VietnameseDecision No. 05/1999/QD-UBCK3 dated March 27, 1999 of the State Securities Commission promulgating the regulation on securities custody, clearing and registration
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Decision No. 05/1999/QD-UBCK3 dated March 27, 1999 of the State Securities Commission promulgating the regulation on securities custody, clearing and registration
| Issuing body: | State Securities Commission | Effective date: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Official number: | 05/1999/QD-UBCK3 | Signer: | Le Van Chau |
| Type: | Decision | Expiry date: | Updating |
| Issuing date: | 27/03/1999 | Effect status: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Fields: | Securities |
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Effect status: Known
THE STATE SECURITIES COMMISSION ------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom – Happiness ---------- |
No: 05/1999/QD-UBCK3 | Hanoi, March 27, 1999 |
DECISION
PROMULGATING THE REGULATION ON SECURITIES CUSTODY, CLEARING AND REGISTRATION
THE CHAIRMAN OF THE STATE SECURITIES COMMISSION
Pursuant to Decree No.15/CP of March 2, 1993 of the Government on the tasks, powers and State management responsibilities of the ministries and ministerial-level agencies;
Pursuant to Decree No.75/CP of November 28, 1996 of the Government on the establishment of the State Securities Commission;
Pursuant to Decree No.48/1998/ND-CP of July 11, 1998 of the Government on securities and securities market;
Pursuant to Decision No 127/1998/QD-TTg of July 11, 1998 of the Prime Minister on the establishment of the Securities Trading Centers;
At the proposal of the Director of the Securities Trading Management Department,
DECIDES:
Article 1.- To promulgate together with this Decision the Regulation on securities custody, clearing and registration.
Article 2.- This Decision takes effect 15 days after its signing.
Article 3.- The head of the Office, the director of the Securities Trading Management Department, the heads of the units attached to the State Securities Commission, the Securities Trading Centers, the custody members and the concerned parties shall have to implement this Decision.
THE STATE SECURITIES COMMISSION Le Van Chau |
REGULATION
ON SECURITIES CUSTODY, CLEARING AND REGISTRATION
(Issued together with Decision No.05/QD-UBCK3 of March 27, 1999 of the Chairman of the State Securities Commission)
Chapter I
GENERAL PROVISIONS
Article 1.- This Regulation stipulates the principles, content, order and procedures related to securities custody, clearing and registration activities.
Article 2.- In this Regulation, the following terms shall be understood as follows:
1. Securities registration is the acknowledgement of the ownership, other rights and relevant obligations of the securities holders by a securities custody information system in the securities custody accounts.
2. Securities trading comparison is the reception of information related to transactions already executed at the Securities Trading Center and the reconfirmation of such information’s accuracy with the Securities Trading Center by purchasing and selling members.
3. Securities and cash clearing is the clearing among securities purchasing and selling transactions executed at the Securities Trading Center for each type of securities with the same settlement day in order to determine the volume or value of securities and cash which each custody member must deliver or receive on the settlement day.
4. Securities custody is the storing and preservation of securities of clients, thus helping them to exercise their rights over their securities.
Clients shall be classified into two kinds:
a/ Clients of the Securities Trading Center;
b/ Clients of the custody members.
5. Custody member is a member securities firm or a commercial bank licensed for custody operation by the State Securities Commission in order to provide securities custody, clearing and registration services at the Securities Trading Center.
Custody members shall be classified into two kinds:
a/ Domestic custody member is a member securities firm or a Vietnamese commercial bank licensed for custody operation by the State Securities Commission in order to provide securities custody, clearing and registration services at the Securities Trading Center for Vietnamese organizations and individuals.
b/ Foreign custody member is a foreign bank branch or a joint venture bank operating in Vietnam which is licensed for custody operation by the State Securities Commission to provide the securities custody, clearing and registration services at the Securities Trading Center to foreign organizations and individuals.
6. Professional staff is the staff of custody members granted the custody practitioner licenses by the State Securities Commission to engage in the securities custody, clearing and registration activities.
7. Working day is every week day from Monday through to Saturday, except for the public holidays defined in the Labor Code and days off under decisions of the Director of the Securities Trading Center in cases where the computer system is struck with incidents or force majeure cases.
8. Settlement day is a day when the securities buying custody member or selling custody member receives their securities or cash according to the State Securities Commission’s regulations.
9. Trading report is a detailed report on transactions of custody members made by the Securities Trading Center.
10. Securities custody account is an account used for accounting the deposit, withdrawal or transfer of securities, as well as for accounting of the securities delivery and reception.
11. Pledgor is a custody member that, on its own behalf or under the authorization of the borrower, delivers securities to the pledgee.
12. Pledgee is a custody member that, on its own behalf or under the authorization of the lender, receives the pledged securities from the pledgor.
13. Final registration day is the day fixed by the issuing organization to determine the list of securities owners in service of the exercise of the securities owners rights.
Article 3.-
1. Securities custody, clearing and registration by the Securities Trading Center shall be affected at the head office of the Securities Trading Center.
2. Only the Securities Trading Center and organizations, licensed to conduct the custody operation may provide custody services.
Chapter II
CUSTODY MEMBERS
Article 4.- All securities firms which have been granted securities business operation licenses by the State Securities Commission to conduct one or several securities business types specified in Points a, b, c and d, Clause 2, Article 29 of the Government’s Decree No.48/1998/ND-CP of July 11, 1998 on securities and securities market shall naturally be granted securities custody licenses by the State Securities Commission.
Within 15 days after a securities firm files an application, produces the list of its professional staff members who have been granted the custody practitioner licenses, and pays the licensing fee as prescribed, the State Securities Commission shall grant the custody operation license to such securities firm.
Article 5.- A commercial bank applying for the custody operation license must meet the following conditions:
1. Having been granted license for establishment and operation in Vietnam by the State Bank;
2. Having enough material and technical facilities to ensure the provision of custody services;
3. Having at least two professional staff members, and one person from the management board in charge of the custody operations.
Article 6.- The dossier of application for custody operation license for a domestic commercial bank or a joint venture bank shall include:
1. An application for custody operation license;
2. The notarized copy of the bank’s charter;
3. The written explanation on its material-technical facilities in service of the securities custody operation;
4. The list of its professional staff members enclosed with their practitioner licenses granted by the State Securities Commission;
5. The audited financial reports for the latest two consecutive years;
6. The notarized copies of the establishment and operation license of the applying organization;
7. The curricula vitae of the managing board’s members, as well as the custody member’s representatives;
8. The specimen seal of the applying organization, the specimen signatures of the manager, the management board’s members in charge of custody operation and the authorized representative(s) of such organization;
9. The plan for custody operation in Vietnam and the projected capital source for the first 12 months’ operation.
Article 7.- A foreign bank’s branch wishing to apply for the custody operation license shall, besides documents specified in Article 6 of this Regulation, have to submit also the following documents:
1. The notarized copy of the current charter of the original bank;
2. The notarized copies of the operation license of the original bank and the establishment and operation license of the foreign bank’s branch;
3. The notarized copy of the original bank’s authorization letter permitting its branch to conduct the custody operation;
4. The financial reports for the latest two consecutive years and the report on custody operation of the original bank;
5. Other documents at the request of the State Securities Commission.
Article 8.-
1. Within 90 days after receiving the banks’ complete dossiers of application for custody licenses, the State Securities Commission shall grant or refuse to grant custody operation licenses. Enclosed with the refusal must be the written explanation of the reasons therefor.
2. The banks applying for custody operation licenses shall have to pay the licensing fee as prescribed before officially receiving the licenses.
3. Within 120 days after being granted licenses by the State Securities Commission, the organizations engaged in the custody operation shall have to register for being custody members of the Securities Trading Center.
Article 9.- At the requests of the concerned securities firms and commercial banks, the State Securities Commission shall consider and grant the securities custody practitioner licenses to individuals who fully meet the following conditions:
1. Having full legal capacity and full capacity for civil acts;
2. Not falling in one of the following cases:
a/ Being examined for penal liability;
b/ Having been sentenced for serious crimes against the national security, the socialist property, the citizens’ property; or serious economic crimes;
c/ Having been sentenced for other crimes, but their sentences not being wiped out yet.
3. Having the financial or banking degrees of intermediate or higher levels;
4. Having all professional certificates on securities, issued by the State Securities Commission.
Article 10.- A practitioner license application dossier of a Vietnamese citizen shall include:
1. An application for custody operation practitioner license;
2. His/her securities professional certificates issued by the State Securities Commission;
3. His/her curriculum vitae with the competent agency’s certification that the applicant does not fall within the cases specified in Clause 2, Article 9 of this Regulation;
4. The comments of the agency(ies) where the practitioner license applicant previously worked (if any);
5. The notarized copies of his/her financial or banking intermediate or higher degrees.
Article 11.- A practitioner license application dossier of a foreigner working in Vietnam shall include:
1. An application for practitioner license;
2. The photocopy of his/her passport and the notarized copy of his/her permit for residence in Vietnam;
3. The work permit for foreign laborers granted by the Ministry of Labor, War Invalids and Social Affairs;
4. The diplomas and certificates evidencing his/her educational level and professional qualifications;
5. The judicial background record certificate issued by the competent agency of the country of which the applicant is a citizen;
6. The custody practitioner license granted by the foreign country or the securities professional certificates issued by the State Securities Commission;
7. The comments of the agency(ies) where the practitioner license applicant previously worked (if any).
Article 12.- The practitioner license applicant shall have to pay a licensing fee of VND 1 million to the State Securities Commission before receiving the practitioner license.
Article 13.-
1. A custody member shall have to register at least two professional staff members to perform the securities custody, clearing and registration at the Securities Trading Center, together with the authorization paper for such professional staff members.
2. The Securities Trading Center may request a custody member to change, increase or reduce the number of its professional staff members mentioned in Clause 1 of this Article to support the settlement of securities transactions in case of necessity.
Article 14.- A custody member shall have the following rights and obligations:
1. To authorize in writing the designated bank to effect the payment of money for securities transactions, and commit itself to notify the Securities Trading Center of any change related to the authorization paper;
2. To authorize in writing the Securities Trading Center to perform operations related to the settlement of securities transactions as prescribed;
3. To take responsibility for all operations of its professional staff members in the settlement of securities transactions;
4. To commit itself to abide by all regulations of the State Securities Commission, the Securities Trading Center and the designated banks on matters related to the securities custody, clearing and registration;
5. To provide the Securities Trading Center with information or documents necessary for conducting the securities custody, clearing and registration.
Article 15.-
1. The custody members shall cease the securities custody, clearing and registration at the Securities Trading Center in the following cases:
a/ Such custody members wish to do so voluntarily;
b/ It is done so on the Securities Trading Center’s order.
2. The custody members that cease the service provision according to Point a, Clause 1 of this Article shall have to submit the applications for withdrawal of custody operation license to the State Securities Commission and may terminate their operations only after obtaining the State Securities Commission’s approval.
3. A custody member shall be compelled to stop the provision of services according to Point b, Clause 1 of this Article, in the following cases:
a/ Such custody member has failed to pay to the Securities Trading Center the fee or any expense for two consecutive times;
b/ Such custody member is not fully eligible for operation as prescribed.
4. The custody members that cease the securities custody, clearing and registration shall have to:
a/ Pay to the Securities Trading Center all outstanding fee and expense amounts;
b/ Withdraw all remaining securities on their securities deposit accounts within a time limit prescribed by the Securities Trading Center. If they fail to do so, such custody members shall have to bear all arising costs related to the securities safe-keeping and pay a fine as prescribed.
After the custody members fulfill the above-said obligation, the Securities Trading Center shall order the final settlement of securities custody accounts of the custody members and the latter shall have to terminate their operation from the date set by the Securities Trading Center.
Chapter III
SECURITIES CUSTODY
Article 16.-
1. In the securities custody operation, the Securities Trading Center shall have the following rights and obligations:
a/ To provide custody services for types of securities traded at the Securities Trading Center;
b/ To supervise the custody members in drawing up the list of owners of securities deposited at the Securities Trading Center;
c/ To provide the custody members with information on securities custody accounts;
d/ To guide the order and procedures for depositing, withdrawing, transferring, delivering and receiving securities;
e/ To promptly inform the custody members on the regulations, guidance and procedures newly promulgated or amended by the State Securities Commission;
f/ To request the custody members to pledge to comply with the provisions of this Regulation.
2. The Securities Trading Center shall have to take full responsibility for the damage caused by itself to custody members.
Article 17.- The securities allowed to be put in custody or sub-custody at the Securities Trading Center include all types of shares, bonds, warrants of the right to purchase shares, investment fund certificates, and other types of securities listed at the Securities Trading Center.
Article 18.-
1. The custody members shall have to open and manage accounts for their clients who have securities kept in custody. Each account opened for a client of a custody member must include following contents:
a/ The number of the securities custody account;
b/ The name and address of the account owner;
c/ The serial number of the identity card or the passport, or the serial number of the enterprise’s establishment license;
d/ The volume of securities;
e/ The type and code number of securities;
f/ Other necessary information.
2. In cases where there is any change or error regarding the information in the securities custody account, the client shall have to immediately notify it to the concerned organization so that the latter may acknowledge the change or correct the error in time and accurately.
3. If Vietnamese organizations and/or individuals that are not custody members wish to have their securities kept in custody, they shall have to deposit their securities and file applications for opening of securities custody accounts at domestic custody members.
If foreign organizations and/or individuals that are not custody members wish to have their securities kept in custody, they shall have to deposit their securities and file applications for opening of securities custody accounts at foreign custody members.
Article 19.-
1. Custody members shall have to open securities custody accounts for their clients separately from their own securities custody accounts in order to account the deposit, withdrawal or transfer of securities.
2. Custody members shall not be allowed to use securities or cash of one client for the interests of another client or of their own.
Article 20.-
1. Custody members that keep their clients’ securities in custody shall register their names as trustees authorized by the clients to perform the securities custody, clearing and registration operations.
2. Custody members shall, within 120 days after being granted the custody operation licenses by the State Securities Commission, register and fill in the procedures for opening securities custody accounts at the Securities Trading Center.
3. Securities listed at the Securities Trading Center must be kept in the centralized custody there.
4. The Securities Trading Center shall undertake custody of securities from its custody members with its name registered in the capacity as a trustee authorized by the custody members to perform securities custody, clearing and registration operations.
5. The custody members shall deposit their clients’ securities in sub-custody at the Securities Trading Center on the basis of account opening contracts between the clients and the custody members.
6. Securities shall be kept in the concentrated custody at the Securities Trading Center in the form of general custody, and since then the securities owners shall become co-owners of securities in general custody.
Article 21.- A securities custody account opened by a custody member at the Securities Trading Center must include the following contents:
a/ The serial number of the securities custody account;
b/ The name and address of the custody member;
c/The volume, type and code number of securities in custody and the name of the issuing organization;
d/ The increase or decrease in volume of securities in custody and the reason(s) therefor;
e/ If the securities custody account is a pledge one: the names and addresses of the pledgor and pledgee in cases where the custody member pledges securities in custody;
f/ The business registration number and the registered number of the custody member granted by the Securities Trading Center;
g/ Other information as prescribed by the Securities Trading Center.
Article 22.-
1. Securities custody accounts opened by the custody members at the Securities Trading Center shall be categorized as follows:
a/ Domestic securities custody accounts;
b/ Foreign securities custody accounts.
2. Only domestic custody members shall be entitled to open the domestic securities custody accounts at the Securities Trading Center.
Only foreign custody members shall be entitled to open the foreign securities custody accounts at the Securities Trading Center
Article 23.- Securities custody accounts specified in Clause 1, Article 22 of this Regulation shall be categorized as follows:
1. Securities custody accounts for accounting of the deposit, withdrawal and transfer of securities include three following types:
a/ Securities deposit accounts;
b/ Trading halt accounts;
c/ Pledge accounts.
2. Accounts for clearing of securities already traded.
Article 24.- The effect of the securities custody at the Securities Trading Center is stipulated as follows:
1. In cases where a member underwrites the securities issuance or subscribes to securities registered at the Securities Trading Center, the custody of the concerned securities shall take effect after the Securities Trading Center receives the report on distribution of newly issued securities to the securities purchasers.
2. In cases where the securities owners’ rights are exercised, the securities custody shall take effect as from the following time points when:
a/ The issuing organization additionally issues shares to increase its capital: the securities custody shall take effect one working day after the Securities Trading Center receives the money for securities subscription;
b/ The issuing organization pays dividends in form of securities: the securities custody shall take effect after the Securities Trading Center receives the report on distribution of securities to shareholders from the issuing organization;
c/ The convertible bonds are converted or the right to purchase shares is exercised: the securities custody shall take effect after the Securities Trading Center receives valid applications for conversion of convertible bonds or for purchase of shares;
d/ The issuing organization issues convertible bonds and warrants of the right to purchase shares: the securities custody shall take effect after the Securities Trading Center receives the money paid for subscription.
3. In cases where securities custody at the Securities Trading Center is effected in contravention of the provisions in Clauses 1 and 2 of this Article, the securities custody shall take effect after the Securities Trading Center credits the securities to the securities depositing accounts opened by the custody members at the Securities Trading Center.
Article 25.-
1. When depositing securities in the concentrated custody at the Securities Trading Center, the custody members shall have to submit to the Securities Trading Center the following documents:
a/ The securities deposit bills;
b/ In cases where securities under the ownership of the custody members’ clients are deposited such custody members shall also have to submit the securities deposit bills made by such clients;
c/ The securities certificates;
d/ Documents evidencing the ownership over the securities in custody;
e/ Other documents as prescribed by the Securities Trading Center.
2. Securities deposited at the Securities Trading Center must be securities of the issuing organizations which have already been registered at the Securities Trading Center.
3. The securities deposited in custody must be valid and damage-free and must not be those banned from exchange, announced stolen or litigated. The signatures on the securities certificates must be genuinely valid and must not be counterfeit ones.
4. If the documents specified in Clause 1 of this Article and submitted by the custody members conform to the regulations, the Securities Trading Center shall account the volume of securities deposited in the securities custody accounts and issue securities deposit certificates to the concerned custody members.
5. After accounting the volume of securities deposited in the securities custody accounts, if the Securities Trading Center detects that such securities are no longer valid for circulation, not up to the standards or invalid, or the signatures thereon are counterfeit or invalid ones, it shall cancel such securities custody. The custody members that have deposited such securities shall have to take responsibility for all losses incurred from the depositing of such securities.
Article 26.-
1. A custody member wishing to withdraw securities shall have to file to the Securities Trading Center a dossier containing:
a/ The securities withdrawal bill;
b/ An application for securities certificate made by the securities owner;
c/ In case of application for withdrawal of securities under the ownership of the custody member’s client, the custody member shall also have to submit the securities withdrawal bill made by such client;
d/ The documents related to the securities withdrawal.
2. If the dossier is already accurate and complete and the custody member has sufficient securities on the account, the Securities Trading Center shall make the equivalent book entry of the securities withdrawal on the securities custody account of the custody member within the day when such custody member files the dossier, and give it a written appointment for receiving the securities.
3. Within 7 working days from the date written in the appointment paper, the custody member must come to receive the securities certificates. Past such time limit, the Securities Trading Center shall charge the securities custody fee.
Article 27.-
1. The Securities Trading Center shall not undertake the securities custody, withdrawal, and/or transfer on the following days:
a/ Working days specified by itself for merger, division, change of securities certificates or execution of requests for conversion of convertible bonds;
b/ Working days specified by the Securities Trading Center for payment of bond principals and interests;
c/ Working days on which, due to technical reasons, the Securities Trading Center is not able to execute the clients’ requests. In this case, the Securities Trading Center shall have to notify in advance the concerned custody members of the reason(s) and time period during which the Securities Trading Center shall not undertake the securities custody.
2. Besides, the Securities Trading Center shall not undertake the securities custody for the period from the working day before the final registration day to the working day after the final registration day.
3. Besides the provisions of Clause 1, this Article, the Securities Trading Center shall not allow the securities withdrawal or account transfer until it formally receives securities in custody in cases specified in Article 24 of this Regulation.
Article 28.-
1. In order to effect the through-account transfer of already traded securities according to clearing result, the custody member shall have to fill in the procedures for opening an account for clearing of traded securities separately from the account for accounting the securities deposit, withdrawal and transfer.
2. The account stipulated in Clause 1, this Article, shall be used for delivering and receiving securities according to securities settlement vouchers made by the Securities Trading Center.
Article 29.-
1. The custody member shall make, receive or cancel the transfer of securities on the securities custody account in order to account the securities deposit, withdrawal and transfer by way of sending requests through the computer system on each working day.
2. When making securities through-account transfer through the computer system, the custody member shall have to announce the receipt of securities within the day of such account transfer. In cases where the member fails to make announcement within such day, such account transfer shall not be valid yet.
Article 30.-
1. The Securities Trading Center shall effect the transfer of securities on the securities custody accounts in conformity with the securities settlement vouchers.
2. The custody member delivering securities must ensure that the securities volume on the securities clearing account is compatible with the securities settlement vouchers.
Article 31.- The Securities Trading Center shall have to:
1. Provide the custody members with daily information on account transfer or reception of account transfer of securities on the securities custody accounts as well as the balance thereon through the computer system of the Securities Trading Center on the working day after the date of securities account transfer or securities account transfer reception.
2. Make reports on balance of securities custody accounts of the custody members on the last day of each month and send them to the custody members on the first day of the following month.
Article 32.- If the information or reports specified in Article 31 of this Regulation are inaccurate, the custody members shall request in writing the Securities Trading Center to correct them before 14:30 hrs of the working day right after the date they receive such information or reports.
In cases where the custody members do not request for correction of information or reports within the prescribed time limit, thus causing losses to the Securities Trading Center or the securities owners, the custody members shall have to be liable for such losses.
Article 33.- The securities pledge must be effected according to the following principles and procedures:
1. The pledgor shall have to submit to the Securities Trading Center a dossier including:
a/ An application for opening of a securities pledge account;
b/ The written pledge pledge release request;
c/ The securities pledge contract;
d/ The securities pledge authorization paper (in cases where the borrower is not a custody member);
e/ The request for transfer of pledged securities into the pledge account;
f/ Other documents stipulated by the Securities Trading Center.
2. In cases where the lender is not a custody member, the lender shall have to authorize the reception of securities pledge to a certain custody member.
3. If the dossier submitted by the pledgor is complete and accurate, the Securities Trading Center shall open a pledge account and transfer securities into it at the pledgor’s request.
4. The pledge account must be separated from the other securities custody accounts of the pledgor. The Securities Trading Center shall suspend the withdrawal, transfer or assignment of securities on the pledge account within the pledge term. After recording pledged securities in the registration book, the Securities Trading Center shall have to notify in writing the pledgee of the effect of the securities pledge.
Article 34.-
1. The securities pledge release shall be effected according to the following principles and procedures:
a/ The person who is in charge of the securities pledge release must be the securities pledgee;
b/ The pledged securities may be wholly or partly released in the form of withdrawal of certificates or account transfer;
c/ The pledgee shall have to send the securities pledge pledge release request to the Securities Trading Center.
2. If the dossier submitted by the pledgee is accurate and complete, the Securities Trading Center shall cancel the securities pledge in the securities owners registration book.
3. After cancelling the securities pledge, the Securities Trading Center shall have to send to the pledgee a written notice of the cancellation of the securities pledge.
4. Through the computer system, the pledgee shall have to request the transfer of securities already released from the pledge account to other accounts.
Article 35.- If the pledgor fails to perform or perform the due obligation(s) not according to the agreement, the pledged assets shall be handled by mode already agreed upon by the parties or put on auction for the performance of such obligation(s) according to provisions of law.
The securities auction shall be conducted in either of the two following ways:
1. In cases where the pledged securities with original securities certificates are auctioned, the pledgee shall have to withdraw the pledged securities certificates deposited at the Securities Trading Center for auction.
2. In cases where the pledged securities without original securities certificates are auctioned, the securities auction shall be conducted as follows:
a/ The pledgee shall have to use the pledge certification copies as proofs for auction instead of the pledged securities certificates;
b/ After completing the auction of pledged securities, the pledgee shall have to submit to the Securities Trading Center a dossier, including:
- The decision on pledged securities auction;
- The announcement and the record of the securities auction.
c/ At the request of the buyers in the auction session, the securities delivery may be conducted in form of book-entry account transfer or delivery of securities certificates.
Article 36.- The custody members that use the securities custody, clearing and registration services provided by the Securities Trading Center shall have to pay the prescribed fees and charges.
Chapter IV
SECURITIES CLEARING
Article 37.-
1. The securities clearing activities shall be conducted from 8:00 to 11:00 hrs and from 13:30 hrs to 15:00 hrs on all working days at the Securities Trading Center.
2. Securities clearing shall be applied to all securities transactions at the Securities Trading Center.
Article 38.- The transaction clearing and settlement shall be effected on the following principles:
1. The securities transaction clearing shall be effected by mode of multilateral clearing. The bilateral clearing mode shall be applied to some cases and certain types of transaction under the Securities Trading Center’s regulations;
2. The settlement of securities transactions must comply with the principles of simultaneous securities delivery and money payment.
Article 39.- The comparison and clearing shall be conducted in the following order:
1. The members receive trading reports provided by the Securities Trading Center;
2. The members send to the Securities Trading Center their trading confirmation reports;
3. The Securities Trading Center shall have to send notices to convoke the members in cases where the data in the trading reports are not matched;
4. The Securities Trading Center shall effect the money or securities clearing, and make settlement vouchers.
The specific time schedule and order for the comparison and clearing shall be set by the Securities Trading Center.
Article 40.- The transaction settlement shall be conducted in the following order:
1. The custody members receive the settlement vouchers provided by the Securities Trading Center;
2. The custody members provide securities or money to the Securities Trading Center;
3. The Securities Trading Center receive securities or money from the providing custody members and deliver them to the receiving custody members.
The specific time schedule and order for the transaction settlement shall be set by the Securities Trading Center.
Article 41.- Settlement of securities and money must satisfy the following requirements:
1. The settlement of traded securities must accord with the volume of securities and money stated in the securities settlement vouchers;
2. Money payment must be effected by mode of transfer through the account system of the custody members and the Securities Trading Market opened at a designated bank.
The designated bank is a big and prestigious commercial bank and designated by the State Securities Commission on the basis of consulting the State Bank and such commercial bank to open settlement accounts for the Securities Trading Center and the custody members in service of the settlement of securities transactions;
3. The custody members shall have to ensure the sufficient transfer of money for transaction settlement into their clearing accounts at the designated bank within the prescribed time limit by mode of account transfer, a direct payment of cash or check at the designated bank;
4. By the prescribed time point, the designated bank shall deduct money amounts for settlement from the clearing accounts of the custody member and remit them into the clearing account of the Securities Trading Center opened at such designated bank.
Chapter V
SECURITIES REGISTRATION
Article 42.- All securities must be concentratedly registered at the Securities Trading Center through the custody members. The securities registration shall include:
1. Registering the newly issued securities;
2. Managing the securities owners registration book;
3. Managing the assigned securities registration book and the pledged securities registration book;
4. Drawing up the list of securities owners in preparation for the shareholders’ annual congresses;
5. Providing services of sending letters to invite shareholders and making minutes of the shareholders’ congresses;
6. Performing the activities related to the payment of dividends;
7. Performing the securities registration operations related to the increase of capital of the issuing companies;
8. Supervising the participation proportions of the foreign party(ies);
9. Other activities specified by the Securities Trading Center.
Article 43.- The Securities Trading Center has the obligations:
1. To record accurately and fully, and update information on the registered securities;
2. To conduct the internal inspection in order to protect clients or securities owners;
3. To preserve, store, gather and process data related to the securities registration;
4. To supervise activities of the securities owners in compliance with the provisions of law;
5. To provide guidance on the securities registration procedures for the custody members.
Article 44.- Securities shall be registered separately for each type according to the following information:
1. The information on securities:
a/ Securities appellation;
b/ Securities type;
c/ Par value;
d/ Total volume of issued securities.
2. The information on securities owner:
a/ Name, nationality and address of the securities owner;
b/ Serial number of the securities certificate (if any);
c/ Volume of securities held by the securities owner;
d/ Date of making the securities ownership registration or date of transferring the securities ownership;
e/ Other information as prescribed.
Article 45.-
1. When it needs to change the securities ownership, the full name and address of a securities owner, a custody member shall have to submit the following documents:
a/ An application for changes in the information on securities registration;
b/ A copy of the identity card or the passport of the securities owner who wishes to change the information on securities registration;
c/ A copy of the document evidencing the changes in the ownership, the full name and address of the securities owner according to the regulations;
2. When it needs to change the information on a securities owner being a legal person, a custody member shall have to submit the following documents:
a/ An application for changes in the information on securities registration;
b/ A copy of the identity card or the passport of the representative authorized by the legal person to sign the application for changes in the information on securities registration;
c/ The document(s) evidencing the changes in the information on the legal person issued by the competent agency;
3. The Securities Trading Center shall have to adjust the registered information in compliance with Clauses 1 and 2 of this Article. If it discovers any discrepancy in the information on securities registration, the Securities Trading Center shall process such information properly.
Chapter VI
EXERCISE OF THE SECURITIES OWNERS’ RIGHTS
Article 46.-
1. Upon receiving the issuing organization’s notice on the final registration day, the Securities Trading Center shall have to notify the custody members thereof two weeks before the final registration day.
2. Upon receiving the notice specified in Clause 1 of this Article, a custody member shall have to provide the Securities Trading Center with the list of securities owners within 10 days after the final registration day in cases where this list is used for the shareholders’ regular congress, and 3 working days after the final registration day in cases where this list is used for other purposes by the issuing organization.
3. The custody member shall have to make the list of domestic securities owners or the list of foreign securities owners. These lists must include the following information which are valid until the final registration day:
a/ The full names and addresses of the securities owners;
b/ The occupations and nationalities of the securities owners;
c/ The types and volume of securities;
d/ The registration numbers of the securities owners being legal persons;
e/ Other information as prescribed by the Securities Trading Center.
Article 47.-
1. In cases where the list of securities owners submitted by the custody member contains inadequate or inaccurate information according to the provisions of Clause 3, Article 46 of this Regulation, the Securities Trading Center shall accept only the list’s parts containing adequate and accurate information and return those with inadequate and inaccurate information to the custody member for appropriate correction.
2. In cases where any loss is caused due to the custody member’s failure to submit adequate and accurate information within the prescribed time limit, such custody member shall have to take responsibility for such loss.
Article 48.- After receiving the list of securities owners, the Securities Trading Center shall notify the issuing organization of the information in the list within 20 working days after the final registration day if the list is used for the shareholders’ annual congress, and 6 working days after the final registration day if the list is used for other purposes by the issuing organization.
Article 49.-
1. The Securities Trading Center shall have to compare the list of securities owners with the general report on distribution of rights to clients sent by the issuing organization, make the final rights distribution report and immediately send it to the concerned custody member together with the issuing organization’s general report.
2. After receiving the final rights distribution reports from the Securities Trading Center, the custody members shall have to promptly notify the concerned securities owners of the contents in such reports.
Article 50.- Upon receiving a written request of a custody member or a securities owner sent via a custody member for the exercise of the rights over securities in custody at the Securities Trading Center as stipulated in Articles 51, 52, 53, 54, 55, 56 and 57 of this Regulation, the Securities Trading Center shall, on behalf of the securities owner or the custody member, exercise the rights in compliance with the provisions of Clauses 1 and 4, Article 20 of this Regulation.
Article 51.- The Securities Trading Center’s participation in the voting on behalf of the securities owners at the latter’s requests is stipulated as follows:
1. In cases where a custody member requests the Securities Trading Center to exercise the voting right on behalf of a securities owner, such custody member shall have to send to the Securities Trading Center a written request for the exercise of the voting right together with the authorization letter of each securities owner within 5 working days before the shareholders� congress takes place.
2. Upon receiving the request specified in Clause 1 of this Article, a representative of the Securities Trading Center shall participate in the shareholders’ congress (at the request and with authorization letter), and exercise the voting right on behalf of the securities owner.
Article 52.- The Securities Trading Center’s participation in the voting on behalf of the securities owners at the request of the issuing organization is stipulated as follows:
1. In order to have enough number of lawful shareholders to attend the shareholders’ congress, the issuing organization shall have to send to the Securities Trading Center a written request for the latter’s participation in the voting on behalf of the securities owners within 7 working days before the shareholders’ congress takes place;
2. The issuing organization shall have to publicize the Securities Trading Center’s participation in the voting on behalf of the securities owners within 10 working days before the shareholders’ congress takes place;
3. After the issuing organization makes such public announcement, the securities owners shall have to send to the Securities Trading Center notices through the custody members on their direct participation in the voting or the waive of their voting right within 5 working days before the shareholders’ congress takes place. If the securities owners fail to send notices within the prescribed time limit, the Securities Trading Center shall exercise its voting right at the request of the issuing organizations.
Article 53.-
1. In cases where it exercises the right to purchase shares, a custody member shall have to send a request for share subscription and pay share purchase money to the Securities Trading Center within one working day before the deadlines for exercising the share purchase right.
2. If the request specified in Clause 1 of this Article is valid, the Securities Trading Center shall check and confirm with the concerned custody member the holding of such custody member�s share purchase right. In order to exercise the share purchase right, the Securities Trading Center shall have to send to the issuing organization the warrant of the share purchase right of the concerned custody member.
3. After receiving the report on exercise of the share purchase right from the issuing organization, the Securities Trading Center shall have to transfer such shares into the securities custody account of the concerned custody member. Then, the Securities Trading Center shall promptly notify such custody member of the exercise of the share purchase right.
4. When the issuing organization issues the warrants of the share purchase right, the Securities Trading Center shall have to gather and distribute the share purchase rights according to the custody members� requests.
Article 54.-
1. The custody member wishing to exercise the right to convert the convertible bonds shall have to send to the Securities Trading Center a written request for the conversion of the convertible bonds together with other documents specified by the Securities Trading Center within one working day before the deadlines for converting the convertible bonds.
2. Upon receiving the request specified in Clause 1 of this Article, the Securities Trading Center shall have to request the issuing organization to promptly make the conversion. If it deems necessary, the Securities Trading Center may prescribe a time limit for converting the whole volume of such convertible bonds.
3. The Securities Trading Center shall provide the custody member with the abstract of the securities custody account after accounting the newly issued shares due to the conversion of convertible bonds into the securities custody account of the custody member.
Article 55.-
1. In order to receive dividends, bonus shares or bond principals and interests, the custody members shall file to the Securities Trading Center applications for payment of dividends, bonus shares or bond principals and interests. The Securities Trading Center shall distribute dividends, bonus shares or bond principals and interests to the concerned custody members on the working day after it receives dividends, bonus shares or bond principals and interests from the issuing organizations according to the securities holding proportions of the custody members at such issuing organizations.
2. In cases where the Securities Trading Center cannot distribute dividends, bonus shares or bond principal and interest within the time limit prescribed in Clause 1 of this Article, it shall have to promptly notify the concerned custody members of reason(s) for such delay.
Article 56.-
1. The Securities Trading Center shall exercise the rights over securities of persons having their names in the list of securities owners on the final registration day in cases where such securities have already been withdrawn, as follows:
a/ For the right to purchase shares or the right to convert convertible bonds, the Securities Trading Center shall make the subscription of newly issued securities, or receive and distribute the rights to purchase shares only at the written request of the securities withdrawers sent via the custody members that have effected the withdrawal of such shares;
b/ For dividends, bonus shares or bond principals and interests, the Securities Trading Center shall receive and pay or transfer at the custody members’ requests;
c/ The Securities Trading Center shall not exercise the shareholders’ rights other than those specified in Points a and b, Clause 1 of this Article.
2. In case of necessity, shares received from the issuing organization according to Clause 1 of this Article shall be accounted into a separate account.
3. The Securities Trading Center shall specify the procedures for exercising the rights over securities as provided for in Clause 1 of this Article.
Article 57.- The Securities Trading Center shall prescribe the procedures for exercising the rights other than those provided for in Articles 51, 52, 53, 54, 55 and 56 of this Regulation.
Chapter VII
SETTLEMENT SUPPORT FUND
Article 58.- The settlement support fund is a fund formed with contributions by the custody members and used to effect the settlement on behalf of a custody member in cases where such member is temporarily incapable of settling its transactions.
Article 59.-
1. All custody members are obliged to contribute a certain amount of money to the Securities Trading Center’s settlement support fund’s account opened at a designated bank.
2. The contribution levels are stipulated as follows:
a/ The fixed initial contribution level shall be 120 million VND for a custody member being a securities firm, and 80 million VND for a custody member being a commercial bank;
b/ The annual contribution level shall be equal to 0.008% of the trading turnover for all custody members.
3. The settlement support fund shall be put into the deposit account in the Securities Trading Center’s name at the designated bank.
Article 60.-
1. The Securities Trading Center shall be entitled to use the settlement support fund to make temporary settlement on behalf of a custody member in cases where such member lacks settlement capability.
2. The Securities Trading Center shall have to open a separate account to manage the settlement support fund’s assets in separation from the assets of the Securities Trading Center. All loss, profit and incurred expenditure amounts related to the settlement support fund shall be accounted on this account.
Article 61.-
1. In cases where a custody member fails to make settlement within the prescribed time limit, the Securities Trading Center shall have to transfer money to effect the settlement of transactions in the following order:
a/ Setting aside the contributions made to the settlement support fund by the violating custody members.
b/ In cases where the contributions mentioned in Point a, Clause 1 of this Article are not enough for the settlement, the Securities Trading Center shall set aside the contributions by other custody members according to such custody members’ proportion of contributions to the settlement support fund.
2. Within 5 working days after the settlement support fund’s money is used, the violating custody members are obliged to refund the settlement support fund the full amount they have used, compensate for all losses caused by their settlement breaches together with the fine interest calculated from the date the settlement support fund’s money is used. The applicable fine interest shall be equal to 150% of the interest of the 1-year deposits at the designated bank calculated on the number of late payment days for the first 5 days, and 6% per day from the 6th day. The fine interest shall be transferred into the settlement support fund.
3. Besides setting aside part of the settlement support fund to settle transactions according to Clause 1 of this Article, the Securities Trading Center shall also temporarily collect all money amounts and hold all securities that the violating custody members are entitled to receive on the date the settlement support fund’s money is used and the subsequent working days in order to fully retrieve the settlement support fund’s money amount stipulated in Clause 2 of this Article.
4. If after 5 working days, the value of all money amounts and securities collected according to Clause 3 of this Article is not sufficient to offset the settlement amounts mentioned in Clause 2 of this Article, the custody members that have breached the settlement shall have to mortgage or pledge their assets or valuable papers equivalent to the outstanding amount at the Securities Trading Center.
5. If the violating custody members fail to comply with provisions of Clause 4 of this Article, the Securities Trading Center shall temporarily suspend the securities clearing operation of such members.
Article 62.-
1. In cases where a concerned custody member fails to comply with provision of Clause 2, Article 61 of this Regulation, the Securities Trading Center shall have to apply the following measures in the following order to retrieve the money amounts mentioned in Clause 2, Article 61 of this Regulation:
a/ Using the money amount temporarily collected according to Clause 3, Article 61 of this Regulation;
b/ Selling securities temporarily held according to Clause 3, Article 61 of this Regulation;
c/ Selling assets or valuable papers mortgaged or pledged by the violating members according to Clause 4, Article 61 of this Regulation;
2. If the money amounts retrieved according to Clause 1 of this Article are not enough for settlement of the amounts specified in Clause 2, Article 61 of this Regulation, the members shall have to immediately settle the outstanding amounts. If the violating custody members fail to settle such outstanding amounts, the Securities Trading Center shall temporarily suspend the securities clearing operation of such members.
Article 63.-
1. The contributions made to the settlement support fund by the custody members shall be refunded only when they are no longer custody members of the Securities Trading Center.
2. The refund of the settlement support fund shall be made after all expenses related to services and fees for completing the settlement of securities transactions and other obligations, which the custody members have not fulfilled yet, are calculated.
3. As they are no longer custody members of the Securities Trading Center, the contributions to the settlement support fund by former custody members shall be refunded after the Securities Trading Center deducts amounts that must be settled or amounts of the fund used by such custody members.
Chapter VIII
REPORTING REGIME
Article 64.- The Securities Trading Center shall have to make monthly, quarterly and yearly reports as well as extraordinary reports at the State Securities Commission’s request.
Article 65.-
1. The provision of statistical reporting data must comply with the principle of ensuring confidentiality for the concerned custody members and be allowed by the Securities Trading Center’s Director.
2. The custody members shall have to apply the accounting regime set by the Ministry of Finance. The foreign custody members that wish to apply other accounting regime shall have to obtain the approval of the Ministry of Finance and the State Securities Commission.
Article 66.- Monthly, quarterly, biannually and annually, the custody members shall have to make truthful, accurate and complete reports on their operations to the State Securities Commission, as prescribed. The annual custody operation reports must be certified by an independent auditing organization accepted by the State Securities Commission.
In case of any unusual activities, the custody members shall have to report thereon to the State Securities Commission within 24 hours after its occurrence.
Chapter IX
INSPECTION, SUPERVISION AND HANDLING OF VIOLATIONS
Article 67.- The custody members and their professional staff members shall be subject to the inspection and supervision by the Securities Trading Center and the State Securities Commission in compliance with the provisions of the current law.
Article 68.- Any custody members and professional staff members that commit acts of violating the provisions in this Regulation shall be sanctioned according to the current law provisions.
Chapter X
IMPLEMENTATION PROVISIONS
Article 69.- Any amendments and/or supplements to this Regulation shall be decided by the Chairman of the State Securities Commission.
THE STATE SECURITIES COMMISSION Le Van Chau |
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