Legal Document Updates in English (21/2011)

AMENDING LAW ON SECURITIES: TIGHTENING FREE MARKET
 

The National Assembly issued the Law Amending and Supplementing a Number of Articles of the Law on Securities with some new regulations on Private placement, public bid and so on in order to strengthen market and tightening situations of law avoidance.

Accordingly, the Private placement of securities of issuing organizations other than public companies complies with the Enterprise Law and other relevant laws.

Private placement of securities of a public company has to ensure the following conditions: There is a decision of the Shareholders’ General Meeting or the Board of Directors adopting a plan on private placement and use of proceeds from private placement, and clearly identifying eligible investors and the number thereof;  transfer of privately placed shares or convertible bonds is banned for at least one year after the completion of the private placement; there must be an interval of at least 6 months between two consecutive private placements of shares or convertible bonds.

However private placement under selective programs to the company’s employees,

transfer of placed securities of individuals to professional securities investors, transfer of securities among professional securities investors, or under a court ruling or in cases of inheritance under law;

The Law also regulates the cases attached to public bid, among that, Bids for voting stocks or certificates of closed funds which lead to the ownership of twenty-five per cent or more of outstanding stocks or fund certificates of a public company or a closed fund; organizations, individuals and affiliated persons that hold twenty-five per cent or more of voting stocks or fund certificates of a public company or a closed fund continue to buy ten per cent or more of outstanding voting stocks or fund certificates of such public company or closed fund;

According to this Law, Organizations, individuals and affiliated persons that hold twenty-five per cent or more of voting stocks or fund certificates of a public company or a closed fund continue to buy between five and under ten per cent of voting stocks or fund certificates of such public company or closed fund within less than one year after the completion of the last public offering.

The Law amending and supplementing a number of Articles of the Law on Securities takes effect on  July 01, 2011.

PERSONAL INCOME TAX IS NOT AMOUNTED TO
SEVERE DISEASE TREATMENT AMOUNT
 

On June 08, 2011, the Ministry of Finance issued the Circular No. 78/2011/TT-BTC guiding on taxable incomes are not accounted to personal income tax for medical treatment amounts for labors and labor’s relatives from earnings after business income tax; business’s welfare funds and benefit funds.

Accordingly, Business is allow to extract from earnings after business income taxes; labor’s salaries and wages and business’s supports to labors and labor’s relative in severe disease treatments including business established under Vietnam legal regulations; business established under foreign laws (below referred to as foreign business) have resident establishments and non-resident establishments in Vietnam; organization established and operated under the Law on Corporative; public non-business unit and non-public non-business unit producing and trading goods and services and organization having production and business activities with incomes.

Receivers from support amounts are people having severe diseases including: labors is working at business; labor’s relatives (parents, wife or husband, children, legal adopted children).

The support level may be part of or overall medical treatment charges for labors and labor’s relatives but the maximum support level cannot exceed the hospital fees of labors and labor’s relatives after extracting the fees from health insurance agency.

Business has responsibilities in: saving copies of hospital fee’s records which are confirmed by business (in the case that labor and labor’s relative paid the remaining fee after health insurance agencies pay directly to medical treatment units) or copies of hospital fee’s records; copies of health insurance payment confirmed by business (in the case labor and labor’s relatives pay all hospital fee, health insurance agency will pay health insurance premium to labors and labor’s relatives) together with the payment records for labors and labor’s relatives who are having severe diseases.

This Circular takes effect on July 22, 2011.

REDUCE IMPORT TAX RATE FOR AMMONIA TO 0%
 

The Ministry of Finance issued the Circular No. 77/2011/TT-BTC amending preferential import tax rate for ammonia at the code 2814.10.000.000 at the preferential import tariff.

Accordingly, amending the preferential import rate for ammonia at the code 2814.10.000.000 at the Preferential Import Tariff according to List of tax-liable goods

issued attached with the Circular No.184/2010/TT-BTC dated November 15, 2010 of the Ministry of Finance regulating the tax rate of the Preferential Export Tariff and Preferential Import Tariff to the list of tax-liable goods is 0%.

And the preferential tax rate 0% is applied from July 22, 2011.

INVESTORS ARE ENTITLED TO MAKE THE OPPOSITE TRANSACTION
OF THE SAME SECURITIES IN THE TRANSACTION DAY
 

On June 01, 2011, the Ministry of Finance issued the Circular No. 74/2011/TT-BTC guiding on securities transaction with much more advantageous regulations for transactions and liquidity of market such as: opening many transaction accounts, trading securities in transaction day and transaction to buy securities deposit are allowed.

Accordingly, the first point to be paid is that the Ministry of Finance allows investors to open many accounts at various companies  instead of the former regulation that only allow investors to open only 01 account at 01 securities company. However, where investors opening securities transaction accounts in different securities companies, in the records of opening accounts in the new securities companies must record clearly the number of accounts opened and account codes in the former securities companies.

Investors are entitled to make the opposite transaction (buy, sell) of the same securities in the transaction day, only being bought (or sold) a type of security if the selling order (or buying order) of the same type of security which was previously made ​​and the transaction order must meet the demand on deposit rate.

The investors are not permitted to perform transactions not leading to the change of ownership of securities;  at the same time placing selling and buying orders of the same type of security in each matching on the same account or different accounts that are under the name of investors.

Another point is that when opening securities transaction accounts, investors are entitled to authorize transact in writing to the Securities Company or securities depository bank to perform the transactions, Staffs of securities companies are not entitled to receive the authority from investors. And this Circular also regulates that Investors wishing to conduct deposit transactions must open deposit transaction accounts in the securities company where the investors opening the securities transaction accounts. In every securities company where investors open their transaction accounts, investors are only allowed to open one (01) deposit transaction account. The securities companies must manage separately the deposit transaction accounts of investors with other transaction accounts.

This Circular takes effect on August 01, 2011.

REDUCE DEPOSIT INTEREST RATE BY US DOLLARS TO 2% PER YEAR
 

On-going the solutions on controlling foreign currency transaction and reducing credit growth as well as dollarization, the State Bank of Vietnam issued the Circular No. 14/2011/TT-NHNN dated June 01, 2011 on regulating maximum deposit interest rate level by US dollars of organizations and individuals in credit institutions.

The maximum deposit interest rate by US dollars applied to organizations who are residents and non-residents (except for credit institutions) is 0,5%/year and to individuals who are residents and non-residents (except for credit institutions) is 2,0%/year. The maximum deposit interest rate regulated in this Article including forms of promotional expenses and applied to the way of payment maturity interest; for other ways of interest payment, it must be conversed in the way of paying maturity interest correlative with the maximum deposit interest rate.

As according to this Circular, Credit institutions may fix and shall publicize deposit interest rates by USD at the deposit places (Head offices, transaction offices, branches, transaction departments, saving funds) under regulations of the State

Bank of Vietnam. Forbid strictly all credit institutions to make promotions on deposit by money, interest rate and other ways that are not right to the legal regulations.

This Circular takes effect on June 02, 2011. The Circular No. 09/2011/TT-NHNN dated April 09, 2011; Term deposit interest rate by USD of organizations and individuals at credit institutions arising before the effective date of this Circular will be applied to the end of agreement time between credit institutions and organizations, individuals.

Specialists consider that reduction in deposit interest rate by US dollars more 1% is not new policy in the market economy that has initially stabilized when the State Bank of Vietnam takes the first solution effectively, it itself is the stronger solution for us to be more active in controlling foreign exchange so as to restrict the dollarization condition at the end of year.