The Government has issued Decree No. 86/2016/NĐ-CP (July 1, 2016) governing requirements applicable to securities investment and business activities in Việt Nam. The decree applies to securities companies, fund management companies, securities investment companies, foreign securities business organisations, and relevant organisations and individuals in Việt Nam’s stock market. Below are highlights of requirements for securities investment and business activities.

Foreign organisations holding 51% or more charter capital of securities business organisations in Việt Nam must meet the following requirements:

·         The purchase of shares or capital portions to hold 51 per cent or more of charter capital of securities business organisation must be adopted by the general meeting of shareholders (GMS), the board of members (BOM) or owner(s) of the foreign organisation;

·         The purchase of shares or capital portions to hold 51per cent or more of charter capital of securities business organisation by the foreign organisation must be adopted by GMS, BOM or owners of the securities business organisation, unless the foreign organisation makes a public offer under the securities laws;

·         The foreign organisation only can use its own capital or other legal capital sources to purchase shares or capital portions; and the foreign organisation is not in the cases of ownership limits;

·         The foreign organisation’s annual financial statement up to the latest submission is made and audited under the foreign laws and in conformity with international accounting and auditing standards;

·         Additionally, the foreign organisation also must meet general requirements of organisations contributing the capital into the securities business organisations.

Establishment and operation of securities companies

Requirements to obtain the license for establishment and operation of securities companies:

·         To have an office, facilities and equipment, such as a computer system, software of investment analysis, risk analysis and management, and document retention and equipment for office safety and security as guided by the Ministry of Finance (MOF);

·         To have minimum capital contribution equivalent to legal capital required by the law, VNĐ10 billion up to VNĐ165 billion, applicable to each business scope at the time of company establishment;

·         To have at least three securities practitioners for each business scope respectively. General Director (GD) must have at least three years’ experience in the field of finance, banking, or securities and at least three years’ experience in business administration; and practice certificate of financial analysis or fund management;

·         To have structure of shareholders and capital contributors in compliance with general requirements by laws and comply with regulations applicable to foreign investors. At the time of company establishment, capital contributors have no accumulated loss in the latest audited annual financial statement and the latest examined biannual financial statement, if any. In case the securities company is established in the form of one member limited liability company, the owner must be a commercial bank, insurer or foreign organisation satisfying the above requirements of investing in the Vietnamese stock market.

Establishment and operation of fund management companies

Requirements to obtain the licence for establishment and operation of fund management companies:

·         To have an office, facilities and equipment such as a computer system, software of investment analysis, risk analysis and management, and document retention and equipment for office safety and security as guided by MOF;

·         To have minimum capital contribution equivalent to legal capital required by the laws, VNĐ25 billion at the time of company’s establishment;

·         To have at least five staff obtaining practice certificates of fund management. GD and Deputy General Director (DGD) in charge of specialised services must have at least five years of experience in the field of finance, banking or insurance; and practice certificates of fund management or accepted international degrees; and must not work full-time in other business entities at the same time.

·         To have a structure of shareholders and capital contributors in compliance with general requirements by laws and comply with regulations on foreign investors. In case the fund management company is established in the form of one member limited liability company, the owner must be commercial bank, insurer or foreign organisation satisfying the above requirements of investing in the Vietnamese stock market.

The decree took effect on July 1, 2016. Except converting into one member limited liability company, the securities business organisation established before the effective date of this decree and re-organise the company is exempt from requirements of structure of shareholders, capital contributors under this decree.  - MAI COUNSEL -