Decision No. 124/2008/QD-BTC of December 26, 2008, promulgating the Regulation on establishment and operation of Vietnam-based representative offices of foreign securities trading organizations

THE MINISTRY OF FINANCE

Decision No. 124/2008/QD-BTC of December 26, 2008, promulgating the Regulation on establishment and operation of Vietnam-based representative offices of foreign securities trading organizations

THE MINISTER OF FINANCE

Pursuant to June 29, 2006 Securities Law No. 70/2006/QH11;

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

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

At the proposal of the Chairman of the State Securities Commission,

DECIDES:

Article 1. To promulgate together with this Decision the Regulation on establishment and operation of Vietnam-based representative offices of foreign securities trading organizations.

Article 2. This Decision takes effect 15 days after its publication in “CONG BAO.”[1] Previous documents’ provisions which are contrary to those of the Regulation promulgated together with this Decision cease to be effective.

Article 3. The director of the Finance Ministry’s Office, the Chairman of the State Securities Commission, Vietnam-based representative offices of foreign securities trading organizations and concerned parties shall implement this Decision.

For the Minister of Finance
Vice Minister
TRAN XUAN HA

 

REGULATION ON ESTABLISHMENT AND OPERATION OF VIETNAM-BASED REPRESENTATIVE OFFICES OF FOREIGN SECURITIES TRADING ORGANIZATIONS

(Promulgated together with the Finance Minister’s Decision No. 124/2008/QD-BTC of December 26, 2008)

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Regulation guides the establishment and operation of representative offices of foreign securities trading organizations on the Vietnamese securities market.

Article 2. Interpretation of terms

In this Regulation, the terms below are construed as follows:

1. Parent company means a foreign securities trading organization with a representative office operating in Vietnam.

2. Competent representatives include:

a/ Chairman of the board of directors or director general (director) of a foreign securities trading organization;

b/ Persons authorized in writing by the person defined at Point a of this Clause;

c/ Persons who are fully competent, under the charter of a foreign securities trading organization, to sign documents specified in this Regulation and perform relevant jobs within the ambit of their vested powers.

3. Valid copy means a copy notarized or authenticated by a competent Vietnamese management agency.

4. Valid dossier means a dossier comprising all valid papers required by this Regulation and fully filled in under law.

5. Inauguration means commencement of operation of a representative office.

6. Date of inauguration is the date on which a representative office commences its operation.

Article 3. General provisions

1. Securities trading organizations which are established and lawfully operate under foreign laws and fully satisfy the conditions specified in Article 4 of this Regulation may open their representative offices in Vietnam.

2. Vietnam-based representative offices of foreign securities trading organizations submit to the management and supervision by the State Securities Commission.

3. Vietnam-based representative offices of foreign securities trading organizations, which were established before the effective date of the Securities Law but have not yet made operation registration under the securities law, shall make operation re-registration with the State Securities Commission. Operation re-registration dossiers of Vietnam-based representative offices of foreign securities trading organizations are specified in Article 5 of this Regulation.

4. Vietnam-based representative offices of foreign securities trading organizations and their employees have their lawful rights and interests protected and are obliged to abide by Vietnamese law.

Chapter II

ESTABLISHMENT OF VIETNAM-BASED REPRESENTATIVE OFFICES

Article 4. Conditions on establishment of representative offices of foreign securities trading organizations

Foreign securities trading organizations satisfying the following conditions may establish their Vietnam-based representative offices:

1. Being securities companies, fund management companies or financial institutions conducting one or several operations of securities brokerage, securities dealing, securities investment consultancy, securities issuance underwriting, asset management and securities investment fund management.

2. Having been licensed for operation under foreign laws or having made business registration for one or several securities operations, such as securities brokerage, securities dealing, securities investment consultancy, securities issuance underwriting, asset management and securities investment fund management with competent authorities in charge of securities in countries where they are established or make business registration.

3. Having been licensed by competent foreign authorities to establish, and register operation of, their Vietnam-based representative offices; or being not subject to any limitations on establishment and operation registration of Vietnam-based representative offices under foreign laws.

4. Clause 2 of this Article is not applicable to foreign organizations operating on the capital market and licensed to provide asset management services to a limited number of investors that satisfy some conditions specified by foreign laws and manage overseas investment funds intending to invest in Vietnam.

Article 5. Operation registration dossiers of Vietnam-based representative offices of foreign securities trading organizations

1. An operation registration dossier of a Vietnam-based representative office of a foreign securities trading organization comprises:

a/ An application for a representative office operation registration certificate, which is signed by a competent representative of the foreign securities trading organization (made according to a set form, not printed herein);

b/ The following papers, in case the foreign organization satisfies the conditions specified in Clauses 1 and 2, Article 4 of this Regulation:

- Valid copy of the operation license, business registration certificate or a paper of equivalent legal validity issued by a competent foreign authority in charge of securities, certifying that the foreign securities trading organization satisfies the conditions specified in Clauses 1 and 2, Article 4 of this Regulation. In case the operation license, business registration certificate or a paper of equivalent legal validity prescribes an operation duration for the foreign securities trading organization, the remaining duration must be at least one (1) year;

The following papers, in case the foreign organization satisfies only the conditions specified in Clause 4, Article 4 of this Regulation:

- Valid copy of the operation license, business registration certificate or a paper of equivalent legal validity issued by a competent authority to the foreign organization;

- Copy of the applicable foreign regulation permitting the foreign organization to provide the asset management service;

The following additional papers, in case the foreign organization satisfies the conditions specified in Clause 4, Article 4 of this Regulation and has registered trading codes for investment activities in Vietnam of investment funds it is currently managing:

- A list of investment funds currently operating in Vietnam certified by a competent person of the foreign organization and enclosed with copies of securities trading code registration certificates of these funds. This list contains information on raised capital amounts, capital amounts projected for investment in Vietnam, fields of investment, custodian banks in Vietnam, securities company or fund management company providing securities services, banks at which indirect investment capital accounts are opened, and is enclosed with valid copies of registration certificates of these accounts.

The following additional papers, in case the foreign organization satisfies the conditions specified in Clause 4, Article 4 of this Regulation and has not yet registered trading codes for investment activities in Vietnam of investment funds it is currently managing:

- Valid copy of the fund establishment registration certificate or an equivalent paper issued by a competent authority of the country where the organization has raised capital for the establishment or registered operation of these funds. In case it is prescribed by law in the country where a fund is established or makes business registration that a competent authority does not issue such paper, the foreign organization may submit the following papers in substitution: an excerpt from the website of the competent authority of the country where the fund is established or makes business registration certifying the fund’s establishment registration;

- Prospectuses of funds or equivalent papers;

- The articles of incorporation or fund charters;

- Trust deeds or fund contracts or memoranda for private placement or establishment contracts;

- Written certification of the paid-up capital amount by the custodian bank or depository bank.

c/ A copy of the memorandum for private placement, establishment contract or articles of incorporation of the foreign securities trading organization;

d/ A meeting minutes and resolution of the board of directors of the foreign securities trading organization on establishment of a Vietnam-based representative office and appointment of a Vietnam-based chief representative, clearly indicating the scope of operation of the Vietnam-based representative office. These must be enclosed with a written commitment of the foreign securities trading organization to taking full responsibility for the operation of its Vietnam-based representative office and assuring the observance of Vietnamese law by its Vietnam-based representative office;

e/ Valid copies of the passport or identity card and curriculum vitae (made according to a set form, not printed herein) of the person expected to be appointed as the Vietnam-based chief representative, which contain the certification of the foreign securities trading organization or local administration (for Vietnamese chief representatives), a list and curricula vitae (made according to a set form, not printed herein) of staff member of the representative office (if any), which contain the certification of a competent authority;

f/ An on-principle contract on lease of the representative office’s working office enclosed with a written certification of the ownership or lease right of the working office lessor;

g/ The latest fiscal year’s financial statement or a written certification of the tax or financial obligation performance in that year issued by a competent authority of the country where the foreign securities trading organization is established;

h/ A written permission of a competent authority of the country where the foreign securities trading organization is established or makes operation registration for this organization to open a Vietnam-based representative office. In case such a written permission is not required under foreign regulations, there must be documents proving that relaxation (copy of relevant foreign regulations).

2. A dossier specified in Clause 1 of this Article must be prepared in two (2) sets, one in Vietnamese and another in English, and:

a/ The dossier set in English must be legalized by a consulate, except for the financial statement which is originally in English and documents sent by the competent foreign authority directly to the State Securities Commission;

b/ Vietnamese copies and translations of English originals must be notarized by a lawful notary office in Vietnam under the notary public law. Particularly for translations of annual financial statements, memorandum for private placement or establishment contract, articles of incorporation or fund charters and equivalent documents, they must be certified by a competent agency or organization having the translation function and lawfully operating in Vietnam;

c/ The operation license, business registration certificate and legal documents and papers issued by competent Vietnamese authorities, original documents in Vietnamese (or their duplicates) which are prepared in Vietnam are not required to be translated into English or legalized by a consulate.

3. The modification or supplementation of dossiers shall be made when foreign securities trading organizations find it necessary or the State Securities Commission so requires. Modified or supplemented dossiers must be signed by persons who have signed original registration dossiers submitted to the State Securities Commission or persons holding the same titles.

4. Within seven (7) working days after receiving a complete and valid dossier of application for a representative office operation registration certificate, the State Securities Commission shall grant such certificate. In case of refusal, the State Securities Commission shall reply in writing, clearly stating the reason.

Article 6. Information disclosure and inauguration

1. Within thirty (30) days after getting a representative office operation registration certificate, a foreign securities trading organization shall carry out procedures for applying for seals with the police office (the provincial-level Police Department in the locality where its representative office is based) under the latter’s guidance, publish  the following details of this representative office operation registration certificate on a licensed newspaper, printed or online, for three (3) consecutive issues:

a/ Name and address of the representative office;

b/ Name and address of the head office of the foreign securities trading organization having a Vietnam-based representative office;

c/ Name and nationality of the chief representative;

d/ Number, date of issuance and the validity duration of the representative office operation registration certificate;

e/ Operations of the representative office.

2. Within fifteen (15) days after its official inauguration, a representative office shall send to the State Securities Commission a report on its operation (made according to a set form, not printed herein) and documents certifying that its parent foreign organization has completed procedures for inaugurating its operation under Clause 1 of this Article.

Article 7. Operation duration of representative offices

1. The operation duration of a representative office of a foreign securities trading organization is specified in its operation registration certificate and counted from the date of signing this certificate.

2. The maximum validity duration of a representative office operation registration certificate is five (5) years but must not exceed the remaining validity duration of the operation license, business registration certificate or a paper of equivalent legal validity of the foreign securities trading organization.

Article 8. Adjustment of representative office operation registration certificates

1. A foreign securities trading organization may request the State Securities Commission to adjust, modify or supplement a representative office operation registration certificate to reflect any of the following changes:

a/ Replacement of the chief representative;

b/ Renaming of the representative office;

c/ Relocation of the representative office’s working office;

d/ Renaming or relocation of the foreign securities trading organization within the country where this organization is established or makes operation registration;

e/ Renaming or relocation of the business registration office of the foreign securities trading organization from a country to another;

f/ Change in the operation of the foreign securities trading organization; change in the legal status or change related to the separation, split-up, merger or consolidation of the foreign securities trading organization.

2. A dossier of request for adjustment, modification or supplementation of a representative office operation registration certificate comprises:

a/ In case of change of the Vietnam-based chief representative under Point a, Clause 1 of this Article;

- A written request for adjustment, modification or supplementation of the representative office operation registration certificate (made according to a set form, not printed herein), signed by a competent representative of the foreign securities trading organization;

- A decision on appointment or replacement of the Vietnam-based chief representative, signed by a competent representative of the foreign securities trading organization;

- Documents proving that the outgoing chief representative has fully fulfilled the tax and financial obligations toward the Vietnamese State;

- Valid copies of the passport or identify card and curriculum vitae of the person expected to be appointed as the Vietnam-based chief representative (made according to a set form, not printed herein), certified by the foreign securities trading organization or the local administration, in case the chief representative is a Vietnamese.

b/ In case of renaming or relocation of the representative office under Points b and c, Clause 1 of this Article:

- A written request for adjustment, modification or supplementation of the representative office operation registration certificate (made according to a set form, not printed herein), signed by a competent representative of the foreign securities trading organization or the chief representative authorized by the foreign securities trading organization, enclosed with the document of authorization;

- Valid copy of the operation license, business registration certificate or a document of equivalent legal validity, issued by competent foreign authorities;

- A copy of the contract to lease a new working office of the representative office (in case of relocation of the representative office’s working office).

c/ In case of a change related to the foreign securities trading organization under Points d, e and f, Clause 1 of this Article:

- Within three (3) months after the occurrence of a change related to the foreign securities trading organization as specified at Point d, e or f, Clause 1 of this Article, the foreign securities trading organization shall submit a written request for adjustment, modification or supplementation of the operation registration certificate of its Vietnam-based representative office signed by its competent representative;

- Valid copy of the operation license, business registration certificate or a document of equivalent legal validity proving the relocation of the foreign securities trading organization within the country where this organization is established, the renaming, change of the legal status, relocation or change of the business registration office of the foreign securities trading organization, or documents of equivalent validity of the foreign securities trading organization, certified by a competent authority of the country where this organization is established or makes business registration.

3. Within seven (7) working days after receiving a complete and valid dossier of a foreign securities trading organization under Clause 2 of this Article, the State Securities Commission shall adjust, modify or supplement the representative office operation registration certificate. In case of refusal, the State Securities Commission shall reply in writing, clearly stating the reason. The time limit specified in this Clause is exclusive of the time for the foreign securities trading organization to modify or supplement its dossier.

4. Within seven (7) days after receiving an adjusted representative office operation registration certificate, the foreign securities trading organization shall disclose the adjusted contents by the method specified in Clause 1, Article 6 of this Regulation.

Article 9. Extension of representative office operation registration certificates

1. A foreign securities trading organization may have its representative office operation registration certificate extended when fully satisfying the following conditions:

a/ Being a foreign securities trading organization, sustaining its lawful operation under the law of the country where it is established or makes business registration, and satisfying the conditions specified in Article 4 of this Regulation;

b/ Committing no serious violation of Vietnam law related to the operation of its representative office for which its representative office operation registration certificate may be revoked.

2. At least thirty (30) days before its representative office operation registration certificate expires, a foreign securities trading organization shall carry out procedures for certificate extension.

3. A dossier of application for extension of a representative office operation registration certificate comprises:

a/ An application for extension of the representative office operation registration certificate (made according to a set form, not printed herein), signed by a competent representative of the foreign securities trading organization;

b/ Documents specified at Points b, d and g, Clause 1, Article 5 of this Regulation;

c/ In case of modification of the charter of the foreign securities trading organization or replacement of the chief representative or relocation of the representative office, the dossier must be added with documents specified at Points c, e and h, Clause 1, Article 5 of this Regulation.

4. The time limit for the State Securities Commission to carry out procedures for extending representative office operation registration certificates is the same as the time limit for granting new representative office operation registration certificates specified in Clause 4, Article 5 of this Regulation. In case of refusal to extend certificates, the State Securities Commission shall reply in writing, clearly stating the reason. This time limit is exclusive the time for foreign securities trading organizations to modify or supplement their extension application dossiers.

Article 10. Scope of operation, rights and obligations of representative offices, chief representatives and staff members of representative offices

1. The scope of operation of a Vietnam-based representative office of a foreign securities trading organization covers one, several or all of the following activities:

a/ Performing the function of a liaison office and conducting securities market surveys;

b/ Formulating cooperation projects related to securities and the securities market in Vietnam;

c/ Stepping up and supervising the performance of securities-related contracts and agreements signed between the foreign securities trading organization and Vietnamese businesses;

d/ Stepping up and supervising the implementation of securities-related projects funded by the foreign securities trading organization in Vietnam.

2. Representative offices of foreign securities trading organizations conducting business operations in many sectors may only conduct activities specified in Clause 1 of this Article.

3. Rights of representative offices:

a/ To open only payment accounts in a foreign currency or Vietnam dong of foreign-currency origin at credit institutions licensed to deal in foreign exchange in Vietnam and use these accounts for their business activities. The opening, use and closing of accounts comply with regulations of the State Bank of Vietnam;

b/ To employ Vietnamese and foreigners to work under Vietnamese law. Within five (5) working days after each additional recruitment of foreigners to work for their representative offices, parent companies shall send to the State Securities Commission reports on the recruitment of foreign employees enclosed with documents certifying the approval of competent management authorities;

c/ To have their own seals under Vietnamese law and use them only in transaction documents falling under their competence and functions;

d/ Other rights provided for by law.

4. Obligations of representative offices:

a/ To conduct only activities within the operation duration indicated in their operation registration certificates. Neither to sublease their working offices, act as representatives for other organizations nor transfer their operation registration certificates to other organizations or individuals;

b/ To register their employees and carry out other procedures related to their foreign and Vietnamese employees at provincial-level People’s Committees under law and guidance of these People’s Committees;

c/ Not to conduct business activities in Vietnam; neither to manage assets and capital for investors, including also investment capital amounts of their parent companies in Vietnam, nor to conduct other securities trading activities in Vietnam;

d/ Other obligations specified by law.

5. Chief representatives may not concurrently act as:

a/ Heads of Vietnam-based subsidiaries of the same foreign securities trading organization or Vietnam-based chief representatives or heads of subsidiaries of another foreign organization, or directors or deputy directors (directors general or deputy directors general), or staff members of a Vietnam-based securities trading organization;

b/ Representatives at law, directors or deputy directors (directors general or deputy directors general) of enterprises established under Vietnamese law;

c/ Representatives at law of foreign securities trading organizations; members of boards of directors, directors or deputy directors (directors general or deputy directors general), or other individuals competent to sign economic contracts or conduct asset transactions without written authorization by foreign securities trading organizations.

6. Chief representatives may sign on behalf of foreign securities trading organizations contracts related to these organizations’ business or investment activities with Vietnamese economic or securities trading organizations in case they are lawfully authorized in writing by competent persons of foreign securities trading organizations. Written authorization must be made for each time of contract signing (single authorization) and its valid copy must be sent to the State Securities Commission within 10 working days after its signing.

Article 11. Dossiers and procedures for termination of operation of representative offices

1. Vietnam-based representative offices of foreign securities trading organizations shall terminate their operation in the following cases:

a/ They willingly terminate operation as requested by their parent foreign securities trading organizations;

b/ Their operation durations indicated in their operation registration certificates expire;

c/ Their parent foreign securities trading organizations are dissolved or bankrupt;

d/ They have their operation registration certificates revoked under Article 12 of this Regulation.

2. In case its representative office terminates operation under Point a or b, Clause 1 of this Article, a foreign securities trading organization shall send to the State Securities Commission a dossier of request for representative office operation termination at least thirty (30) days before the planned date of dissolution or operation termination. Such a dossier comprises:

a/ A notice of planned termination of operation of the representative office (made according to a set form, not printed herein);

b/ A plan on termination of operation of the representative office, covering the order of and procedures for liquidation of the representative office’s liabilities and debts; method, deadline and plan for settlement of liabilities, recovery of assets, settlement of the representative office’s obligations and interests with concerned individuals and organizations; a plan on transfer of the representative office’s money and assets abroad;

c/ A decision of a competent authority or competent representative of the parent company on termination of operation (close-down) of the representative office;

d/ Other documents at the request of the State Securities Commission.

3. Within ten (10) days after receiving complete dossiers specified in Clause 2 of this Article, the State Securities Commission shall consider and approve on principle the termination of operation of Vietnam-based representative offices of foreign securities trading organizations. In case of disapproval, the State Securities Commission shall reply in writing, clearly stating the reason.

4. Within fifteen (15) days after receiving the State Securities Commission’s official letter on on-principle approval of termination of its operation, the representative office of a foreign securities trading organization shall complete procedures for closing down its office, including:

a/ Announcing the termination of its operation on three (3) consecutive issues of one (1) central or local newspaper of the locality where it is based so that concerned organizations and individuals can know and come to settle their related interests;

b/ Liquidating the contract on lease of the office and labor contracts with its employees and other transactions (if any);

c/ Fulfilling tax and financial obligations toward the State under current regulations;

d/ Carrying out procedures for returning its seal and certificate of seal specimen registration to the seal-granting agency;

e/ Settling all obligations and interests toward concerned organizations and individuals.

5. After completing the procedures specified in Article 4 of this Article, securities trading organizations shall report to the State Securities Commission on the completion of procedures for termination of operation of their Vietnam-based representative offices. A reporting dossier comprises:

a/ A notice of representative office operation termination (made according to a set form, not printed herein) signed by a competent representative of the foreign securities trading organization;

b/ Relevant documents and papers proving that the foreign securities trading organization has completed procedures for liquidation and settlement of all obligations and interests toward concerned organizations and individuals under Points a, b, c, d and e, Clause 4 of this Article (tax offices’ certifications, written records of liquidation of the office lease contract and labor contracts) and relevant provisions of Vietnamese law;

c/ The original certificate of operation registration of the foreign securities trading organization’s representative office.

6. Within fifteen (15) days after receiving complete and valid dossiers specified in Clause 5 of this Article, the State Securities Commission shall issue decisions on termination of operation of representative offices of foreign securities trading organizations.

7. After receiving decisions on termination of their operation issued by the State Securities Commission, representative offices of foreign securities trading organizations may transfer abroad assets (if any) of their parent companies left after the liquidation under current regulations.

Article 12. Revocation of representative office operation registration certificates

Depending on the nature and seriousness of its violation, a foreign securities trading organization may have the representative office operation registration certificate revoked in the following cases:

1. It and its representative office intentionally violate Vietnamese regulations on foreign exchange management or securities; commit acts of market abuse or manipulation, insider trading or fraudulence; or fail to fulfill tax and other financial obligations toward the Vietnamese State under law;

2. The dossier of application for an operation registration certificate of its representative office contains untruthful or inaccurate information or lacks material contents as required;

3. Its representative office operates for improper purposes or at variance with the representative office operation registration certificate or other relevant legal provisions on operation of representative offices;

4. Its representative office fails to make reports at the request of the State Securities Commission and competent agencies within a set time limit;

5. It willingly terminates operation of its Vietnam-based representative office;

6. It decides, after being separated, split up, merged or consolidated, to terminate operation of its Vietnam-based representative office, or is forced by a competent authority of the country where it established or makes operation registration to dissolve, or goes bankrupt;

7. Its representative office fails to commence operation within twelve (12) months after being licensed.

Article 13. Reporting and archival regimes of representative offices of foreign securities trading organizations

1. Representative offices shall submit quarterly and annual reports (made according to set forms, not printed herein) on their operation to the State Securities Commission.

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

a/ 15 working days after the end of a quarter;

b/ 90 working days after the end of a year.

3. When necessary, upon written request of the State Securities Commission or competent authorities defined by Vietnamese law, representative offices shall report, supply documents or explain matters related to their operation and their parent foreign securities trading organizations’ activities on the Vietnamese securities market.

Chapter V

INSPECTION, SUPERVISION, AND HANDLING OF VIOLATIONS

Article 14. Inspection and supervision

Representative offices of foreign securities trading organizations and their employees submit to the management, inspection and supervision by the State Securities Commission and competent management authorities defined by law.

Article 15. Handling of violations

Foreign securities trading organizations and their representative offices that commit acts in violation of this Regulation shall, depending on the nature and seriousness of their violations, be handled under the law on handling of administrative violations in the domain of securities.

Chapter VI

ORGANIZATION OF IMPLEMENTATION

Article 16. Application of the Securities Law to representative offices established and operating before the effective date of this Regulation

Foreign securities trading organizations with representative offices operating under the Securities Law shall adjust their representative offices’ relevant operations to comply with this Regulation within three (3) months after the effective date of this Regulation.-

For the Finance Minister
Vice Minister
TRAN XUAN HA