Circular No. 43/2010/TT-BTC dated March 25, 2010 of the Ministry of Finance amending and supplementing the Regulation on securities registration, deposit, clearing and settlement promulgated together with the Minister of Finance's Decision No. 87/2007/QD-BTC dated October 22,2007

THE MINISTRY OF FINANCE

Circular No. 43/2010/TT-BTC of March 25, 2010, amending and supplementing the Regulation on securities registration, deposit, clearing and settlement promulgated together with the Minister of Finance’s Decision No. 87/2007/QD-BTC of October 22, 2007

Pursuant to Law No. 70/2006/QH11 on Securities, which was passed by the National Assembly on June 29, 2006;

Pursuant to the Government’s Decree No. 14/2007/ND-CP of January 19, 2007, detailing a number of articles of the Law on Securities;

Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

The Ministry of Finance amends and supplements a number of articles of the Regulation on securities registration, deposit, clearing and settlement promulgated together with the Minister of Finance’s Decision No. 87/2007/QD-BTC of October 22, 2007 (below referred to as Decision No. 87/2007/QD-BTC), as follows:

Article 1. To rename the Securities Depository Center (abbreviated to SDC) the Vietnam Securities Depositary (VSD).

Article 2. To amend Point d of, and add Point e to, Clause 1, Article 7, Chapter III of Decision No. 87/2007/QD-BTC as follows:

“d/ Its professional processes of securities registration, deposit, clearing and settlement  satisfy requirements of the VSD.

e/ Its system is capable of connecting to the VSD’s portal and its software for management of securities registration, deposit, clearing and settlement satisfies requirements of the VSD.”

Article 3. To amend and supplement Clause 8, Article 12, Chapter III of Decision No. 87/2007/QD-BTC as follows:

“8. A member has its securities brokerage operation or its certificate of registration of securities depository operation revoked by the State Securities Commission under Clause 2, Article 51 of the Law on Securities (applicable to depository members).”

Article 4. To amend and supplement Clause 1, Article 18, Chapter IV of Decision No. 87/2007/QD-BTC as follows:

“1. Transfer of ownership of securities listed or registered for trading must be made on the following principles:

a/ Securities owners who wish to transfer securities ownership shall deposit their securities in the VSD through depository members in order to sell securities through the Stock Exchanges or transfer the ownership under Clause b of this Article (except cases of ownership transfer through inheritance or redemption by issuing organizations of stocks of their cadres and employees upon termination of their labor contracts).

b/ The VSD may transfer the ownership of securities outside the securities trading system through transactions which are not of purchase and sale nature or cannot be conducted through the trading system of the Stock Exchanges in the following cases:

- Donation or inheritance of securities under the civil law.

- Odd-lot securities transactions under the law on securities and securities market.

- Redemption of preferred stocks by issuing organizations or trade union organizations therein from their cadres and employees upon termination of their labor contracts for use as treasury stocks or bonus stocks for other cadres and employees.

- Use of treasury stocks by issuing organizations as bonuses or distribution of bonus stocks by trade union organizations in issuing organizations to their cadres and employees.

- Transactions conducted by founding share-holders during the period of restricted transfer.

- Change of strategic shareholders by issuing organizations during the period of restricted transfer.

- Transactions in securities already registered with the VSD and approved in principle by the Stock Exchanges but not yet approved for official listing.

- Transfer of ownership of securities as entrusted by investors to fund management companies in case the latter undertake to manage investment portfolios entrusted in assets.

- Transfer of ownership of entrusted securities by fund management companies to entrusting investors or other fund management companies in case of termination of investment portfolio management contracts or their dissolution or bankruptcy in which entrusted assets must be returned to investors or asset portfolios must be transferred to other fund management companies for management.

- Cases of ownership transfer under court rulings.

- Division, splitting up, merger, consolidation, contribution of stocks as capital to establish enterprises or redefinition of the corporate finance management mechanism under the civil law, the Enterprise Law and the Securities Law.

- Other cases of ownership transfer not of sale and purchase nature which must be approved by the State Securities Commission.”

Article 5. To amend and supplement Clause 1, Article 21, Chapter V of Decision No. 87/2007/QD-BTC as follows:

“1. The depositing of clients’ securities at the VSD must be made on the principle that clients shall deposit their securities at depository members and depository members shall redeposit their clients’ securities at the VSD.”

Article 6. To amend and supplement Clauses 3 and 5, Article 24, Chapter V of Decision No. 87/2007/QD-BTC as follows:

“3. Total balance on clients’ securities depository accounts opened at depository members must be always consistent with the balance of depository members’ depository accounts opened at the VSD. The detailed balance on each client’s securities depository account at a depository member must be consistent with such client’s ownership data at the VSD.

5. When detecting any error in information on a member’s or a member’s client’s securities depository account, the VSD shall promptly notify it to the member who shall make appropriate adjustment.”

Article 7. To add Point f to Clause 1, Article 26, Chapter V of Decision No. 87/2007/QD-BTC as follows:

“f. The depository member shall update on a daily basis information on the opening or closure of depository accounts of investors at it to the VSD and compare information on the balance of each client’s depository account against such client’s securities ownership data at the VSD on the basis of clients’ securities ownership data supplied by the VSD to depository members. The order and procedures for updating account information and balance comparison comply with regulations of the VSD.”

Article 8. To amend Clause 3, Article 27, Chapter V of Decision No. 87/2007/QD-BTC as follows:

“3. The State Securities Commission shall specifically guide the time limit for post-trading securities sale after obtaining approval of the Ministry of Finance.”

Article 9. To add Clauses 3 and 4 to Article 28, Chapter V of Decision No. 87/2007/QD-BTC as follows:

“3. The VSD shall satisfy requests for securities depositing concurrently with securities registration for investors upon receiving these requests from issuing organizations that represent their share-holders. The VSD shall prescribe dossiers and procedures for securities depositing in this case.

4. In case issuing organizations manage securities by making book entries on accounts and do not issue certificates, the securities depositing by investors must comply with the VSD’s guidance.”

Article 10. To annul Points a, f, g and h and to amend and supplement Points i and j, Clause 1, Article 30 of Chapter V of Decision No. 87/2007/QD-BTC as follows:

“i/ Invalidation of the depository member status, revocation of depository operation certificates or cancellation of the securities brokerage operation of depository members at which clients’ accounts are opened by the VSD;

j/ Cases of ownership transfer specified at Point b, Clause 1, Article 4 of this Circular.”

Article 11. To annul Clause 4, and amend and supplement Clause 3, Article 32, Chapter VI of Decision No. 87/2007/QD-BTC as follows:

“3. For transactions of selling and purchasing securities listed or registered for trading, the VSD shall make settlement based on trading results supplied by the Stock Exchanges.”

Article 12. To amend and supplement Clauses 1 and 2, Article 40, Chapter VI of Decision No. 87/2007/QD-BTC as follows:

“1. The VSD may cancel the settlement of transactions in the following cases:

- A member becomes unable to settle transactions and cannot remedy its inability after having applied as measures as prescribed.

- A member or a member’s client sells short securities without guidance of the Ministry of Finance.

- Information on a concerned client’s transaction account is not updated under the VSD’s regulations at the time of settlement of a securities transaction.

2. Depository members transactions of which settlement is cancelled shall take full responsibility for losses caused to their clients and related members due to cancelled settlement. Compensation for a loss shall be agreed upon by the involved parties but must not exceed 10% of the value of the transaction of which settlement is cancelled.

Article 13. To amend and supplement Clause 2, Article 41, Chapter VI of Decision No. 87/2007/QD-BTC as follows:

“2. For transactions of unlisted public companies, when finding out that the account of a member has insufficient money or the account of a member’s client has insufficient securities for settlement or information on the transaction account of a concerned client is not updated under the VSD’s regulations at the time of settlement of these securities transactions, the VSD shall handle these transactions under its regulation on professional guidance.”

Article 14. To amend Clause 2 and supplement Clauses 7 and 8, Article 42, Chapter VII of Decision No. 87/2007/QD-BTC as follows:

“2. Its paid-in charter capital is over VND 5 trillion.

7. At least 10 members of the VSD commit to registering the opening of accounts for securities transaction settlement after it is approved to act as a payment bank and it may not reject requests of VSD members for use of its services.

8. Its system is capable of storing data and information on transaction settlement for at least one year and supplying those data and information immediately to the State Securities Commission or the VSD within one day after receiving requests.”

Article 15. Effect

1. This Circular takes effect 45 days from the date of its signing. In case VSD depository members still fail to satisfy the conditions specified in Article 2 of this Circular, they shall completely upgrade their systems and modify their professional processes within 3 months after this Circular takes effect.

2. Any problems arising in the course of implementation should be promptly reported to the Ministry of Finance for consideration and settlement.-

For the Minister of Finance
Deputy Minister
TRAN XUAN HA