise and manage assets of public funds and securities investment companies must not be related persons, owners, lenders or borrowers of the fund management companies or securities investment companies, and vice versa.

2. Supervisory banks, their Boards of Directors, executives and employees that supervise and manage assets of public funds and securities investment companies must not be buyers or sellers of assets of public funds and securities investment companies.

Chapter VIII

INFORMATION DISCLOSURE

Article 118. Entities subject to information disclosure

1. Entities subject to information disclosure include:

a) Public companies;

b) Organizations making public offering of corporate bonds;

c) Organizations that have corporate bonds listed;

d) Securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies;

dd) VNX and its subsidiaries, VSDC;

e) Major shareholders, groups of related persons holding at least 5% of voting shares of a public company; investors and groups of related persons holding at least 5% of fund certificates of a closed-end fund;

g) Founding shareholders during transfer restriction of a public company or public investment company;

h) Internal actors of public companies, public funds, public investment companies as prescribed in Clause 45 Article 4 of this Law, and their related persons;

i) Groups of related foreign investors holding at least 5% of voting shares of an issuer or at least 5% of fund certificates of a closed-end fund;

k) Other entities prescribed by the Minister of Finance.

2. The Minister of Finance shall promulgate specific regulations on information disclosure by each entity mentioned in Clause 1 of this Article.

3. Information disclosure by public companies that are credit institutions under special control shall comply with requests of SBV and ensure safety of the credit institution system.

Article 119. Information disclosure rules

1. Information disclosed must be adequate, accurate and timely.

2. The disclosing entities are legally responsible for the information they disclose. In case of changes to disclosed information, the disclosing entity shall promptly and adequately disclose such changes and reasons for those changes.

3. When disclosing information, the disclosing entities mentioned in Article 118 shall simultaneously send an information disclosure report to SSC and the organization at which the securities are listed or registered.

4. An organization’s information shall be disclosed by its legal representative or the authorized spokesperson. An individual’s information shall be disclosed by himself/herself, or by an organization or individual authorized by the individual.

5. Disclosing entities shall retain the information disclosed as prescribed by law.

Article 120. Disclosure of information of public companies

1. A public company shall periodically disclose the following information:

a) Audited annual financial statements, biannual financial statements reviewed by accredited audit organizations; quarterly financial statements;

b) Annual reports;

c) Company administration reports;

d) Resolutions of Annual General Meetings of Shareholders;

dd) Other information prescribed by law.

2. A public company shall disclose information on an ad hoc basis in any of the following events:

a) The company’s account at a bank or foreign branch bank (FBB) is frozen at the request of a competent authority or when the payment service provider suspects a fraud or illegal activities relevant to the account; the account is unfrozen;

b) Business suspension; changes to enterprise registration information; revocation of the certificate of enterprise registration; revision, suspension, revocation of the license for establishment and operation or operating license;

c) Ratification of decisions of an ad hoc General Meeting of Shareholders;

d) The company’s decision to repurchase its shares; the date of exercising the right to buy shares of bondholders, or the date of conversion of convertible bonds into shares, and decisions relevant to the offering and issuance of securities;

dd) Decisions on the enterprise’s reorganization or dissolution; strategies, medium-term development plans and annual business plans of the company; establishment, dissolution of subsidiaries and associate companies; any transaction that turns a company into a subsidiary or associate company or vice versa; establishment and closure of branches or representative offices;

e0 Decisions on change of accounting period, accounting policies; retroactive adjustments to financial statements; qualified opinions of the audit organization in the financial statement; selection or change of an audit company;

g) Change or addition of internal actors;

h) Decisions to buy or sell assets or any transaction whose value exceeds 15% of total asset of the company according to the latest audited annual financial statement or latest reviewed biannual financial statements;

i) Decisions on imposition of penalties for tax offences, effective court judgments or decisions that affect the company’s operation; the court’s notice of receipt of the company’s bankruptcy petition;

k) Any charge against the company or its internal actor;

l) Approval or cancellation of listing at a foreign stock exchange;

m) Other events prescribed by the Minister of Finance.

3. Public companies shall disclose information at the request of SSC, VNX and its subsidiaries in any of the following events:

a) Any event that seriously affects lawful interests of investors;

b) There is information about the company that significantly affects the securities prices and has to be verified.

Article 121. Information disclosure by organizations making public offering of corporate bonds

1. The organization that publicly offers corporate bonds shall periodically disclose the following information:

a) Annual financial statements audited by accredited audit organizations;

b) Annual reports;

c) Resolutions of Annual General Meetings of Shareholders if the issuer is a joint-stock company;

d) Audited reports on use of revenue from the offering;

dd) Other information prescribed by law.

2. The corporate bond issuer shall disclose information on an ad hoc basis in any of the events specified in Clause 2 Article 120 of this Law.

3. The corporate bond issuer shall disclose information on request in accordance with Clause 3 Article 120 of this Law.

Article 122. Information disclosure by organizations that have corporate bonds listed

1. A listing organization that is a public company shall disclose information in accordance with Article 120 of this Law.

2. A listing organization other than those mentioned in Clause 1 of this Article shall disclose the following information:

a) Annual financial statements audited by accredited audit organizations, and annual reports;

b) Information to be disclosed on an ad hoc basis as prescribed in Clause 2 Article 120 of this Law;

c) Information to be disclosed on request as prescribed in Clause 3 Article 120 of this Law.

Article 123. Information disclosure by securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies

1. Securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies shall periodically disclose the following information:

a) Audited annual financial statements, biannual financial statements reviewed by accredited audit organizations; quarterly financial statements;

b) Prudential ratio reports reviewed on June 30 and audited on December 31 by accredited audit organizations;

c) Annual reports;

d) Company administration reports;

dd) Resolutions of Annual General Meetings of Shareholders of joint-stock companies;

e) Other information prescribed by law.

2. Securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies shall disclose information on an ad hoc basis as prescribed in Clause 2 Article 120 of this Law and in any of the following events:

a) SSC imposes administrative penalties upon the company, branch or its certified securities professional for securities-related offences; The General Director (Director), Deputy General Director (Deputy Director) has his/her securities practicing certificate suspended or revoked;

b) SSC issues a warning or a decision to put the company under alert, control or special control, or revokes such decision; SSC issues a decision to suspend or terminate the company’s operation or cancels such decision;

c) SSC approves the establishment or closure of a branch, transaction office, representative office in Vietnam or a foreign country, indirect outward investment.

3. A securities company shall disclose at its headquarters, branches and transaction offices information about transaction methods, order placement, depositing, payment time, transaction fees, services provided and list of the company’s certified securities professionals. Regarding margin trading services, conditions for provision of margin trading services, including margin ratio, loan interest, loan term, list of securities available for margin trading shall be disclosed.

4. Securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies shall disclose information that seriously affect the lawful rights and interests of investors at the request of SSC, VNX and its subsidiaries.

Article 124. Disclosure of information about public funds

1. The fund management company shall periodically disclose the following information about the public fund:

a) Audited annual financial statements, biannual financial statements reviewed by accredited audit organizations; quarterly financial statements;

b) Reports on changes in the net asset value;

c) Investment reports;

d) Summary report on fund management.

2. A fund management company shall disclose information on an ad hoc basis in any of the following events:

a) Ratification of decisions of the General Meetings of Investors;

b) Decisions on change to the charter capital of the closed-end fund;

c) Revocation of the certificate of public offering of public fund certificates;

d) Suspension or cancellation of the offering of public fund certificates; unsuccessful offering of public fund certificates;

dd) Revision to the charter or prospectus;

e) Changes or addition of internal actors of the public fund; charges against internal actors of the public fund;

g) Decision on consolidation, merger, split-up, dissolution, change of operating period, liquidation of assets of the public fund;

h) Other events prescribed by the Minister of Finance.

3. Asset management companies shall disclose information about public funds at the request of SSC, VNX and its subsidiaries in any of the following events:

a) There is information that affects the offering and/or price of public fund certificates;

b) There are unusual changes in the price or volume of trade of public fund certificates.

Article 125. Disclosure of information about public securities investment companies

1. The fund management company shall periodically disclose the following information about the public securities investment company:

a) The information specified in Points a, b, c Clause 1 Article 124 of this Law;

b) Summary report on management of the public securities investment company;

c) Resolutions of Annual General Meetings of Shareholders.

2. The fund management company shall disclose information on an ad hoc basis about the public securities investment company in any of the following events:

a) Suspension or cancellation of the offering of shares of the public securities investment company;

b) Suspension of trading in shares of the public securities investment company;

c) Any of the events specified in Points a, c, e and m Clause 2 Article 120 and Points dd, e and g Clause 2 Article 124 of this Law.

3. Asset management companies shall disclose information about public investment companies at the request of SSC, VNX and its subsidiaries in accordance with Clause 3 Article 120 of this Law.

Article 126. Information disclosure by VNX and its subsidiaries, and VSDC

1. VNX and its subsidiaries shall publish the following information:

a) Information about the organization and operation of VNX and its subsidiaries;

b) Information about organizations having their securities listed or registered; information about members of VNX and its subsidiaries;

c) Information about securities transactions;

d) Other information prescribed by the Minister of Finance.

2. VSDC shall publish the following information:

a) Information about the organization and operation of VSDC;

b) Information relevant to the management and supervision of members of VSDC;

d) Information about securities registration and depositing;

d) Other information prescribed by the Minister of Finance.

Article 127. Information disclosure by major shareholders, groups of related persons holding at least 5% of voting shares of a public company; investors and groups of related persons holding at least 5% of fund certificates of a closed-end fund; groups of related foreign investors holding at least 5% of voting shares of an issuer or at least 5% of fund certificates of a closed-end fund

1. Organizations, individuals, groups of related persons, groups of related foreign investors shall disclose information when they become or are no longer major shareholders of a public company or public securities investment company.

2. Organizations, individuals, groups of related persons, groups of related foreign investors that are major shareholders shall disclose information every time their holdings vary by more than 1% of voting shares of the public company or public securities investment company.

3. Regulations in Clause 1 and Clause 2 of this Article do not apply in the following cases:

a) Changes in the holding of voting shares when the public company repurchases its own shares or issues additional shares;

b) Swap transactions in exchange traded funds (ETF);

c) Other cases as regulated by law.

4. Investors, groups of related persons, groups of related foreign investors shall disclose information when the amount of closed-end fund certificates they are holding reaches or falls below 5%.

5. Investors, groups of related persons, groups of related foreign investors holding at least 5% of fund certificates of a closed-end fund shall disclose information every time their holdings of closed-end fund certificates vary by 1%.

Article 128. Information disclosure by internal actors and their related persons

1. Internal actors of public companies, public investment companies, public funds and their related persons shall disclose information before and after their transactions, and when there are changes to the holding of shares, call options for shares, convertible bonds, call options for convertible bonds, fund certificates, call options for fund certificates or covered warrants of the public companies, public investment companies and public funds.

2. Regulations in Clause 1 of this Article do not apply to exchange traded funds that perform swap transactions or the value of securities traded is below the level at which information disclosure is mandatory, and other cases prescribed by law.

Chapter IX

INSPECTION, ACTIONS AGAINST VIOLATIONS, DISPUTE SETTLEMENT AND COMPENSATION FOR DAMAGE

Article 129. Securities inspectorate

1. The securities inspectorate is specialized in inspection in the field of securities and securities market.

2. The securities inspectorate has a chief inspector, deputy chief inspectors and inspectors.

3. The securities inspectorate works under management of President of SSC and instructions of Inspectorate of the Ministry of Finance, inspection laws and this Law.

4. The securities inspectorate has the following tasks and entitlements:

a) Inspect the compliance to regulations of law on securities and securities market;

b) Impose administrative penalties or request the President of SSC to impose administrative penalties as prescribed by law;

c) Cooperate with relevant agencies and units in preventing, detecting and taking actions against violations against regulations of law on securities and securities market;

d) Implement other duties and powers in accordance with laws.

Article 130. Tasks and entitlements of SSC in inspection and handling of violations against regulations of law on securities and securities market

1. In addition to the tasks and entitlements prescribed in inspection laws, administrative penalty laws and relevant laws, SSC also has the following tasks and entitlements:

a) Request the organizations and individuals that have information, documents and data relevant to the inspected issues to provide them, or request them to provide explanation or meet in-person to clarify the inspected issues;

b) Request credit institutions and FBBs to provide information relevant to transactions on the clients’ accounts in case of suspected commission of the securities-related offences specified in Article 12 of this Law. Procedures for requesting and providing information shall comply with banking laws;

c) Request telecommunication companies to provide names, addresses, incoming and outgoing phone numbers to verify and take actions against the securities-related offences specified in Article 12 of this Law. Procedures for requesting and providing information shall comply with telecommunications laws.

2. The request for information, document, data, explanation or in-person meeting mentioned in Clause 1 of this Article are subject to approval by the President of SSC and has to be made in writing, specifying the purposes, basis and specifics of the request.

3. The information, documents and data provided by credit institutions, FBBs, telecommunication companies as prescribed in Clause 1 of this Article shall be kept confidential as prescribed by law and only be used for inspection purposes.

4. In case of transboundary violations relevant to Vietnam’s securities market, SSC shall cooperate with securities market authorities of the foreign country in investigation and information exchange.

Article 131. Responsibility for cooperation of authorities, organizations and individuals during securities-related inspections

1. Authorities, organizations and individuals shall provide information, document, data, explanation at the request of SSC as prescribed in Point a Clause 1 Article 130 of this Law.

2. Credit institutions, FBBs and telecommunication companies shall provide information at the request of SSC as prescribed in Point b and Point c Clause 1 Article 130 of this Law.

3. Business registration authorities shall operate and send information about registration of public companies, securities companies, fund management companies, branches of foreign securities companies and foreign fund management companies in Vietnam, relevant enterprises, and other information at the request of SSC.

4. Tax authorities shall cooperate in providing information of public companies regarding their tax registration, opening and closing of taxpayer ID number, suspension, shutdown, whether they are operating at registered addresses, actions against tax offences, tax enforcement and other information requested by SSC.

5. Authorities, organizations and individuals, within the scope of their duties and entitlements, shall provide adequate and timely information, documents and data they are holding for SSC at its request. Authorities, organizations and individuals may refuse to provide information, documents and data on the grounds that the request is not conformable with Article 130 of this Law, or the requested information, document or data is not relevant to the inspected entities. In case provision of information, documents or data is not possible, the requested party shall send a written notice to SSC and provide explanation.

Article 132. Actions against violations

1. Any organization or individual that violate regulations of this Law and other laws relevant to securities and securities market-related activities shall, depending on the nature and severity of the violations, face administrative penalties or face a criminal prosecution, and pay compensation for any damage caused.

2. Administrative penalties shall be imposed in accordance with this Law and administrative penalty laws.

3. The maximum fine for an offence mentioned in Clause 2 and Clause 3 Article 12 of this Law is 10 times the illegal revenue from commission of the violation. In case there is no illegal revenue or the fine based on the illegal revenue is smaller than the maximum fine mentioned in Clause 4 of this Article, the maximum fine mentioned in Clause 4 of this Article shall apply. The Minister of Finance shall provide the method for calculation of illegal revenue from commission of securities-related offences.

4. The maximum fine for other securities offences is VND 03 billion.

5. The maximum fines mentioned in Clause 3 and Clause 4 of this Article apply to organizations; the maximum fine imposed upon an individual who commits the same offence shall be a half (1/2) of the maximum fine imposed upon an organization.

6. The President of SSC, Chief Inspectors and chiefs of specialized securities inspectorates are entitled to impose administrative penalties for securities-related offences.

7. The Government shall specify the jurisdiction, fine and penalty for each securities-related offence.

Article 133. Dispute settlement and compensation for damage

1. Any commission of infringement upon legitimate rights and interests of organizations and individuals or securities and securities market-related disputes that occur in Vietnam shall be settled through negotiation and mediation, or by Vietnam’s arbitration or court proceeding as prescribed by law.

2. The entity that infringes upon legitimate rights and interests of another organization or individual in securities and securities market-related activities and causes damage shall pay compensation and fulfill other civil liabilities under agreement, in accordance with the Civil Code and relevant laws.

3. The jurisdiction and procedures for protection of legitimate rights and interests of organizations and individuals or settlement of securities and securities market-related disputes shall comply with regulations of law.

Chapter X

IMPLEMENTATION CLAUSES [44]

Article 134. Effect

1. This Law comes into force from January 01, 2021.

2. The Law on Securities No. 70/2006/QH11 and the Law No. 62/2010/QH12 providing amendments to the Law on Securities cease to have effect from the effective date of this Law.

Article 135. Transition

1. Within 02 years from the effective date of this Law, securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies that are licensed before the effective date of this Law shall fulfill the following licensing requirements:

a) For securities companies: the licensing requirements in Clause 1, Point c and Point d Clause 2, Clause 4, Clause 5 Article 74 of this Law;

b) For fund management companies: the licensing requirements in Clause 1, Point b and Point c Clause 2, Clause 4, Clause 5 Article 75 of this Law;

c) For branches in Vietnam of foreign fund management companies: the licensing requirements specified in Points b and c Clause 1 Article 76 of this Law;

d) For branches in Vietnam of foreign fund management companies: the licensing requirements specified in Points c, d and dd Clause 2 Article 76 of this Law.

2. Within 02 years from the effective date of this Law, securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies that are licensed before the effective date of this Law and fulfill the licensing requirements specified in Clause 1 of this Article may apply for enterprise registration or business registration in accordance with provisions of Article 71 of this Law, and are not required to apply for change of the securities trading license, unless it is demanded.

After 02 years from the effective date of this Law, securities companies, fund management companies, branches in Vietnam of foreign securities companies and foreign fund management companies that are licensed before the effective date of this Law but fail to fulfill the licensing requirements specified in Clause 1 of this Article shall have their operation suspended and their licenses revoked by SSC in accordance with provisions of this Law.

3. Except for the cases in Clause 1 and Clause 2 of this Article, other organizations and individuals that have been licensed or approved by SSC, Stock Exchange or Vietnam Securities Depository before the effective date of this Law are not required to repeat procedures for licensing or approval under this Law.

Regulations of this Law shall apply to the organizations and individuals that have submitted their applications to SSC, Stock Exchange and Vietnam Securities Depository before the effective date of this Law but have not had the applications granted.

4. [45] (abrogated)

5.[46] (abrogated)

6. Within 02 years from the effective date of this Law, VNX and VSDC shall operate in accordance with regulations of this Law.

Stock Exchanges and securities depositories established before the effective date of this Law may keep operating under regulations of the Law No. 70/2006/QH11, as amended by the Law No. 62/2010/QH12, until VNX and VSDC start to operate in accordance with regulations of this Law.

7. The Government shall elaborate this Article.

 

CERTIFIED BY CHAIRMAN OF THE OFFICE OF THE NATIONAL ASSEMBLY Le Quang Tung