Decree 59/2021/ND-CP the financial management mechanism for Vietnam Exchange

DECREE

Providing a number of special contents in the mechanism for financial management and operational efficiency evaluation applicable to the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation^[1]

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to the November 22, 2019 Law Amending and Supplementing a Number of Articles of the Law on Organization of the Government and the Law on Organization of Local Administration;

Pursuant to the June 17, 2020 Law on Enterprises;

Pursuant to the November 26, 2014 Law on Management and Use of State Capital Invested in Production and Business at Enterprises;

Pursuant to the November 26, 2019 Law on Securities;

At the proposal of the Minister of Finance;

The Government promulgates the Decree providing a number of special contents in the mechanism for financial management and operational efficiency evaluation applicable to the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. This Decree provides a number of special contents in the mechanism for financial management and operational efficiency evaluation applicable to the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation.

2. In addition to the special provisions referred to in this Decree, the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation shall carry out financial management and evaluate operational efficiency in accordance with the Law on Management and Use of State Capital Invested in Production and Business at Enterprises and its guiding, revising and replacing documents (if any).

Article 2. Subjects of application

1. The Vietnam Stock Exchange.

2. The Vietnam Securities Depository and Clearing Corporation.

3. The Ministry of Finance that acts as the owner-representing agency of the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation.

4. Other organizations and individuals involved in the mechanism for financial management and operational efficiency evaluation applicable to the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation.

Chapter II

A NUMBER OF SPECIAL PROVISIONS ON FINANCIAL ISSUES APPLICABLE TO THE VIETNAM STOCK EXCHANGE AND THE VIETNAM SECURITIES DEPOSITORY AND CLEARING CORPORATION

Article 3. Outward investment

1. The Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation may only make outward investment in the field of securities and securities market.

2. The form of and competence to make outward investment of the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation must comply with the law on management and use of state capital invested in production and business at enterprises and their organization and operation charters.

Article 4. Turnover

1. The Vietnam Stock Exchange shall manage its turnover and other incomes under Article 30 of the Government’s Decree No. 91/2015/ND-CP of October 13, 2015, on investment of state capital in, and management and use of capital and assets by, enterprises, and its guiding, revising and replacing documents (if any). Turnover of the Vietnam Stock Exchange includes:

a/ Turnover from professional operations, including turnover from management of members; and turnover from other professional operations in accordance with law;

b/ Turnover from provision of services, including turnover from information provision services; turnover from provision of technological infrastructure services for the securities market; and turnover from provision of other services in accordance with law;

c/ Turnover and incomes from capital investment in its subsidiary companies, including after-tax profits after funds are set aside at the subsidiary companies, and differences between equity and charter capital of the subsidiary companies; and turnover from financial operations and other incomes in accordance with law.

2. The Vietnam Securities Depository and Clearing Corporation shall manage its turnover and other incomes under Article 30 of the Government’s Decree No. 91/2015/ND-CP of October 13, 2015, on investment of state capital in, and management and use of capital and assets by, enterprises, and its guiding, revising and replacing documents (if any). Turnover of the Vietnam Securities Depository and Clearing Corporation includes:

a/ Turnover from professional operations, including turnover from management of members;  turnover from securities registration; turnover from the securities depository operation; turnover from securities account transfer; turnover from exercise of rights; turnover from the transfer of securities ownership not via trading systems; turnover from agency services in payment of principals and interests of government’s debt instruments, government-guaranteed bonds, and municipal bonds; turnover from securities transaction clearing and payment, management of positions, transfer of positions between accounts, management of collaterals, fixing of post-trading errors, extension of payment deadlines, and switching to cash payment; turnover from registration of security measures for securities already registered at the Vietnam Securities Depository and Clearing Corporation; and turnover from other professional operations in accordance with law;

b/ Turnover from service provision, including turnover from information provision services and turnover from provision of other services in accordance with law;

c/ In addition to turnover from financial operations and other incomes in accordance with the law on management and use of state capital invested in production and business at enterprises, the Vietnam Securities Depository and Clearing Corporation may account as its turnover from financial operations deposit interests arising from authorized payment of dividends and principals and interests of government’s debt instruments, government-guaranteed bonds, municipal bonds, and other securities, and exercise of stock warrants.

Article 5. Expenses

The Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation shall manage their expenses under Article 30 of the Government’s Decree No. 91/2015/ND-CP of October 13, 2015, on investment of state capital in, and management and use of capital and assets by, enterprises, and its guiding, revising and replacing documents (if any).

2. When determining its taxable incomes, the Vietnam Securities Depository and Clearing Corporation may account the following special spending items as its expenses:

a/ Amounts set aside as the fund for offsetting operational risks specified in Clause 3, Article 156 of the Government’s Decree No. 155/2020/ND-CP of December 31, 2020, detailing a number of articles of the Law on Securities and its guiding, revising and replacing documents (if any). The setting aside of the fund for offsetting operational risks shall be carried out on a quarterly basis. In case such fund is not used up in a fiscal year, the remainder may be carried forward to the subsequent year for further use;

b/ Expenses for refund to the Vietnam Stock Exchange’s subsidiary companies of turnover amounts generated from transfer of securities ownership not via trading systems.

Article 6. Operational efficiency evaluation and ranking of enterprises

1. The Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation shall carry out operational efficiency evaluation and ranking of enterprises in accordance with the regulations on operational efficiency evaluation and ranking of state-owned enterprises.

2. When computing criteria for operational efficiency evaluation of enterprises, in addition to objective factors allowed to be excluded in accordance with the regulations on operational efficiency evaluation of state-owned enterprises, the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation may exclude the following objective factors:

a/ The State’s management policies that affect securities listing, trading, registration, depository, clearing and payment in the securities market.

b/ For the Vietnam Stock Exchange, changes in turnover from professional operations, and turnover and incomes from investment of capital in its subsidiary companies as a result of changes in the following factors: number of listed companies, number of trading registration companies; securities trading volume and prices; number of members of the Vietnam Stock Exchange; bid-winning bond value; plans on and scale of capital raising through bond issuance; bond trading value; value of securities ownership transferred not via the trading system; derivatives trading volume; and trading volumes of other types of securities in accordance with the law on securities;

c/ For the Vietnam Securities Depository and Clearing Corporation, changes in turnover from professional operations as a result of changes in the following factors: volume of deposited securities executed in the year; value of (initially) registered securities executed in the year and number of times of additional registration of securities; payment value of principals and interests of government’s debt instruments, government-guaranteed bonds and municipal bonds; number of times of exercise of stock warrants and number of shareholders involved in each time of stock warrant exercise; number of times of securities account transfer and value of securities transferred between accounts; and value of securities transferred not via the trading system; number of depository members and clearing members; number of securities borrowing and lending contracts and securities borrowing and lending value; day-end position balance; day-end collateral asset balance; value of substitute securities trading and volume of substitute derivatives; and number of transactions requiring error fixing, number of transactions eligible for payment deadline extension, and number of transactions shifting to cash payment.

Article 7. Regulation on financial management and regulation on supervision and operational efficiency evaluation of the Vietnam Stock Exchange’s subsidiary companies

1. Pursuant to the provisions of this Decree, regulations on financial management and operational efficiency evaluation of state-owned enterprises, and other relevant regulations, the Vietnam Stock Exchange shall issue the regulation on financial management and regulation on supervision and operational efficiency evaluation of its subsidiary companies.

2. The regulation on financial management of the Vietnam Stock Exchange’s subsidiary companies must have the following basic contents:

a/ Charter capital, capital raising, and outward investment;

b/ Investment in, construction, and procurement of fixed assets, and asset management;

c/ Turnover of the Vietnam Stock Exchange’s subsidiary companies, including turnover from professional operations (revenue from securities listing and trading, turnover from derivatives trading, turnover from bond bidding, turnover from securities auction, turnover from the transfer of securities ownership not via the trading system, and turnover from other professional operations); turnover from service provision (turnover from information provision services, turnover from provision of technological infrastructure services for the securities market, and turnover from provision of other services); turnover from financial operations, and other incomes. The Vietnam Stock Exchange’s subsidiary companies may account as turnover from financial operations deposit interest amounts related to securities auction;

d/ Expenses of the Vietnam Stock Exchange’s subsidiary companies;

dd/ Distribution of after-tax profits and setting aside of funds;

e/ Other contents under the management requirements.

3. The regulation on supervision and operational efficiency evaluation of the Vietnam Stock Exchange’s subsidiary companies must have the following contents:

a/ Criteria and bases for operational efficiency evaluation and ranking of enterprises;

b/ Methods of operational efficiency evaluation and results of ranking of enterprises;

c/ When computing criteria for operational efficiency evaluation of enterprises, subsidiary companies may exclude objective factors like the Vietnam Stock Exchange under Clause 2, Article 6 of this Decree;

d/ Other contents as specified by law.

Chapter III

RESPONSIBILITIES OF RELATED AGENCIES

Article 8. Responsibilities of the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation

1. To comply with regulations on the mechanism for financial management and operational efficiency evaluation in accordance with the Law on Management and Use of State Capital Invested in Production and Business at Enterprises, this Decree and their guiding, revising and replacing documents (if any).

2. To submit to inspection, examination and supervision of their financial operations by competent state agencies.

3. The Vietnam Stock Exchange shall issue the regulations on financial management and the regulation on supervision and operational efficiency evaluation of its subsidiary companies in accordance with this Decree.

Article 9. Responsibilities of the Ministry of Finance

1. To exercise rights and perform responsibilities of the owner-representing agency for the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation in accordance with the Law on Management and Use of State Capital Invested in Production and Business at Enterprises, this Decree, and their guiding, revising and replacing documents (if any).

2. To evaluate the observance of regimes and policies before proposing the Government to promulgate, revise or replace regulations on the mechanism for financial management and operational efficiency evaluation applicable to the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 10. Effect

1. This Decree takes effect on August 6, 2021.

2. The Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation shall, after being established and starting operation in accordance with the 2019 Law on Securities, carry out financial management and operational efficiency evaluation under this Decree; to annul Articles 9, 10, 11, and 12, Clause 3, Article 13, and remove the phrases “the Stock Exchanges, the Vietnam Securities Depository” and “the Stock Exchanges and the Vietnam Securities Depository” in Articles 1, 2, 13, 15, 16 and 17 of the Government’s Decree No. 122/2017/ND-CP of November 13, 2017, providing a number of special contents in the mechanism for financial management and operational efficiency evaluation applicable to lottery businesses, the Stock Exchanges and the Vietnam Securities Depository.

Article 11. Transitional provisions

1. The Stock Exchanges and the Vietnam Securities Depository that are organized and operate in accordance with Law No. 70/2006/QH11 on Securities, which had a number of articles amended and supplemented under Law No. 62/2010/QH12, shall continue to carry out their financial management and operational efficiency evaluation under the Government’s Decree No. 122/2017/ND-CP of November 13, 2017, providing a number of special contents in the mechanism for financial management and operational efficiency evaluation applicable to lottery businesses, the Stock Exchanges and the Vietnam Securities Depository until the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation start their operations in accordance with November 26, 2019 Law No. 54/2019/QH14 on Securities, except Clause 3 of this Article.

2.  The Hanoi Stock Exchange and Ho Chi Minh Stock Exchange shall account as their other incomes balances of the fund for member damage compensation through December 31, 2020, and carry out procedures for payment of enterprise income tax in accordance with law.

3. For balance of the fund for offsetting operational risks and the fund for offsetting derivatives payment risks of the Vietnam Securities Depository

a/ The Vietnam Securities Depository shall comply with transitional provisions of Clause 15, Article 310 of the Government’s Decree No. 155/2020/ND-CP of December 31, 2020, detailing a number of articles of the Law on Securities;

b/ Before the Vietnam Securities Depository and Clearing Corporation starts its operation in accordance with Law No. 54/2019/QH14 on Securities, the Vietnam Securities Depository may, upon determining its taxable incomes under Point a, Clause 2, Article 5 of this Decree, account as its expenses amounts set aside as the fund for offsetting operational risks.

Article 12. Implementation responsibility

The Minister of Finance, Members’ Councils and Directors General of the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation, and related organizations and individuals shall implement this Decree.-

On behalf of the Government
For the Prime Minister
Deputy Prime Minister
LE MINH KHAI