In case the income statement of the listed company shows a loss, can the company continue margin trading in Vietnam?
What are the regulations on initial margin in Vietnam?
Pursuant to the provisions of Article 5 of the Regulation issued together with Decision No. 87/QD-UBCK in 2017 on initial margin in Vietnam as follows:
Initial margin requirement, maintenance margin requirement
1. Initial margin is decided by the securities company but not lower than 50%.
2. Maintenance margin is decided by the securities company but not lower than 30%
3. Depending on the developments of the securities market, the State Securities Commission may adjust the margin specified in Clause 1 and 2 this Article.
Thus, according to the above regulations, at present, the initial margin is decided by the securities company.
The initial margin will not be lower than 50%. The State Securities Commission may adjust the margin depending on the operation of the securities market.
In case the income statement of the listed company shows a loss, can the company continue margin trading in Vietnam?
In case the income statement of the listed company shows a loss, can the company continue margin trading in Vietnam?
Pursuant to the provisions of Clause 2, Article 4 of the 2019 Law on Securities of Vietnam, shares are securities that certify their holders’ lawful rights and interests to a portion of share capital of the issuer.
According to that, in order to determine whether the listed shares of a company with a loss business result can continue to be marginable and be excluded from the margin list, pursuant to Article 3 of the Regulations promulgated together with Decision No. 87/QD-UBCK in 2017 (amended by Article 1 of Decision No. 1205/QD-UBCK in 2017) on conditions for marginable securities as follows:
Marginable securities
The marginable securities include: shares, fund certificates listed at the Stock Exchanges, excluding the following cases:
1. The securities have been listed for less than 06 months from the first securities trading date to the day they are converted into marginable securities. If the shares are transferred to another stock exchange, the listing duration is the total listing duration at both Stock Exchanges;
2. The securities are put under control or special control, suspended or delisted in accordance with related regulations on listing of securities;
3. The audit’s opinion on the audited financial statement of the issuer of the securities or the examined, audited semi-annual financial statement of the issuer is unqualified opinion;
4. The listed organization delays the disclosure of the audited financial statement or examined semi-annual financial statement more than 05 working days from the initial deadline or extended deadline for information disclosure according to regulations;
5. The Stock Exchange receives a report or information disclosure from a listed company or the Stock Exchange has information about:
- Decision of the person competent to sanction administrative violations of the listed company for acts of tax evasion or tax fraud;
- The decision of the person competent to sanction administrative violations of the listed company for the act of failing to comply with the conclusion on enforcement of the tax administrative decision;
- The decision to prosecute the accused of the agency conducting the proceedings against the listed company;
6. The income statement of the listed organization shows a loss in the period during which margin trading is under consideration or accrued loss according to the latest audited financial statement or the audited or examined semi-annual financial statement. If the listed organization is the parent company, the income statement is based on the consolidated financial statement; if the listed organization is a public fund, the net asset value (NAV) of a fund certificate must be smaller than the face value in at least one month, according to the monthly report on the change of the net asset value in 03 consecutive months from the time of selection for margin trading.
Thus, in case the income statement of the listed organization show a loss in the period during which margin trading is under consideration or accrued loss according to the latest audited financial statement or the audited or examined semi-annual financial statement, it will be deemed non-marginable.
At this time, the shares will be non-marginable and will be removed from the Margin List.
What is the time limit for announcement of the list of non-marginable securities?
Pursuant to the provisions of Clause 1, Article 4 of the Regulation promulgated together with Decision No. 87/QD-UBCK in 2017 as follows:
Compilation and publishing of the list of marginable securities
1. Within 02 working days from the day on which one of the cases aforementioned prescribed in Article 3 this document occurs, the Stock Exchange shall announce the list of non-marginable securities. The minimum publishing requirement includes all non-marginable securities as of the date of disclosure. Except for the cases specified in Clause 1 Article 3 this Regulation, at least once every 06 months from the latest time on which the Stock Exchange publishes the list of non-marginable securities, the Stock Exchange may consider removing the securities from the list of non-marginable securities. The publishing time shall be decided by the Stock Exchange.
Thus, according to the above regulations, the list of non-marginable securities will be announced within 2 working days from the date of arising the case of ineligibility for margin.
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