Circular No. 99/2020/TT-BTC Guidance on operations of securities investment fund management companies

CIRCULAR

Providing Guidance on operations of securities investment fund management companies

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Pursuant to the Law on Securities dated June 29, 2006;

Pursuant to the Law on Enterprises dated June 17, 2020;

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

At the proposal of the Chairperson of the State Securities Commission;

The Ministry of Finance hereby promulgates the Circular on providing Guidance on operations of securities investment fund management companies.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. This Circular stipulates operations of securities investment fund management companies (hereinafter referred to as fund management companies) in Vietnam.

2. This Circular applies to:

a) Fund management companies;

b) Organizations and individuals involved in the operation of fund management companies.

Article 2. Interpretation of terms

In this Circular, the following terms are interpreted as follows:

1. Executive Board consists of Chief Executive Officers and Chief Operations Officers.

2. Valid copy means a copy issued from the master register or copy certified as true copy by a competent agency or organization, or copy proved to match its original after comparison.

3. Fund management company means the enterprise granted an establishment and securities business license by the State Securities Commission, carrying out securities investment fund management operations, securities investment portfolio management and securities investment consultancy.

4. Entrusting customers mean the securities investment funds, securities investment companies, individuals and organizations entrusting their capital, assets to the fund management company for management.

5. Personal record may be a curriculum vitae made according to the form provided in Appendix II attached to this Circular, a valid copy of a foreigner's passport or another lawful personal identification paper.

6. The beneficiaries mean the organizations, individuals not taking the name of the property owner, but having full ownership of such property in accordance with the law.

7. Entrusted assets mean the list of assets including cash, securities and other assets of the entrusting customers.

Chapter II

PROVISIONS ON COMPANY GOVERNANCE, ORGANIZATIONAL STRUCTURE OF A FUND MANAGEMENT COMPANY

Article 3. Charter and principles of governance of a fund management company

1. A fund management company charter is set up in accordance with the company's operation model, with at least content according to the charter template provided in Appendix XII attached to this Circular. A fund management company that is a public company shall refer the charter template applicable to public companies to develop its charter.

2. A fund management company must comply with the Law on Securities, the Law on Enterprises, this Circular and other relevant laws on company governance.

Article 4. Board of Directors, Members’ Council and Supervisory Board

1. Organizational structure, powers, obligations and operations of the Board of Directors, Members’ Council, Supervisory Board, Audit Committee, internal audit department and Executive Board; conditions, election, dismissal, removal, powers and obligations of members and Chairperson of the Board of Directors and Members’ Council, Company president, Head of the Supervisory Board, supervisors, Chairperson and members of the Audit Committee shall be regulated by the company charter in accordance with the law on company governance applicable to public companies, the law on enterprises and not in contravention of provisions prescribed in this Circular.

2. Members of the Members’ Council or Board of Directors of the fund management company may not be members of the Board of Directors, Members’ Council, Executive Board or fund management practitioners of another fund management company or members of the Board of Directors or Members’ Council, Executive Board, staffs of the depository banks, supervisory banks providing services to the securities investment fund or securities investment company that the company is managing.

Article 5. Internal audit

1. Fund management companies that are public companies or the companies managing public funds, public securities investment companies must establish an internal audit department. An internal audit department is under the Board of Directors or Members’ Council or owner of the company.

2. An internal audit department shall:

a) Examine and evaluate the organizational structure, company governance activities, operating activities, coordination of each department, each working position in order to prevent conflicts of interest, protect rights of customers;

b) Examine and evaluate the adequacy, effectiveness and efficiency, the level of compliance with the provisions of law, the provisions of the charter of the company; the internal control system; internal policies, procedures, including the rules of professional ethics, professional process, risk management procedures and system, information technology system, accounting, process and system of reporting, disclosure of information, the process of receiving and handling denunciations and complaints from customers, and other internal regulations;

c) Check the validity, legality, honesty, the level of prudence, compliance with professional processes and risk management;

d) Perform the audit activities according to the annual internal audit plan. The annual internal audit plan must be approved by the Board of Directors or Members’ Council or the owner of the company before implementing. The annual internal audit plan must satisfy the following principles:

- Internal audit activity must be carried out annually and extraordinarily;

- Risk levels of activities, processes and departments must be evaluated according to the internal regulations of the company. High-risk activities, processes, and departments are concentrated resources, prioritized for auditing first and audited at least once a year;

- The annual internal audit plan must be adjusted when there is any change about the risk level of activities, process and departments;

dd) Audit the entire operations of all departments of the company at least twice a year;

e) Propose the complete solutions to enhance the effectiveness and performance of the company; monitor the implementation of recommendations after the audit has been approved by the Board of Directors or owner of the company.

3. Internal audit activities must satisfy the following principles:

a) Independence: The internal audit department and the operation of this department is independent with other departments and activities of the fund management company, not subject to the management of the Executive Board of the fund management company.  Staff of the internal audit department is not allowed to working in other departments of the fund management company at the same time;

b) Objectiveness: Internal auditors must be objective, fair, not have prejudice, not impact, not be interfered with when performing their duties;

c) Honesty: Internal audit must be done in an honest, careful and responsible manner;

d) Coordination: The internal audit department has full right to unrestricted access to information and documents of the company.  Members of the Executive Board and all staff of the fund management company shall be responsible for coordinating, providing fully, timely, honestly and exactly relevant information and documents, as required by the internal audit department.  Departments of the company shall inform the internal audit department upon discovering the weaknesses and shortcomings, mistakes, risk or large losses on assets of the company or customers;

dd) Confidentiality: The internal audit department and staff of the internal audit department shall be responsible for keeping confidential the information obtained during the audit, except for the case of providing information at the request of state management agencies.

4. When being appointed, staff of the internal audit department must satisfy the following requirements:

a) Not being examined for penal liability or serving imprisonment sentences or prohibited from practicing securities operations as prescribed by law;

b) Not being sanctioned for administrative violations in the field of securities and securities market within the latest 06 months up to the time of appointment;

c) Possessing the Certificate of asset management practice in the member states of the Organization for Economic Cooperation and Development (OECD); or have passed an international certificate in chartered financial analyst (CFA) level II or higher or CIIA (Certified International Investment Analyst - Final Level); or have a securities practice certificate; or certificate of basic issues of securities and securities markets and legal certificate of securities and securities markets.

5. Regarding the personnel structure of the internal audit department, it is required to have at least one staff who has an auditor's certificate or an accountant certificate issued by Vietnam; or international certificates of accounting and auditing such as ACCA (Association of Chartered Certified Accountants), CPA (Certified Public Accountants), CA (Chartered Accountants) , ACA (Associate Chartered Accountants); or has a working period of three (03) years or more in the legal department, department of inspection, management and supervision of the activities of the financial organizations in the state management agencies in the field of finance, banking, insurance, securities and state audit.

6. Within 07 days from the date of appointment, dismissal or change of the internal audit department’s staff, the fund management company shall notify the State Securities Commission and attach the following documents:

a) Resolutions or decisions of the Board of Directors or the Members’ Council or decisions of the owner on the appointment, dismissal or change of the internal audit department’s staff;

b) Personal record and legal record granted no more than 06 months up to the date of submitting the dossier (for new staff), valid copies of documents guarantee that the staff and personnel structure of the internal audit department meet the provisions provided Clauses 4 and 5 of this Article.

7. The internal audit department must promptly send the report on the annual audit result to the Board of Directors or Members’ Council or the owner of the company and the State Securities Commission.  An internal audit report must clearly state opinions, conclusions of the internal audit department, grounds for the audit opinion; the explanation of the audit object; remedial measures, handling of violations and completion.

Article 6. Internal control

1. A fund management company must set up an internal control system in accordance with the company's organizational structure and management, establish the internal control department under the Executive Board and promulgate regulations on internal control including mechanisms, policies, processes and internal regulations.

2. The internal control department shall be responsible for:

a) Monitoring to ensure that the operation of each position, each department and the entire operation of the company is in compliance with law regulations, policies, professional processes, and internal regulations of the company;

b) Monitoring the implementation of responsibilities of the entire staff in the company regarding assigned, decentralized or authorized activities. The principles for decentralization and authorization in the company must ensure that:

- The mechanism of decentralization and authorization must be clear, specific and transparent to ensure separation of duties and powers from individuals and departments of the company. The professional processes must ensure separation between the functions and duties of each position, department in the company from the analysis, appraisal, acceptance or approval, or decision on implementation, implementation organization, reporting and monitoring after the investment;

- An individual is not allowed to be in charge of many positions that he/she can perform activities with conflicted or overlapped purposes, interests. Regarding the appointment of staff, it is required to ensure that an individual cannot independently make decisions by himself/herself and perform two or more activities in the entire professional process without consulting other departments or individuals;

c) Participating in formulating and monitoring of the organization and implementation of the policies, regulations, procedures and internal regulations of the company in order to prevent conflicts of interest; monitoring the implementation of the rules of professional ethics ; synthesizing, storing, making statistics and monitoring business activities of the company and the company’s staff's personal transactions;

c) Participating in developing of process, implementation organization of the risk management for the company and each entrusting customer; timely identifying, evaluating the risk level, setting up the investment limit and taking measures to prevent and manage potential risks in the investment activities of the company and entrusting customers;

dd) Monitoring to ensure the net asset value of the entrusted portfolio, securities investment funds and securities investment companies to be valued in accordance with the provisions of law and internal regulations; assets and resources of the company to be managed safely and effectively; assets entrusted by customers are managed separately and independently; financial statements, operational reports, reports on financial safety norms and other reports of the company to be made honestly, correctly, timely and fully updated in accordance with the law;

e) Monitoring and ensuring that the financial information system and management system is truthful, complete, timely and accurate; having backup information system to promptly handle the incidents such as natural disasters, fires, explosions to maintain continuous operation of the company;

g) Proposing the plan for solving and handling disputes, conflict of interest, complaints from customers and partners; back-up plans to overcome the consequences when incidents occur;

h) Performing the internal audit function in the case a fund management company is not required to establish an internal audit department.

3. Staff of the internal control department must satisfy the following requirements:

a) Meeting the provisions in Clause 4, Article 5 of this Circular;

b) Having working experience for at least 02 years in the professional departments of fund management companies or securities companies or credit institutions or insurance businesses or audit firms or in the state management agencies in the field of finance, banking, insurance, securities or state audit;

c) They are not the relevant persons of members of the Executive Board and not allowed to concurrently work in the professional departments directly related to the licensed securities business operation.

4. Regarding the personnel structure, the internal control department must have at least:

a) One compliance controller possessing a university or higher degree in law and having working experience of at least 01 year in the field of law;

b) One employee possessing certificates in accounting and audit as prescribed in Clause 5, Article 5 of this Circular; or possessing a university or higher degree in accounting or audit and having working experience of at least 01 year in the field of accounting or audit;

c) Head of the internal control department must satisfy requirements specified at Point a or Point b of this Clause.

5. Within 07 days from the date of appointment, dismissal or change of the internal control department’s staff, the fund management company shall notify the State Securities Commission and attach the following documents:

a) Decisions of the Chief Executive Officer of the company on the appointment, dismissal or change of the internal control staff;

b) The list attached to the personal record and legal record granted no more than 06 months up to the date of submitting the dossier (for new staff); valid copies of other documents guarantee that the staff and personnel structure of the internal control department meet the provisions provided Clauses 3 and 4 of this Article.

6. The fund management company must send the annual internal control report to the State Securities Commission. Such report must clearly indicate potential risks to the company’s operation, management of entrusted assets and inspection and supervision in each unit, department and licensed professional operation.

Article 7. Executive Board and staff of a fund management company

1. The fund management company must appoint the Chief Executive Officer and Chief Operations Officers in charge of securities business operation (if any) who satisfy provisions of Clause 5, Article 75 of the Law on Securities.

2. In addition to the Chief Executive Officer and Chief Operations Officers, a fund management company must have at least 05 employees possessing fund management practice certificates during its operation.

3. A fund management company must appoint a person possessing a securities practice certificate to work at the following positions:

a) Fund executive officers; heads and deputy heads of professional departments in analysis and investment, investment appraisal, deciding on investment; staff directly carrying out investment analysis, appraisal and making decision on investment must have a fund management practice certificate;

b) Heads and deputy heads of securities investment consultancy departments, staff directly providing advices on securities investment; heads and deputy heads of investment departments, staff directly investing for entrusting customers must have an appropriate securities practice certificate.

4. A fund management company must dismiss the Chief Executive Officer and Chief Operations Officers in charge of securities business operations, fund executive officers within 07 working days if they violate provisions specified in Article 12 and Clause 2, Article 98 of the Law on Securities or they fall in the cases of being examined for penal liability or serving an imprisonment sentence or being prohibited from doing securities business in accordance with law provisions.

5. Within 05 working days from the date on which the decision on appointment, dismissal or change of the Chief Executive Officer or Chief Operations Officers in charge of securities business operations, change of the fund executive officers is approved, the fund management company must notify the State Securities Commission and attach the following documents:

a) Decisions on appointment or dismissal of the Chief Executive Officer. Chief Operations Officers in charge of securities business operations and the fund executive officers;

b) The List of Chief Executive Officer, Chief Operations Officers in charge of securities business operations and the fund executive officers, made according to the form provided in Appendix I attached to this Circular; valid copies of documents guaranteeing that the new appointed Chief Executive Officer, Chief Operations Officers in charge of securities business operations and the fund executive officers satisfy requirements of the law on securities.

Article 8. Representative offices

1. Name of the representative office of a fund management company must contain the name of the fund management company and the phrase “representative office”, and must comply with regulations on the name of representative offices as prescribed by the law on enterprises.

2. A domestic representative office of a fund management company shall be revoked the decision on establishment in the following cases:

a) The fund management company is dissolved, become bankrupt or revoked its establishment and securities business license;

b) There is false information in the dossier of request for approval of the establishment of representative office;

c) Operating with improper purpose, not in accordance with the content of the decision on establishment of representative office.

3. Within 15 days from the date of receipt of written notice from the State Securities Commission on the revocation of the decision on establishment of representative office, the fund management company shall close the representative office and report to the State Securities Commission in accordance with the law on securities.

Article 9. Branches

1. Name of the domestic branch of a fund management company must contain the name of the fund management company and the phrase “branch”, and must comply with regulations on the name of branches as prescribed by the law on enterprises.

2. A domestic branch of a fund management company shall be revoked the decision on establishment in the following cases:

a) The fund management company is dissolved, become bankrupt or revoked its establishment and securities business license;

b) There is false information in the dossier of request for approval of the establishment of branch;

c) Operating with improper purpose, not in accordance with the content of the decision on establishment of branch;

d) Failing to meet conditions of head offices and equipment serving the licensed securities business operation after the remedial period of 03 months at most, from the date of failing to meet such conditions;

dd) Failing to operate within 03 months from the date on which it is granted a decision on establishment of branch.

3. Within 15 days from the date of receipt of written notice from the State Securities Commission on the revocation of the decision on establishment of branch, the fund management company shall close the branch and report to the State Securities Commission in accordance with the law on securities.

Chapter III

OPERATION OF A FUND MANAGEMENT COMPANY

Section 1

GENERAL PROVISIONS

Article 10. Obligations of a fund management company

1. A fund management company shall be the authorized representative of the entrusting customer, on behalf of the entrusting customer to perform the ownership toward the assets of entrusting customer in an honest and careful manner.

2. The fund management company must issue a securities investment fund management process, securities investment portfolio management process, securities investment consultancy process and other professional operation procedures in compliance with the securities business operation of the company, procedures for internal control;  evaluation handbook; process regarding conditions, order and procedures for convoking, carrying out meetings and approving decisions at the Investors’ General Meeting applicable to funds, Shareholders’ General Meetings of securities investment companies; specific rules of professional ethics for each position. In case where the customer entrusts to invest derivatives in order to prevent risks, the securities investment fund management process must specify the rules and methods to use derivatives in order to prevent risks for the fund or securities investment company; the securities investment portfolio management process must specify the rules and methods to use derivatives in order to prevent risks for underlying securities held by the entrusting customer. Processes shall be implemented and applied consistently for the company operation.

3. The fund management company must comply with the rules of professional ethics, voluntariness, fairness, honesty and for entrusting customers’ sack of the best interests. Regulations on the compliance with the professional ethics are mandatory provisions of the labor contract between the company and its employees.

4. The fund management company must set up a risk management system and issue a strategy, policy and risk management process in compliance with the organizational model and operation scale of the company, types of securities investment funds, securities investment companies and entrusting customers managed by the company. The risk management system, strategy, policy and risk management process shall be developed on the basis of international practices appropriate to the Vietnam’s market conditions and in accordance with the State Securities Commission's instructions.

5. When managing entrusted assets, the fund management company must ensure:

a) To invest entrusted assets in accordance with the provisions of law, the provisions in the charter of the securities investment fund, charter of the securities investment company and investment entrustment contracts;

b) To sign in the depository contract or supervision contract with the depository bank, for member funds, private securities investment companies, entrusted portfolio; sign in the supervision contract with the supervisory bank, for public funds and public securities investment companies;

c) To deposit all assets arising in the territory of Vietnam, fully, promptly and accurately store information and data on the ownership and deposit the originals of legal documents verifying the ownership of assets at the depository bank and supervisory bank.

- In case of investing deposits and certificates of deposit for entrusting customers: The fund management company may only deposit at credit institutions in the list approved by the entrusting customers; and must provide sufficient information on deposit contracts and deposit accounts for depository banks and supervisory banks for crosscheck of the balance in the deposit accounts, value of deposit contracts with the credit institution receiving the deposit, store the originals of deposit contracts and provide such contracts at requests of the depository banks and supervisory banks;

- In case of investing into the contributed capital at a limited liability company, stocks unlisted or not yet registered for trading, unlisted bonds for entrusting customers: The fund management company must deposit the originals or valid copies of trading contracts, transaction documents or the original of the shareholder's register or member’s register or document confirming the ownership of assets at the depository banks and supervisory banks for periodical crosscheck with the institution receiving the investment capital;

d) To develop an information system to manage entrusting customers’ accounts in the company to ensure the principle of management of independence and separation of assets to each entrusting customer; separation of entrusted assets and assets of the company; adequate and timely storage of accounting books, transaction documents and other documents related to transactions and ownership of entrusting customers’ assets; sum up fully, accurately and timely information on each entrusting customer’s assets and place for depository of such assets;

dd) To establish a mechanism of examination, regular crosscheck of three parties to ensure the consistency of data of entrusting customer’s assets on the system of accounts of entrusting customers managed in the company, the depository system of assets of entrusting customers in the depository bank, supervisory bank with the issuers, the Vietnam Securities Depository and Clearing Corporation, the organization managing the shareholder's register, project owners, organizations receiving investment capital and institutions receiving the deposits. The fund management company shall be responsible for establishing a mechanism for the depository bank and supervisory bank in order to actively and directly cross-check with the above institutions to inspect, monitor, sum up fully and accurately information of depository, property registration and management of entrusted assets.

e) To assign at least 02 persons in charge of fund administration to manage and run the investment operation of each securities investment fund and each securities investment company. A fund executive officer must have a fund management practice certificate and at least 02 years of experience in the property management and has never been sanctioned for administrative violations in the field of securities and securities market. If the securities investment fund or the securities investment company managed by the company invests in derivatives only to prevent risks, in addition to the above conditions, the fund executive officer must have certificates of professional qualifications in derivatives and derivative market. Information on qualifications and professional skills and experience on managing assets of the fund executive officer must be disclosed in the prospectus.

6. The company must issue a process of allocation of transaction orders, allocation of assets reasonably and fairly when conducting the transactions for the entrusting customers and the company itself. Asset allocation process must clearly state the principles of performance, valuation method, volume of assets allocated to each entrusting customer, to ensure compatibility with the investment objectives and level of risk acceptance of each entrusting customer. The process of allocation of transaction orders and assets must be provided to the entrusting customers, depository bank, supervisory bank and applied uniformly.

In case where the fund management company buys or sells the same asset in the same day for many entrusting customers and the company itself, the allocation of assets and transactions shall comply with the following priority order:

a) Prioritizing the allocation of traded assets for entrusting customers. The allocation of assets among the entrusting customers must be fair according to the issued asset allocation process. During the investment portfolio management, if the entrusting customer does not indicate the traded price, assets are bought and sold at different prices, the fund management company must use the weighted average price to allocate assets. If the entrusting customer indicates the traded price, the fund management company shall allocate according to such indicated price;

b) The transaction allocation for the company itself shall be made only after fully satisfying the transaction orders for the entrusting customers. In case where the fund management company knows internal information, or knows that the orders of entrusted asset transaction may create a major influence on the price of an asset, the fund management company may not make transaction of the same type of such asset or disclose to a third party of such asset transaction;

c) The distribution of assets must be notified to the depository bank and supervisory bank to carry out immediately in the trading day.

7. When making transactions of assets for entrusting customers, the fund management company must ensure that:

a) For a public fund or public securities investment company:

- The value of securities traded in a year through brokerages of a securities company must not exceed 50% of the total value of securities traded in a year of such public fund or public securities investment company;

- The value of securities traded in a year through brokerages of a securities company being an affiliated person of a securities company must not exceed 20% of the total value of securities traded in a year of such public fund or public securities investment company;

This provisions shall not apply to a public fund or public securities investment company which has been operated for less than 06 months from the date on which it is granted the fund establishment registration certificate, establishment and operation license until the end of the year when such fund or securities investment company is established; open-ended fund with the total transaction value in a year less than VND 300 billion;

b) For other entrusting customers, the fund management companies must comply with Point a of this Clause, except for the case the company has provided sufficient information on the benefits of the fund management company with securities company and entrusting customers and have written consent to waive the application of the above provisions.

8. In the fund management and transfer agent, the fund management company shall be responsible for ensuring:

a) To determine the net asset value of the investment portfolio of the entrusting customer, the net asset value of the fund or securities investment company, the net asset value on a fund certificate or stock of the securities investment company and other fund administration activities according to the law on securities investment funds, fund’s charter, securities investment company’s charter and the investment entrustment contract;

b) To make, store and update timely, completely and accurately the investor’s register and shareholder's register. Contents of the investor’s register and shareholder’s register shall comply with the relevant provisions of the law on securities investment funds, the provisions on the establishment, charters of the fund and securities investment company;

c) The fund management company may authorize the fund management and transfer agent activities. Such authorization shall comply with Article 12 of this Circular and the provisions of the fund’s charter and the securities investment company’s charter.

9. When managing investment capital of the securities investment company, the fund management company must:

a) Ensure to be subject to the supervision of the Shareholders’ General Meetings and Board of Directors of the securities investment company, supervisory bank and take responsibility before the Shareholders’ General Meetings and Board of Directors of the securities investment company on the implementation of the assigned rights and duties, the provisions in the securities investment company’s charter and the investment entrustment contract;

b) Ensure to set up a system, develop a process and implement the risk management in accordance with the investment policy and type of investment asset and report to the Shareholders’ General Meetings and Board of Directors on the risk management;

c) To make investment decisions, withdraw the daily investment capital of the securities investment company that do not need to have resolutions of the Shareholders’ General Meetings and Board of Directors of the securities investment company according to the charter of the securities investment company and investment entrustment contract;

d) To implement the investment policies, decisions of the general meeting of the Shareholders’ General Meetings and Board of Directors of the securities investment company in accordance with the securities investment company’s charter; to carry out asset transactions within the limit of investment, type of assets permitted to invest, transaction volume and transaction objects as specified in the securities investment company’s charter and the investment entrustment contract;

dd) To propose the plan of dividend payment, plan of charter capital increase or decrease; restructuring plan of a securities investment company;

e) To sign the contracts in the name of the securities investment company under the competence specified in the securities investment company’s charter and investment entrustment contract;

g) To exercise the other powers and duties as prescribed by law, the securities investment company’s charter, investment entrustment contract and the resolution of the Shareholders’ General Meetings and Board of Directors of the securities investment company.

10. When managing the voluntary pension schemes, the fund management company must comply with the law on voluntary pension program.

11. The fund management company shall timely and fully provide information on entrusting customers, the list of entrusted assets, transaction of entrusted assets, institutions receiving investment capital, affiliated persons of the fund management company and other relevant information to the depository bank and supervisory bank. The fund management company must provide information when receiving written requests from the depository bank and supervisory bank, and create favorable conditions for such institutions to fully perform their rights and obligations in accordance with law provisions. At least once every month, the fund management company shall compare the list of assets of each entrusting customer with the depository bank and supervisory bank.

12. Within 15 days from the date on which the supervisory bank detects and informs the fund management company on entrusted asset transactions contrary to the provisions or exceeding the competence of the fund management company as prescribed by law, the fund’s charter, the securities investment company’s charter and the investment entrustment contract, the fund management company must cancel the transactions, or perform other transactions in order to restore the portfolio for the entrusting customers. The fund management company shall bear all incurred costs related to such transactions and losses. In case the transactions generate profits, all profits must be accounted for the entrusting customers.

13. The fund management company shall be responsible for compensating for the losses caused to the entrusting customers due to the employee's fault, malfunction or error of technical system and professional process of the company or because the fund management company fails to comply with its obligations under the law provisions, the fund’s charter, the securities investment company’s charter and the investment entrustment contract. The compensation for the open-end fund, the open-end fund investors shall comply with the law on securities investment funds and the agreement among the concerned parties. The compensation for the closed-end fund, the member fund, securities investment company or the entrusting customer shall comply with the agreement among the concerned parties.

14. The fund management company must purchase occupational liability insurance for staff working in the securities business operation department (when necessary), or set up a professional risk reserve fund to compensate for entrusting customers in the cases specified in Clause 13 of this Article.

15. The fund management company must comply with current law regulations on anti-money laundering. The fund management company shall be responsible for implementing and asking distribution agents to formulate, promulgate and organize the implementation of internal regulations on anti-money laundering.

16. The fund management company shall be responsible for implementing and asking distribution agents to formulate, promulgate and organize the implementation of process and procedures for customer identification, verification and updating customers’ information according to the law on securities, anti-money laundering and relevant laws. When identifying customers, the fund management company and distribution agent may decide to meet them by person-to-person or not.

a) In case of indirect meeting with customers, the fund management company and distribution agent must ensure to take measures, method and technologies to identify and collect sufficient information of customers and verify accurately them according to the law on securities, anti-money laundering, electronic transaction and relevant laws on ensuring safe and confidential information of customers;

b) The fund management company and distribution agent must fully store information and data used to identify customers as prescribed by the law on securities, anti-money laundering and relevant laws. Customer identification information must be stored for prophylaxis, kept confidential and provided at request of the competent state agency;

c) Before implementing the customer identification by indirect meeting method, the fund management company and distribution agent through the fund management company shall notify the State Securities Commission;

d) In case of necessity, the State Securities Commission shall ask the fund management company and distribution agent to suspend or terminate the custom identification by indirect meeting method;

17. The fund management company must ensure the investment of assets of entrusting customers being individuals, foreign organizations to comply with the regulations of law on foreign exchange management, foreign ownership percentage in the Vietnamese enterprises.

18. When using entrusted assets mobilized in Vietnam for offshore indirect investment, the fund management company must comply with the law on offshore indirect investment, foreign exchange management and relevant laws. The offshore indirect investment activities shall be carried out if the fund’s charter, the securities investment company’s charter and the investment entrustment contract have terms and conditions permitting the implementation.

19. The fund management company shall be responsible for keeping confidential information of customers, information on asset transactions, customers’ investment portfolio and other relevant information, except for the case of providing information at request of the State Securities Commission and the competent state management agency.

20. The fund management company must ensure:

a) To separate the headquarters, information technology infrastructure with other organizations. If the company uses information technology infrastructure of its parent company, subsidiaries or organizations being affiliated persons, it must use the mechanism of decentralization and confidentiality to make sure that the departments of the parent company, subsidiaries or organizations being affiliated persons cannot access to the computer system and database of the company;

b) To separate physical foundations, personnel and database among operations with potential conflicts of interest in the company, including the separation among the entrusted assets management; research, investment analysis and the investment implementation and securities investment consultancy activities. The computer system and database shall be decentralized to each individual, department, consistent with the working position according to the regulations on internal control;

c) To separate physical foundations, personnel and database between the financial investment of the company and securities investment fund management, securities investment portfolio management and securities investment consultancy activities.

21. In the financial investment from the owner’s capital, the fund management companies must ensure that:

a) The financial investment activities must be from owner's equity capital, not a loan in any form;

b) Not investing derivatives from its capital sources, loans and other legally mobilized capital;

c) Not lending or transferring the company's capital to other individuals and organizations in any form, except for the case of deposit at the credit institutions in accordance with the banking law, investment in certificates of deposit, treasury bills and listed bonds issued in accordance with law provisions;

d) Economic contracts or transactions between the company and affiliated persons of the company shall only be carried out after being approved by the General Meeting of Shareholders or Board of Directors or Members’ Council or the owner in accordance with the company’s charter and the law on enterprises;

dd) Being entitled to use the legally mobilized capital, including loans, to invest for the purpose of use as the company's head office. In case of not using all using area of the building, the fund management company may lease it;

e) The fund management company shall be responsible for reporting the State Securities Commission on investments in subsidiaries, joint ventures, associated companies and the increase of decrease in value of such investments within 30 days after completing the investment, changing the investment value, or withdrawing investment capital according to the form provided in Appendix X attached to this Circular;

g) The fund management company and affiliated persons (except for affiliated persons being funds and securities investment companies managed by the fund management company) may only invest a maximum of 5% of the voting stocks that are circulated of the securities company already registered for transaction and listing on the Stock Exchange.

22. The fund management company must be approved by the State Securities Commission and granted the limit by the State Bank of Vietnam before conducting offshore indirect investment. The offshore indirect investment activities must comply with Point a, Clause 21 of this Article, the law on investment, banking and the following principles:

a) The fund management company is entitled to invest a maximum of 20% of the equity at the latest audited annual financial statement or the latest examined biannual financial statement and the latest quarterly financial statement; make sure not to exceed the limit confirmed by the State Bank of Vietnam. The fund management company shall only conduct offshore indirect investment to investment instruments prescribed by the State Bank of Vietnam;

b) In case where the investment portfolio of the fund management company exceeds the prescribed limit due to fluctuations in the market prices of held assets or due to the enjoyment of rights related to the held assets, the fund management company must make necessary adjustments to comply with the investment limit specified at Point a of this Clause within 03 months from the date on which the investment exceeds the limit.

23. When providing online securities trading services, the fund management company and the fund certificate distribution agent must comply with the law on e-transaction of securities.

24. In the activity of ownership report and information disclosure on securities market transactions, the fund management company shall be responsible for:

a) The fund management company and the entrusting customers must comply with the law on ownership reporting and information disclosure on the securities market applicable to majority shareholders of the public company, investors holding 5% or more of the fund certificates of a closed-end fund, insiders and affiliated persons of the insiders;

b) Obligation of ownership report and information disclosure shall arise from the time:

- The number of stocks and fund certificates owned by the fund management company and entrusting customers accounts for 5% or more of the total voting stocks of a public company or accounts for 5% or more of the total fund certificates of a closed-end fund, except for entrusting customers being exchange-traded funds;

- The fund management company is the affiliated person of the insider as prescribed by law, except for exchange transactions conducted by an exchange-traded fund and the periodic restructuring of the reference index;

- The obligations of ownership report, disclosure of information, information disclosure method and time, the form for ownership report and information disclosure shall comply with the law on disclosure of information on the securities market;

c) Performing other duties on ownership report and disclosure of information under the law on disclosure of information on the securities market.  In case where customers entrusting portfolio take the ownership name for entrusted assets, the entrusting customers shall be responsible for the obligations of ownership report, disclosure of information in accordance with law provisions.

25. The fund management company shall be responsible for annual training, retraining for staff or appointing securities practitioners to participate in training courses held by the State Securities Commission (if any), to ensure the staff to be updated skills, expertise, professional knowledge of the law.  Information on such activities of the company must be included in the annual operation report sent to the State Securities Commission.

26. The fund management company must fully and timely update changes to organization and operation of the company to the database on fund management companies of the State Securities Commission.

Article 11. Restrictions on the activities of the fund management company and its staff

1. A fund management company may not be an affiliated person or have ownership, lending or loan relationship with the supervisory bank and depository bank of the securities investment fund, securities investment company that the company is managing.  Members of the Board of Directors, or Members’ Council, internal audit department’s staffs, Supervisory Board, the company president, Executive Board and employees of the fund management company may not work in the departments providing services of depository, supervision, fund management at these banks, and vice versa.

2. The fund management company, affiliated person of the fund management company may contribute capital to the establishment and invest in the fund, and the securities investment company that the fund management company is managing if the fund's charter, the securities investment company's charter allows, except for the activities not permitted to be performed as prescribed at Point b, Clause 6 of this Article.

3. The fund management companies, parent companies, subsidiaries, joint ventures, associated companies, members of the Board of Directors or Members’ Council, Supervisory Board, Executive Board and employees of the company may only be allowed to be a partner to buy and sell assets in the entrusted assets portfolio that the company is managing according to the following principles:

a) Transactions are conducted according to the method of concentrated order matching at the Stock Exchange;

b) In case where a transaction is not conducted according to the method of concentrated order matching, it shall be conducted when there is a written approval of the entrusting customer or representative of the entrusting customer.  Such a written approval of the entrusting customer must indicate the type of traded assets, trading partners or criteria to determine trading partners, trading prices or principles to determine the trading prices and the trading time.

4. All securities transactions made by members of the Executive Board, staff of the fund management company must be reported to the internal control department before and after the transaction.  Such a transaction report of the above-mentioned individuals must contain: name of the traded securities, quantity and price of transactions, total value of transactions, the time to implement the transaction, method of implementation, number of transaction account, securities company where the transaction account is opened.  Report on individual transactions must be stored and managed at the department of internal control and provide for the State Securities Commission upon request.

5. Members of the Board of Directors or Members’ Council, Executive Board and employees of the fund management company are not allowed to request, require or receive, in the name of the individual or in the name of the company, any remuneration, profits or benefits, except for types of service prices and bonuses as prescribed in Clause 9 of this Article which are specified in the fund's charter, the securities investment company's charter and the investment entrustment contract.

6. During the management of entrusted assets, the fund management company must ensure that:

a) It shall not use the assets of a fund or securities investment company to invest in that fund or securities investment company;

b) The fund management company shall not use assets of the customer entrusting the management of portfolio, fund, securities investment company under its management to invest to the other funds or securities investment companies under the management, except for customers entrusting the management of portfolio indicated to be invested, entrusting customers being foreign individuals and organizations established according to foreign laws, enterprises with 100% foreign capital, voluntary pension schemes and such customers already allowed to conduct the above-mentioned transactions;

c) It shall not use assets of public funds, public securities investment companies to invest in the fund management company itself; shall not invest in the organizations being affiliated persons of the fund management company, except for the case of using assets of the exchange-traded fund to invest in securities in the list of structured securities of the reference index; shall not invest in the organizations that the members of the Board of Directors or Members’ Council, members of the Executive Board, and employees of the company are shareholders or members holding more than 10% of the charter capital.

The fund management company may use capital of the member funds and private securities investment companies, assets of the customers entrusting the management of portfolio to invest in the above-mentioned organizations in case where the fund's charter, the charter of the private securities investment company, investment entrustment contract, agreement of capital contribution allows the fund management company to make the investment with appropriate management service charge and ensure to comply with Point b of this Clause;

d) It shall not use entrusted assets to lend in any form, guarantee for the loans in any form or make payment for the debt obligations of the fund management company, the affiliated persons of other fund management companies, organizations and individuals.  This provisions shall not apply to entrusting customers being foreign individuals, organizations established according to the foreign laws and already allowed to conduct the above-mentioned transactions; or in case the customers entrusting the management of portfolio in the name as the owners of the entrusted assets;

dd) It shall only use assets of the customers entrusting the management of portfolio to invest in derivatives listed on the Stock Exchange with the purpose of preventing risks for underlying securities held by the entrusting customers.  The investment of assets of the fund or securities investment company in derivatives must comply with the law on securities investment funds;

e) It is not allowed to make judgments or guarantee to the entrusting customers on the income or profits gained on the investment or ensure that the entrusting customers do not lose money, except for the case of investment in fixed income securities; it is not allowed to sign entrustment contracts for investment in bonds with interest rates inconsistent with the real market reality and the results of public the company investment analysis; it shall not directly or indirectly, partially or fully compensating for the entrusting customers' losses due to investment activities;

g) It is not allowed to conduct transactions to reduce profits of an entrusting customer in order to increase profits of another entrusting customer; it is not allowed to sign contracts, conduct transactions with unfavorable terms for entrusting customers.

7. The fund management company may only use the equity and capital of entrusting customers to buy and own (excluding the number of stocks in the portfolio of entrusting customers being exchange-traded funds) 25% or more of the voting stocks of a public company, closed fund certificates that are circulating of a closed-end fund when satisfying the following requirements:

a) To be approved in writing by entrusting customers or representatives of the entrusting customers on public bid, the public bid prices, the volume of assets expected to offering and methods of asset distribution after offering;

b) The fund management company makes the public bid in accordance with the provisions of law on securities regarding public bid.

8. The fund management company is not allowed to authorize or hire Vietnam-based organizations to provide services of securities investment fund management, securities investment portfolio management and securities investment consultancy.

9. Except for open-end fund, the fund management company is entitled to award operation bonuses in accordance with the fund’s charter, the securities investment company's charter and the investment entrustment contract.  An award bonus must be in compliance with the following principles:

a) Being calculated on the basis of the annual profits of the securities investment fund, securities investment company outperformed in comparison to the reference profit, determined based on the growth rate of the market index, portfolio structure and other criteria specified in the fund’s charter, the securities investment company's charter and the investment entrustment contract;

b) It must be calculated deduction, or not be paid if the investment activities in the preceding years have a loss and such loss has not been compensated.

Article 12. Authorization for operation

1. During the performance of business operation, a fund management company may:

a) Authorize the depository bank, supervisory bank and the Vietnam Securities Depository and Clearing Corporation to carry out services of fund management, transfer agent for securities investment funds and securities investment companies;

b) Authorize a foreign organization to provide consultancy service and property management service with regard to assets of the customers entrusting to invest in other countries.

2. When making authorization to operate specified in Clause 1 of this Article, a fund management company must ensure that:

a) The fund's charter, securities investment company's charter and the investment entrustment contract contains provisions allowing the fund management company to authorize such activities.  In case of authorization to operate under Point b, Clause 1 of this Article, a foreign organization must be licensed by a management agency in the field of foreign securities and subject to the management, inspection and supervision of this agency;

b) Basic information of the authorized party, scope of operations, functions and duties of the authorized party must be published in the prospectus and provided to the entrusting customers. The Investors’ General Meeting of the securities investment fund, General Meeting of Shareholders of a securities investment company and entrusting customers have the right to ask the fund management company to change the authorized organization if necessary;

c) The authorized party must have full capacity, system, human resources and experiences to implement the authorized activities;

dd) The department providing service of the authorized party must separate from the remaining parts of the authorized party regarding personnel organization, professional process system, system of report and approval of the report;

dd) The authorized party has the responsibility to provide the fund management company the independent audit report for the authorization, documents serving the inspection and supervision of the fund management company in accordance with Point c, Clauses 3 and 4 of this Article;

e) The authorization for operation and the authorized party specified at Point a, Clause 1 of this Article must be clearly stated in the fund's charter and the securities investment company's charter.  The authorization for operation and the authorized party specified at Point b, Clause 1 of this Article must be approved in writing by the Investors’ General Meeting, General Meeting of Shareholders of the securities investment company and entrusting customers.

3. When carrying out the authorization, the fund management company shall be responsible for:

a) Before signing contract to use service of the authorized party, the fund management company must appraise and make record to evaluate the capacity and material facilities to ensure that the authorized party is fully equipped with material facilities, technical solutions, professional process, and employees having experience and appropriate professional qualification to carry out the authorized activities;

b) Signing the authorization contract with the authorized party.  The authorization contract must contain at least contents according to the form provided in Appendix IX attached to this Circular;

c) Regularly inspecting and supervising to ensure that the authorized activities are carried out carefully, safely and consistently with the provisions of law, the fund's charter, the securities investment company's charter and the investment entrustment contract to ensure the quality of provided service in accordance with the criteria and requirements of the company and the entrusting customers.  The fund management company is used independent consultant, services provided by the professional organizations, other legal activities to carry out the responsibilities specified in this point;  On an monthly basis, the fund management company shall make a synthetic report on result of the inspection and supervision of authorized activities;

d) Maintaining personnel having the appropriate experiences, expertise and professional skills to effectively monitor, identify and manage risks arising from the authorized activities;

dd) Setting up a system and developing a process to ensure at all times, the fund management company, independent audit firm and the State Securities Commission may access to the necessary information to inspect, supervise the authorization, assess and manage the risks arising from the authorization;

e) The authorization shall not reduce or change the responsibilities of the fund management company for entrusting customers. The fund management company must take full financial and legal responsibility arising from the authorization, except for legal obligations, fees and service charges that the customers directly agree and pay to the authorized party on the basis of the investment entrustment contract, supervision contract, deposit contract, the fund’s charter, the securities investment company’s charter and in accordance with relevant laws. The fund management company must ensure the continuity for the authorized activities, not interrupt and affect the investment and services provided for entrusting customers;

g) Providing adequately, timely and accurately the related information to the authorized party for such party to be able to fully and timely implement all the rights, obligations and responsibilities of the authorization;

h) Adequately, timely and accurately storing directions, requests and documents sent to the authorized party to implement authorized activities, authorization contract and the minus evaluating the capacity and facilities. Such documents must be provided to the State Securities Commission as required;

i) Within 10 days from the date of signing the contract with the authorized party for the authorization specified at Point b, Clause 1 of this Article, the fund management company shall notify the State Securities Commission on this authorization and send the documents certifying that the authorized party meets the requirements specified in Clause 2 of this Article.

4. Reports on the examination and monitoring under Point b, Clause 3 of this Article and other relevant documents must be provided for the Board of Directors or Members’ Council or owner of the fund management company, the fund representative board, the Board of Directors of the securities investment company, relevant supervisory bank and the State Securities Commission within 30 days from the date on which such reports are summarized.

Article 13. Termination of the rights and obligations of the fund management company for entrusting customers and replacement of the fund management company

1. A fund management company shall terminate its rights and obligations for entrusting customers in the following cases:

a) It voluntary proposes to terminate its rights and obligations for entrusting customers under the provisions of the fund’s charter, the securities investment company’s charter and the investment entrustment contracts;

b) At the request of the Investors’ General Meeting of the securities investment fund, the General Meeting of Shareholders of the securities investment company and customers entrusting the management of portfolio;

c) The fund management company has its establishment and securities business license revoked according to Article 95 of the Law on Securities;

d) The fund management company is re-organized;

dd) The securities investment funds and securities investment companies have their operation duration or investment entrustment contracts expired.

2. The fund management company must hold a general meeting of Investors of the securities investment fund, general meeting of Shareholders of the securities investment company and entrusting customers to consult on the plan to handle assets and replacing fund management company in the cases specified at Points a, c and d, Clause 1 of this Article.

3. Within 05 working days from the date on which the entrusting customers approve the decision on replacing the fund management company, the replacing fund management company shall be responsible for:

a) With regard to customers entrusting the management of portfolio, the fund management company shall notify the State Securities Commission and enclose with the following documents: Principle contracts on the termination of rights and obligations between the entrusting customers and the replaced fund management company; principle contracts on investment entrustment between entrusting customers and the replacing fund management company; plans on transfer of rights and obligations between the two fund management companies, principle contracts on asset deposit and relevant contracts and documents. Within 07 working days from the date on which the notice is sent, the replacing fund management company shall disclose information on the receiving and managing entrusted assets on the fund management company's website, notify to the depository bank, at the same time, fund management companies shall carry out the transfer of rights and obligations toward entrusting customers;

b) With regard to the fund or securities investment company, the fund management company shall propose the State Securities Commission to adjust the fund establishment registration certificate, establishment and operation license of the securities investment company involved in the change of the fund management company.

4. Rights and obligations toward entrusting customers of the replaced fund management company shall be terminated only from the time of completion of the registration and transfer of ownership toward the entrusted assets, handover of all assets and documents proving the ownership, vouchers, books and information on the entrusted assets, rights and obligations toward entrusting customers to the replacing fund management company. The transfer of assets must be completed within 06 months from the date on which the entrusting customers approve the decision on replacing the fund management company. The termination of the rights and obligations of the fund management company toward customers entrusting portfolio management shall comply with Clause 1, Article 27 of this Circular.

5. Within 07 working days from the date of completion of the handover, the replacing fund management company shall send the handover record of responsibilities and assets between the two fund management companies to the State Securities Commission. The record must be certified by entrusting customers or the entrusting customers’ representatives and the depository bank, supervisory bank.

6. The replaced fund management company must take all responsibility for the liabilities and assets toward entrusting customers that have not been handed fully to the replacing fund management company. In this case, the replaced fund management company shall resolve and overcome the consequences arising within 05 years from the completion of the transfer of assets to the replacing management company in accordance with Clause 5 of this Article.

7. The entrusting customers shall bear all costs related to the replacement of the fund management company in the cases specified at Point b, Clause 1 of this Article. Other cases shall follow the agreement between the two parties.

Section 2

MANAGEMENT OF SECURITIES INVESTMENT FUNDS

Article 14. Establishment of fund, fund management under Vietnamese law

1. The fund management company may raise capital in the country or from other countries to establish and manage types of securities investment funds and securities investment companies.

2. Conditions, order, procedures and dossiers of offering, establishment and operation of types of securities investment funds and securities investment companies shall comply with the law on securities.

Article 15. Establishment and dissolution of fund under foreign law

1. A fund management company may raise capital in overseas to register the fund establishment under foreign law.

2. Within 30 days from the date of completion of the establishment registration or dissolution of a fund with the foreign competent management agency, the fund management company shall notify the State Securities Commission and enclose the following documents:

a) A valid copy of certificate of public offering of fund certificates, fund establishment registration certificate under foreign laws or equivalent documents; or documents certifying the dissolution of fund issued by the foreign competent management agency;

b) A valid copy of the registration dossier for establishment or dissolution of a fund which is submitted at the request of the foreign competent management agency, including minutes of the meetings and resolutions of the Investors’ General Meeting or the representative board of the fund or equivalent organization of the fund on the liquidation or dissolution of the fund.

3. The fund established abroad by a fund management company when participating in invest in Vietnam must comply with the relevant regulations applicable to foreign investors.

Section 3

MANAGEMENT OF INVESTMENT PORTFOLIO

Article 16. General provisions on the management of investment portfolio

1. A fund management company may manage the investment portfolio for entrusting customers on the account in the name of the fund management company or the entrusting customers’ accounts under the investment entrustment contracts signed with entrusting customers and the law provisions. In case where the entrusting customer is an organization, the investment entrustment contract must be signed by the at-law representative of the entrusting customer, or an authorized representative enclosed with a power of attorney made in accordance with the law provisions.

2. An investment entrustment contract must contain the basic contents as prescribed in Appendix III attached to this Circular and shall ensure:

a) There are no provisions to facilitate the fund management company to be able to avoid liability of compensating entrusting customers, in case of fault of the company or by the intentional mistake of the company;

b) There are no provisions to limit the scope of compensation and the financial responsibility of the company toward entrusting customers without legitimate reason; or transfer the risk to the entrusting customers in case of fault of the company or by the intentional mistake of the company;

c) There are no provisions of unfair treatment to entrusting customers.

3. Investment entrustment contracts and entrusting customer’s approvals that allow the fund management company to act in the name of the owner of entrusted assets, perform transactions, notify investment restrictions, and investment instructions, instructions on the exercise of ownership rights to the entrusting customers' assets as prescribed in this Article shall be made in paper or electronic documents. An electronic document must comply with the Law on E-Transactions and its guiding documents. A fund management company must have a technology infrastructure to ensure safety and keep confidential customers’ information, store electronic data and provide it at the State Securities Commission's and competent state agencies’ requests.

4. When using the entrusting customers’ assets for the investment, the fund management company must ensure that:

a) In case there are no specific provisions in the investment entrustment contract, the fund management company may only invest in deposit and money market instruments, including valuable papers and negotiable instruments as prescribed by law, listed securities, securities registered for transaction, open-end fund certificates, fund certificates exchanged from portfolios, debt instruments of the Government, government-guaranteed bonds, municipal bonds, repurchase agreement (repo) of Government’s debt instruments, government-guaranteed bonds and municipal bonds on the transaction system of the Stock Exchange;

b) In case where it is prescribed and allowed in the investment entrustment contract, the fund management company shall be entitled to use the entrusting customers’ assets to contribute capital to establish, purchase shares and contributed capital in unlisted enterprises or enterprises not yet registered for transaction; invest in private offering corporate bonds, unlisted bonds, projects, real estates and assets other than listed securities or securities registered for transaction; conduct repurchase transaction (repo) toward assets other than debt instrument of the Government, government-guaranteed bonds or municipal bonds. The investment and transaction of the above-mentioned assets must fully comply with the following principles:

- Assets must be registered ownership in the name of entrusting customers, except for the case the entrusting customers otherwise request in writing. In case where the fund management company is required to act in the name of the owners of the assets on behalf of the entrusting customers, before conducting transactions, the fund management companies must be approved in writing by the customers to implement the transactions and report to the customers after the transaction have been completed. Traded assets and the original legal documents certifying the ownership of assets or the originals or valid copies of the transaction contract, payment vouchers must be deposited and sent fully in the depository bank selected by the entrusting customers;

- With regard to repurchase transaction (repo) of assets other than debt instruments of the Government, government-guaranteed bonds or municipal bonds, the entrusting customers must act in the name of the trading persons;

c) In case where the fund management company is required to act in the name of the owners of the assets on behalf of entrusting customers who are insurance businesses, credit institutions, securities companies, public companies; the fund management company shall be responsible for requiring entrusting customers to clearly state investment restrictions in writing and take responsibility before law for the type of invested assets, volume of invested assets, investment value, form of implementation, to ensure compliance with the regulations on financial safety, capital safety and the laws on the operation of entrusting customers, securities and the charter of the entrusting customers, particularly in the following activities:

- Investing in the entrusting customer itself: In case of investing in stocks issued by the entrusting customer, it must comply with the law on enterprises and relevant laws;

- Investing in parent companies, subsidiaries, joint ventures, associated companies and other organizations being affiliated persons of the entrusting customers; organizations being affiliated persons of members of the Board of Directors or Members’ Council or company presidents of the entrusting customers;

- Investing in real estate, the investment projects developed and managed by entrusting customers, the parent companies, subsidiaries, joint ventures, associated companies of entrusting customers, or of organizations being affiliated persons of the members of the Board of Directors or Members’ Council or company presidents of the entrusting customers;

- The entrusting customers must notify, report, disclose information and obtain the approval from the competent State management agencies on the transactions and investment activities mentioned above in accordance with the law regulating operations of the entrusting customers; obtain the approval of the General Meeting of Shareholders, Members’ Council, Board of Directors and the owner on the transactions, investment activities mentioned above to suit to charter of the entrusting customers;

d) Except for the case entrusting customers act in the name of the owners of the entrusted assets, the fund management company may not use entrusted assets to lend, guarantee for the loans, mortgage, pledge, deposit, margin trading or collateral security in the transactions of assets to ensure for the organizations and individuals, including the fund management company or entrusting customers themselves;

dd) In case where the entrusting customers are foreign individuals, organizations established under foreign law, the fund management company shall be entitled to make the investment in, financing for the enterprises as designated or according to the terms and conditions in the investment entrustment contract in accordance with the provisions of relevant law.

5. In case where the fund management company manages the portfolio on the account of a entrusting customer, such customer shall be responsible for notifying securities companies, depository members on entrusting the management of securities investment portfolio to the fund management company, enclose with the investment entrustment contract or power of attorney of the entrusting customer that allows the fund management company to conduct transaction on the customer's account.

6. During the effective term of the investment entrustment contract on the customer's account under Clause 5 of this Article, securities companies and depository members may only receive and implement trading orders, investment and payment instructions from the fund management company and shall be responsible for confirming on the status of depository of entrusting customers’ assets at the periodic report on the investment portfolio management of the fund management company. The fund management company shall be responsible for full compliance of its responsibilities and obligations in the investment portfolio management, asset depository, ownership report and disclosure of information, full performance of the ownership rights, to ensure full implementation of the rights, interests and obligations toward the entrusting customers according to this Circular.

7. In case where customers designate the investment, the fund management company must ensure that:

a) Directives on investment of the entrusting customers must be in writing and must specify the type of invested assets or the organizations receiving investment capital, value of investment capital or amount of invested assets, time and duration to perform, the name of the person who registered as the owner of the invested assets;

b) In case where the fund management company is required to act in the name of the owner on behalf of the entrusting customer:

- The fund management company shall be responsible for requiring entrusting customers to provide sufficient information to ensure that the entrusting customers and trading partners, organizations receiving investment capital fully meet conditions for transactions under Clause 4 of this Article and in accordance with the law governing the operation of entrusting customers, organizations receiving investment capital and other relevant laws (if relevant);

- In case of investing in securities of public companies, public funds, public securities investment companies, entrusting customers shall be responsible for implementing by themselves, or authorizing in writing to request the fund management company to report the ownership, disclose information in accordance with law provisions on securities applicable to insiders and affiliated persons of the insiders (in case the entrusting customers are insiders or affiliated persons of the insiders as prescribed by the law on securities) and major shareholders, in case the entrusting customers are major shareholders or investors holding 5% or more of the total fund certificates in accordance with law provisions on securities (in which the number of stocks and fund certificate owned by the entrusting customers, including the number of stocks and fund certificates with the registered name of the entrusting customers, and the number of stocks and fund certificates that the entrusting customers indicate the fund management company to invest and act in the name of the owner on behalf of the entrusting customers).

Article 17. Investment policy

1. The fund management company shall be responsible for information synthesis to identify customers, including information on the beneficiaries (if any); financial capacity, investment experience, investment period, investment objectives, the acceptable level of risk, investment restrictions, investment portfolio sample and other requirements (if any) of the customers; necessary information related to the investment restrictions specified in Clause 4, Article 16 of this Circular.

2. On an annual basis and in case of necessity, the fund management company shall be responsible for updating the entrusting customer identification information in accordance with Clause 1 of this Article. When arising any change, the entrusting customers shall be obliged to fully and timely provide related information to the fund management company. The fund management company has the right to refuse to manage the investment portfolio for the entrusting customers if the entrusting customers do not provide full and timely information as required.

3. The fund management company shall be responsible for developing principles and investment policy in accordance with customers’ demand on the basis of synthetic information as prescribed in Clause 1 of this Article. The investment policy should be clear, detailed and fully show the basic information on the level and types of risk, structure of investment portfolio sample, cost for management, rights and responsibilities of the parties and other concerned important information. The investment policy is an integral part of the investment entrustment contract.

4. In case where the fund management company does not comply with the investment policy stipulated in the investment entrustment contract, the company must re-adjust the investment portfolio within 15 days from the date of discovering mistakes, bear all incurred costs related to this transaction, not collect management service charge for the portfolio not consistent with the investment policy.

5. With regard to the loss and profit arising from investment activities not complying with the investment policy and investment objectives, the fund management company shall pay compensation to entrusting customers according to the written agreement between both parties or account all arising profit in the customers’ portfolio immediately after completion of the investment portfolio adjustment.

6. Those specified in Clauses 4 and 5 of this Article shall not apply in the case the investment portfolio structure is erroneous due to:

a) Fluctuations in the market prices of assets in the investment portfolio of entrusting customers;

b) The payments according to entrusting customer requirements;

c) Operation of consolidation, merger, acquisition, division and splitting of the issuing organizations;

d) During a period of 06 months from the effective date of the investment entrustment contract.

Article 18. Implementation of investment

1. The fund management company must ensure that customers have enough money and assets to carry out the transactions in accordance with the law provisions.

2. The fund management company is entitled to carry out transactions of assets between the investment portfolios of the entrusting customers according to the following principles:

a) For traded assets that are not securities listed or registered for trading on the Stock Exchanges, the transaction must be approved in writing by the parties participating the transaction. Such written approval must include the price, volume of the transaction, time to implement the transaction;

b) For traded assets that are securities listed or registered for trading on the Stock Exchanges:

The transactions must be approved in advance in writing by the parties participating the transaction or notified later to the concerned parties in accordance with the contract; at the same time, the purchase price (sale) shall not be higher (lower) than the closing price at the date of transaction; or the trading price determined by the fund management company within the margin of trading price at the date of the transaction in accordance with provisions of the contract.

Article 19. Depository of entrusting customers’ assets

1. In the portfolio management, the fund management company may open depository accounts in the name of fund management company in several depository banks to deposit entrusted assets according to the following principles:

a) At each depository bank, the fund management company may open 01 depository account for domestic customer entrusting the management of portfolio and 01 depository account for foreign customer entrusting the management of portfolio;

b) The customer entrusting the management of portfolio may choose one or several depository bank(s) where the fund management company opens depository accounts under Point a of this Clause to deposit entrusted assets;

c) Assets of the customers entrusting the management of portfolio must be registered, deposited timely and fully at the depository bank selected by the customers and must be managed separately and independently according to the following principles:

- Assets required to be registered for ownership, originals of legal documents verifying the assets ownership must be deposited at a depository bank, except for the case they are securities already registered or deposited centrally. For securities issued in the form of making entries or which have not got legal documents certifying the asset ownership, the fund management company shall be responsible for depositing the originals or valid copies of transaction contracts and transaction documents at the depository bank;

- For assets requiring ownership registration but the registration for ownership in the name of the fund management company has not yet completed, the fund management company must deposit the originals or valid copies of transaction contracts and transaction documents at the depository bank. The depository bank shall be responsible for certifying the registration and depository of such assets and make periodic reports on the investment portfolio management of the fund management company until completing the ownership registration;

- For assets other than those requiring ownership registration as prescribed by law, the fund management company shall be responsible for depositing the originals or valid copies of transaction contracts and transaction documents at the depository bank;

- For deposits at the bank and deposit contracts, the fund management company shall be responsible for providing sufficient information on deposit accounts, value of deposit contracts to the depository bank so as the depository bank may cross-check with the organizations receiving deposits once a month;

- The fund management company shall be responsible for requesting the issuing organizations, organizations receiving investment capital, organizations receiving deposits or organizations managing the shareholder's register to cross-check once a month and certify the asset ownership at request of the depository bank;

d) The settlement of transactions of securities listed or registered for trading must comply with the principle of delivery of securities at the same time with payment and rules of offset, payment in accordance with the law provisions. The payment for other asset transactions must comply with the legal orders and directives of the fund management company and relevant laws. All transfers and payments, transfer of securities must be implemented to the right trading partners of the entrusting customers and the accounts of the entrusting customers. Payment value must match with the number of assets, stock and the right amount of money stated in the payment vouchers. Invoices and accounting vouchers, electronic information and documents confirming the payment and transaction to entrusting customers must be fully and accurately archived. Except for the case of performing the transactions of assets among entrusting customers’ investment portfolios under Clause 2, Article 18 of this Circular, the fund management company and the depository bank, supervisory bank may not transfer money and assets internally between the accounts of customers entrusting the portfolio management;

dd) Signing a depository contract with the depository bank to deposit all assets arising in Vietnam and managing assets separately to each entrusting customer. The depository contract must be consistent with the investment entrustment contract and include some principal contents in the form prescribed in Appendix IV attached to this Circular.

2. Entrusted assets under material or immaterial form, registered ownership and deposited on the depository account in the name of the fund management company but owned by the entrusting customers and not being the assets of the fund management company, depository bank. The fund management company and depository bank may not use these assets for payment or guarantee of payment for the debts of themselves or for third parties or the entrusting customer itself.

3. The fund management company shall ensure that entrusting customers are entitled to all the rights of ownership toward the entrusting customers’ assets on their entrusting accounts according to the following principles:

a) The fund management company shall only be the authorized representative of the entrusting customer, and may only perform activities within the authorization scope as prescribed in the investment entrustment contract;

b) The fund management company may only use and manage assets on entrusting customers’ accounts in accordance with the investment entrustment contract or according to written instructions of the customers;

c) The fund management company shall exercise the right to vote and other ownership rights in accordance with the written instructions of the entrusting customers; promptly inform fully and accurately to entrusting customers the benefits arising related to their assets.

Article 20. Receipt and returning of assets to entrusting customers

1. When managing the investment portfolio, the fund management company may receive assets not being money to manage. The assets that the company receives from the entrusting customers to manage must meet the following conditions:

a) Owned by the entrusting customers, with sufficient valid legal documents verifying the ownership of customers;

b) Being assets freely transferred, not being restricted from transfer at the effective time of the investment entrustment contract;

c) Not being the assets being mortgaged, pledged, deposited, guaranteed or in the transactions of collateral security assets in accordance with the provisions of civil law.

2. The entrusting customers shall transfer their ownership of assets in the entrusted portfolio to a fund management company to manage in accordance with the following provisions:

a) For assets with ownership registration, the entrusting customers shall carry out procedures to transfer the ownership of that assets to the fund management company in accordance with law provisions. In case where the entrusted assets are securities listed or registered for trading or centralized depository, the transfer of ownership shall be done through the Vietnam Securities Depository and Clearing Corporation and not subject to transaction service charges. For other assets, the transfer of ownership shall comply with the provisions of the relevant law;

b) For assets non registered ownership, the entrustment of capital must be made by the delivery of entrusted assets certified by record. Such a delivery record must clearly state:

- Full name, contact address, serial number of identity card or citizen identification card or passport or other lawful personal identification of individual entrusting customers;

- Number of the enterprise registration certificate or the decision on establishment or other equivalent documents of the institutional entrusting customers; full name, contact address, serial number of identity card or citizen identification card or passport or other lawful personal identification of the at-law representative or authorized representative of institutional entrusting customers; enclose with the minutes of meetings and resolutions of the General Meeting of Shareholders, Members’ Council, Board of Directors, the decision of the owner on the entrustment of assets for the fund management company to manage in accordance with the charter of the organization entrusting assets;

- Type of assets and quantity of entrusted assets; value of entrusted assets; date of delivery; signatures of the entrusting customer or the entrusting customer’s representative and the at-law representative of the fund management company.

c) Assets are deemed to have been entrusted to the fund management company to manage only when the legal ownership right toward the assets contributed as capital was transferred to the fund management company.

d) The value of the entrusted assets in the investment entrustment contract shall be determined according to the principles for determining the net asset value in accordance with the law on securities investment funds. For assets other than listed securities or securities registered for trading, negotiable instruments, the valuation of entrusted assets may be implemented by the price appraisal enterprise in accordance with the law on prices.

3. The fund management company shall return the entrusted assets to customers upon request in writing on the basis of the investment entrustment contract. The handover and transfer of ownership of the assets shall comply with the instructions of the entrusting customers and Clause 2 of this Article. In case of returning assets being centrally registered and deposited securities, the Vietnam Securities Depository and Clearing Corporation shall transfer the ownership out of the securities trading system upon the written requests from the fund management companies, entrusting customers and depository bank.

Article 21. Indirect offshore investment portfolio management

1. A fund management company shall manage the indirect offshore investment portfolio after the State Securities Commission approves such management and the State Bank of Vietnam grants its offshore indirect investment entrustment undertaking limit.

2. Indirect offshore investment portfolio management must comply with regulations on securities investment portfolio management specified in this Circular, laws on investment and banking.

3. The fund management company must sign contract of offshore indirect investment entrustment with the entrusting institution. Such contract must state the entrusted money amount, entrustment duration, offshore indirect investment tool, and rights and obligations of contracting parties, and comply with Clauses 1 and 2, Article 16 of this Article and relevant law. The contract of offshore indirect investment entrustment must be separate from the one of domestic indirect investment entrustment.

4. The fund management company must ensure that the offshore indirect investment entrustment must comply with law on offshore indirect investment.

5. The fund management company shall sign depository contract with an overseas depository institution to deposit offshore indirect investment assets. The overseas depository institution must be entitled to perform the depository activity according to the foreign law. 

The fund management company shall sign contract with a depository bank in Vietnam. The depository bank in Vietnam may authorize an overseas depository institution to deposit offshore indirect investment assets and shall take fully responsibility for authorized depository activity.

6. Within 05 working days from the signing date of depository contracts between the overseas depository institution and the fund management company, the depository bank in Vietnam shall sign depository authorization contracts with the overseas depository institution or when changing the overseas depository institution, the fund management company shall notify the State Securities Commission with depository contract, copy of the securities depository registration certificate or equivalent documents of the overseas depository institution.

7. Activities of offshore indirect investment asset depository authorization and depository must comply with this Circular, law on securities investment funds and relevant laws.

Section 4

SECURITIES INVESTMENT CONSULTANCY OPERATION

Article 22. Securities investment consultancy

1. Securities investment consultancy includes the following contents:

a) Advising customers on investment policy and strategy of transaction, including the investment capital allocation structure; type of investment assets and the method to determine value of assets; form of investment, transaction; time of implementation, the quantity and the price in accordance with the objective, investment policy, risk acceptance level of customers;

b) Issuing publications on securities investment to the public after they have been licensed according to law on press; building and implementing the universal programs for popularizing knowledge of securities investment, promoting securities investment, the intensive training programs on securities investment.

2. Before performing securities investment consultancy, the fund management companies shall synthesize, update information, customer identification, including information on the financial capacity, assets, income, investment objectives, form of investment, risk acceptance level, experience and understanding of investment and investment assets, and other information if necessary. In case the customers do not provide sufficient information upon request, the fund management companies may refuse to provide service.

3. When performing securities investment consultancy, the fund management companies must arrange staff having securities practice certificates to directly advise customers.

4. At least 05 working days before the change of consultant advising a customer, the fund management company shall notify in writing to the customer and provide information on the replacing staff.

5. A fund management company must sign the securities investment consultancy contract with each customer, which clearly states:

a) The scope of securities investment consultancy, service providing form, consultancy assets;

b) Duration of the contract, service cost;

c) Full name and resume of experience of the consultant;

d) Rights and obligations of the parties to the contract.

Article 23. Regulations on securities investment consultancy of the fund management companies

1. Voluntariness, fairness, honesty to customers, providing fully, timely all accurate information for customers to make their own investment decisions.

2. The information, data, economic forecasts provided to customers must be based on real events and together with reliable reference materials issued by professional economic and financial institutions and have been disclosed publicly. Content of consultancy must be based on the results of careful and rational scientific analysis from reliable information sources. A report on securities and securities market analysis, trading recommendations must specify the cited data source and the person who is responsible for content of the report.

3. When advising about investment in an asset, the fund management company must ensure the conformity with the investment objectives, risk acceptance level, the financial capacity of the customer, and the fund management company or consultant has to announce their interests related to such asset if the company or consultant owns such asset.

4. The consultant has the responsibility to explain to customer that his/her advice on customer’s investment activities is for reference only and customer must bear all risks from their investment decisions.

5. In the securities investment consultancy, fund management companies, consultants must not:

a) Advise customers to invest in assets without providing fully information on the assets, the issuing institutions to the customers;

b) Broker transaction of purchase and sale between a customer and a third party; Broker transaction of lending, borrowing assets between a customer and a fund management company or between a customer and a third party;

c) Provide the information that has not been verified, rumors, false information to customers; provide false information, amplify the truth, provide misleading information, give the forecast or perform the acts to entice, induce or invite customers to trade in an asset that does not match with the investment objectives, investment experience, risk awareness capability, risk acceptance level and financial capacity of customers; provide misleading information on the profit and risk characteristics of an asset;

d) Give gifts, use the material benefits in any form to offer, induce a customer to trade an asset; use names of institutions or individuals to request, require or receive any compensation, any material benefit from customers, the fund management company or a third party to offer customers to make transaction of an asset, in addition to the service cost specified in the securities investment consultancy contract;

dd) Invest on behalf of customers, receive customer’s money or assets for investment or transaction, unless the entrusting customers have signed investment entrustment contract with a fund management company;

e) Forecast price of asset in future, ensure investment results (except for investments in securities with fixed incomes or the products invested for capital preservation); make agreement of sharing profit or loss with customers.

Chapter IV

OPERATION OF FUND MANAGEMENT COMPANIES IN PROCESS OF REORGANIZATION, OPERATION SUSPENSION, OPERATION TERMINATION, DISSOLUTION

Article 24. Operation of fund management companies in process of reorganization

1. In the process of reorganization, fund management company, its Boards of Director or Members’ Council, Supervisory Board, Executive Board shall:

a) Ensure the safety of the company's assets, not hide, disperse assets of the company in any form and take responsibility before law for the problems outside of books which were not be handed over;

b) The fund management companies participating in the reorganization have the right and responsibility to all their rights and obligations until the fund management companies that are formed after the reorganization, are issued or modified establishment and securities business license;

c) Comply with law on information disclosure on the securities market.

2. Shareholders opposed the reorganization may request the fund management company to redeem their shares. Creditors may request the fund management company to repay the loans when the organization is made. The implementation of the above requirements must comply with the law on enterprises.

3. From the effective date of establishment and securities business license, license modifying establishment and securities business license of the fund management companies established after being reorganized, the fund management companies participating in reorganization shall hand over all rights and obligations to them. The fund management companies established after being reorganized shall inherit all rights and obligations of the fund management companies participating in reorganization.

4. The fund management companies established after being reorganized must disclose information according to law on information disclosure on the securities market.

Article 25. Operation of fund management companies in process of operation suspension

1. In the process of operation suspension, the fund management companies shall comply with Clause 4, Article 26 of this Circular.

2. The fund management companies shall report to the State Securities Commission on documents to ensure the maintenance of conditions for license grant as prescribed in Clause 1, Article 85 of the Law on Securities before resuming their activities. Documents shall comply with regulations on relevant documents in the dossier for grant of establishment and securities business license.

3. Within 15 days from the date of receiving the reporting documents, the State Securities Commission shall issue a notice on receiving reporting documents of the fund management company’s operation resumption.

4. The State Securities Commission shall disclose information about operation suspension of the fund management company on the website of the State Securities Commission.

Article 26. Operation of fund management companies in process of operation termination

1. The State Securities Commission shall decide operation termination of fund management companies according to cases as prescribed in Article 94 of the Law on Securities.

2. The operation termination duration shall be at most 60 days from the date of operation suspension for cases as prescribed at Points a and c, Clause 1, Article 94 of the Law on Securities; at most 06 months from the date of operation suspension for cases as prescribed at Points b and d, Clause 1, Article 94 of the Law on Securities.

3. Within 15 days from the effective date of the decision on operation termination, the fund management company shall inform the entrusting customers of such operation suspension; carry out the order and procedures for consulting investors’ general meetings of securities investment funds, shareholders’ general meeting of securities investment company, the entrusting customers on the handling plan for securities investment fund, securities investment company, investment management entrustment contracts; consulting opinions about the replacing fund management companies (if any).

4. During the process of termination, fund management companies must comply with the following regulations:

a) Not to sign new contracts of, or extend contracts of, securities investment consultancy and investment entrustment; not to receive additional investment capital from existing entrustment customers; to liquidate accounts and transfer accounts at customers’ request (if any);

b) Not to raise capital to establish new securities investment funds or companies; not to increase the charter capital of their current securities investment funds and companies;

For the valid investment entrustment contracts, the securities investment funds and companies that are operating, the fund management companies shall perform the transactions only after obtaining the written approval of the entrusting customers or entrusting customers’ representatives (authorized for each time). Entrusting customers are solely responsible for the authorizing the fund management company to carry out such transactions.

c) Not to pay dividends, distribute profits; not to transfer the unsecured debts into secured debts by their assets; not to redeem shares, contributed capital; not to establish more branches, representative offices, expand offshore the area of ​​operation; not to contribute capital, invest in subsidiaries, associated companies; not to implement the business and investment which need the approval of the State Securities Commission according to law regulations;

d) To comply with the securities law of the securities investment portfolio management, securities investment fund management; to ensure the legitimate rights and interests of entrusting customers and take entire responsibility for the entrusted asset transactions in accordance with the law;

dd) To adopt a remediation plan and report on the implementation of such plan at the request of the State Securities Commission.

5. Before resumption of operation, fund management companies shall report to the State Securities Commission on documents as prescribed in Clause 2, Article 25 of this Circular and on documents of addressing the situation leading to operation termination.

6. Within 15 days from the date of receiving the reporting documents, the State Securities Commission shall issue a notice on receiving reporting documents of the fund management company’s operation resumption.

7. The State Securities Commission shall disclose information about termination of operation of fund management companies on its website.

Article 27. Operation of fund management companies in process of dissolution

In process of dissolution, fund management companies shall liquidate contracts being still in effect; hand over rights, responsibilities and the investment portfolio of the securities investment companies and funds, customers entrusting to replacing fund management companies to manage the portfolio, ensuring the following principles:

1. For investment portfolio management operation:

a) Within 30 days from the date of receiving the written approval of the dissolution of the State Securities Commission, the fund management company shall have to return assets to entrusting customers upon request in writing; stop purchase/sale of securities; stop withdrawal/deposit of entrusting customers’ money. Then close the balance of money and asset of each entrusting customer;

b) No later than 05 working days from the date of closing balance of entrusted assets, the fund management company must report to the State Securities Commission of the investment portfolio of each customer; notify and send portfolio account statement to each entrusting customer. The entrusted portfolio account statement of each entrusting customer must be certified by depository bank for the balance of cash and securities in the entrusted portfolio in the depository bank. Notice to entrusting customer must state the proposal on the replacing fund management company; guidance on the transfer of assets and handover of rights and responsibility toward entrusting customers to the replacing fund management company; or proposal of the portfolio liquidation; or return of assets to the customers for self-management;

c) From the date of closing balance of money, securities of account of portfolio management, depository members do not make order of transaction, payment instruction of the fund management company for the assets of entrusting customers, except for the liquidating transactions, transactions in order to execute the ownership of entrusting customers or the transactions as required and written instruction of the entrusting customers;

d) After 60 days from the date of receiving the written approval of the dissolution of the State Securities Commission, if the entrusting customers do not self-select a replacing fund management company or do not require liquidation of the investment portfolio, the dissolved fund management company can transfer the entire assets, money of entrusting customers to the entrusted portfolio depository accounts of the replacing fund management company selected by the company.

2. a) For securities investment fund management:

a) The fund management company must consult investors’ general meetings of securities investment funds, shareholders’ general meeting of securities investment company on the replacement of the fund management company. In case the fund management company is dissolved and investors’ general meetings, shareholders’ general meeting cannot reach an agreement of the replacing fund management company, the liquidation or dissolution of the securities investment fund, securities investment company, shall be made in accordance with law on securities investment fund.

b) The handover of the rights and obligations with respect to securities investment fund, securities investment company to the replacing fund management company shall comply with Article 13 of this Circular.

3. For securities investment consultancy operation: the fund management company liquidates the securities investment consultancy contracts for a period of 06 months from the date of approval of the dissolution;

4. The dissolved fund management company must compensate damages to customers in case of money, assets of customers to be lost in the process of dissolution of the company as specified in the charters of securities investment fund, securities investment company and investment entrustment contracts. In the absence of this provision, the customer has the rights as an unsecured creditor. Compensation level must be made according to the same rate as for other unsecured creditors.

5. In the process of dissolution, the fund management company shall continue to perform the obligations to report the activity of investment portfolio management, securities investment fund management as prescribed in Article 29 of this Circular and law on securities investment funds, together with information on the progress of the liquidation of the contract, returning of the assets to each entrusting customer and the handover of rights and responsibilities to the replacing fund management company.

Chapter V

PROVISION OF INFORMATION, OBLIGATION TO REPORT AND ARCHIVE OF DOSSIERS

Article 28. Information provision:

1. A fund management company must archive fully the following documents at its head office, representative offices, branches, distribution agents as well as on the its website and provide them free for investors upon request:

a) The fund charter, the charter of the securities investment company, the prospectus, summarized prospectus, documents, reports, contracts referred to in the prospectus, summarized prospectus of securities investment company, fund;

b) The annual financial statements of securities investment companies, funds that have been audited of at least 05 latest years; biannual financial statements, quarterly financial statements to the latest quarter of the securities investment companies, funds;

c) Report on periodical operation of the securities investment companies, funds according to law on securities investment funds of at least 05 latest years;

d) Report on the net asset value of the securities investment companies, funds in accordance with law securities investment funds.

2. In case the entrusting customers or representatives of entrusting customers request, the fund management companies must provide the risk management process, outlining investment limit, method of risk prevention and management that the companies use to manage assets of entrusting customers.

3. For customers entrusting portfolio management, the fund management companies are responsible for:

a) Monthly reporting to the entrusting customers on the state of investment portfolio, using the form in Appendix V to this Circular. The fund management companies may provide the entrusting customers with such report in electronic or paper form if the investment entrustment contracts define such form. The electronic report shall comply with law on e-transactions;

b) Providing entrusting customers investment entrustment contracts, depository contracts and documents attached to contracts at the request of entrusting customers;

c) Providing customers with investment portfolio account statements, transaction statements certified by depository banks, and information on the investment portfolio management activities, answering all questions as required by the customers.

4. Fund management companies are responsible for providing the State Securities Commission with investment entrustment contracts as required by the State Securities Commission. Fund management companies shall, when providing offshore indirect investment entrustment contracts, send together with documents approving that entrusting institutions meet conditions for offshore indirect investment according to law.

Article 29. Obligation to report

1. The fund management companies send to the State Securities Commission periodic reports as follows:

a) Monthly and annual report on operation of fund management companies, using the form in Appendix VI to this Circular;

b) Monthly report on investment portfolio management of fund management companies with the confirmation of depository banks where such companies open the depository accounts, confirmation of depository members where entrusting customers open their accounts, confirmation of overseas depository institutions, using the form in Appendix VII to this Circular;

c) Biannual and annual reports on the risk administration of fund management companies, using the form in Appendix VIII to this Circular;

d) Reports of annual internal audit results; reports on annual internal control of fund management companies;

dd) Quarterly financial statements; biannual financial statements examined, annual financial statement audited by accredited audit firms of fund management companies according to law on accounting for fund management company;

2. Time limits for submitting periodical reports specified in Clause 1 of this Article:

a) For monthly reports: Within 05 working days from the last day of a month;

b) For quarterly reports: Within 20 days from the last day of a quarter;

c) For biannual reports: Within 45 days after the last day of the first 06 months of a year;

d) For annual reports: Within 90 days from the last day of a year.

3. For periodical reports specified in Clause 1 of this Article, the report data shall be taken:

a) For monthly reports: From the first day to the last day of reporting month (except for data shown at a certain time);

b) For quarterly reports: From the first day to the last day of the reporting quarter (except for data shown at a certain time);

c) For biannual reports: From January 01 to June 03 of the reporting period (except for data shown at a certain time);

d)  For annual reports: From January 01 to December 30 of the reporting year (except for data shown at a certain time);

dd) A fund management company whose operation period is less than one reporting period, the reporting period shall be from the date of issuance of establishment and securities business license to the last day of the reporting period as prescribed at Points a, b, c and d of this Clause.

4. The fund management companies shall send the State Securities Commission reports in electronic or paper form.

5. The fund management companies must notify the State Securities Commission the following events:

a) Changing, electing, relieving from duty members of Board of Directors, members of Members’ Council. A notice must be attached to resolution or decision on election, relief from duty, change of members of Board of Directors, members of Members’ Council and other valid documents to ensure that new members of Board of Directors and of Members’ Council satisfy the company’s charter, laws on securities and enterprises;

b) Changing heads of the domestic representative offices, Chief Executive Officers of domestic branches. A notice must be attached to decision on appointment, other valid documents to ensure that replacing people satisfy the law on securities;

c) Amending and supplementing the company charter. The notice must be attached to document amending and supplementing the company charter;

d) Completing the transfer of shares, contributed capital amounts of shareholders, capital-contributing members of fund management companies, unless stocks of fund management companies have been listed at the Stock Exchange. A notice shall comply with the form in Appendix XI to this Circular and be attached to a valid copy of contract on transfer of shares, contributed capital amounts between parties. In case the fund management company is a public company, if the transfer results the transferee owning 25% or more of voting stocks of the fund management company, the transferee must comply with the law on the public bid for stocks of public companies;

c) The events that may seriously affect financial capacity, entrusted asset management.

6. The time limit for reporting to the State Securities Commission on the events as prescribed in Clause 5 of this Article is 03 working days after such events occur.

7. The fund management companies shall report to the boards of trustees of funds, Board of Directors of the securities investment company or customers entrusting portfolio management in case of detecting that the supervisory banks, depository banks violate fund charters, charters of securities investment companies, supervision contracts, depository contracts; report to the State Securities Commission in case such organizations violate the law provisions within 03 working days from the detection of violation.

8. In addition to the cases of report specified in this Article, in case of necessity, to protect the public interests and the interests of investors, the State Securities Commission shall require the fund management companies to report on operation of the companies. The fund management companies must report to the State Securities Commission, within 48 hours after receiving its requirement.

Article 30. Archive of dossiers, documents and information

1. The fund management companies must archive completely, accurately, timely, and systematically all documents, dossiers and update information and data relating to the operation of the companies according to the law on enterprises. The dossiers, documents and information on the operation of the companies must be made backup in a location outside the companies’ headquarters.

2. The fund management companies, supervision banks, depository banks, distribution agents, concerned service providing organizations must archive fully, systematically to ensure clarity, accuracy and consistency of documents that are suitable for responsibilities and obligations of each organizations according the law and service providing contracts as follows:

a) The offering of fund certificates, distribution of fund certificates;

b) Certification of the ownership of investors of securities investment funds, securities investment companies, entrusting customers; registration of asset ownership of securities investment funds, securities investment companies, entrusting customers;

c) Financial statements, accounting books; system of accounts, bills, transaction documents must reflect in details, accurately and timely daily orders of transactions of each entrusting customer, of the company and the employees in the company, including information on the order to make orders, made transactions; documents and electronic information used to determine the net asset value; the original of legal documents of ownership registration, the original or a valid copy of legal documents verifying ownership relating to assets, asset transactions and relevant documents  must be archived by the fund management companies and the supervision banks, depository banks in the entire process of operation of securities investment funds,  securities investment companies, the validity duration of the investment entrustment contract;

d) Report on the activities of evaluation, investment analysis, investment decision, investment management, divestment of capital and relevant documents; final report on the asset management operations; report on the internal inspection, control in accordance with laws and internal regulations; report on handling of complaint letters, complaints and denunciations, compensation requirements of customers;

dd) All documents related to operation of securities investment companies, funds.

3. Investment portfolio, data and transaction documents, ownership registration,  accounting books, accounting accounts, documents, electronic information related to assets, asset transactions of securities investment funds, securities investment companies, entrusting customers must be periodically and frequently inspected, checked by the fund management companies, supervisory banks, depository banks and the relevant organizations in accordance with fund charter, charters of securities investment companies, investment entrustment contracts and the law on accounting.

4. Dossiers, documents and information specified in Clauses 1, 2 and 3 of this Article shall be archived within 10 years. For the documents related to the accounting activities, to comply with laws on accounting and auditing.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 31. Effect

1. This Circular takes effect on January 01, 2021.

2. This Circular replaces the Circular No. 212/2012/TT-BTC dated December 05, 2012 of the Minister of Finance guiding the establishment, organization and operation of fund management companies. To annul Article 1; Clauses 1, 3 and 4, Article 7 of the Circular No. 91/2019/TT-BTC dated December 31, 2019 of the Minister of Finance amending and supplementing a number of circulars on reporting regime and administrative procedures applicable to fund management companies, securities investment funds and securities investment companies.

3. Fund management companies are responsible for formulate company charter according to the Law No. 54/2019/QH14 on Securities, the Law No. 59/2020/QH14 on Enterprises and this Circular. The charter of a fund management company being the joint stock company must be approved at the latest General Meeting of Shareholders from the effective date of this Circular. The charter of a fund management company being the limited liability company must be approved by its Members’ Council or owner within 06 months from the effective date of this Circular.

4. Regulations for the Vietnam Securities Depository and Clearing Corporation shall be observed by the Vietnam Securities Depository Center until the Vietnam Securities Depository and Clearing Corporation is established and officially operated in accordance with the Law No. 54/2019/QH14 on Securities.

Article 32. Organization of implementation

The State Securities Commission, the Vietnam Securities Depository and Clearing Corporation, securities investment fund management companies, depository banks, supervisory banks and relevant organizations and individuals shall implement this Circular./.

* All Appendices are not translated herein.