What is a foreign investor in Vietnam? When must foreign investors apply for a securities trading code in Vietnam?
What is a foreign investor in Vietnam?
Pursuant to the provisions of Clause 18, Article 3 of the 2020 Law on Investment in Vietnam, “investor” means an organization or individual that carries out business investment activities. Investors include domestic investors, foreign investors and foreign-invested business organizations.
In particular, a foreign investor being defined in Clause 19, Article 3 of the 2020 Law on Investment in Vietnam means an individual holding a foreign nationality or an organization established under foreign laws and carrying our business investment activities in Vietnam.
What is a foreign investor in Vietnam? When must foreign investors apply for a securities trading code in Vietnam?
When must foreign investors apply for a securities trading code in Vietnam?
According to the provisions of Clause 2, Article 138 of Decree No. 155/2020/ND-CP on securities investors as follows:
Securities investment by foreign investors
1. Foreign investors may make investment on the securities market of Vietnam in the following manners:
a) Direct investment and trading on the securities market of Vietnam under the securities and securities market laws;
b) Indirect investment by entrusting a securities investment fund management company or the branch in Vietnam of a foreign fund management company.
2. In case of direct investment mentioned in Point a Clause 1 of this Article, the foreign investor must apply for a securities trading code at Vietnam Securities Depository and Clearing Corporation before making investment. In case of indirect investment mentioned in Point b Clause 1 of this Article, the securities investment fund management company or the branch in Vietnam of a foreign fund management company entrusted by the foreign investor shall apply for the securities trading codes in accordance with Point d and Point dd Clause 2 Article 145 of this Decree.
3. The foreign investor may open a securities trading account and make investment immediately after the securities trading code is issued in the form of an electronic confirmation.
4. The foreign investor may select a representative trader in Vietnam who:
a) is not serving an imprisonment sentence or banned by the court from business operation;
b) has securities-related qualifications, including: certificate of basic training in securities and securities market, certificate of training in securities and securities market laws; and
c) is the sole representative trader in Vietnam of the foreign investor and is authorized by the foreign investor in writing.
5. Foreign investors, their representative traders, securities companies, securities investment fund management companies, branches of foreign securities investment fund management companies that provide services for foreign investors shall comply with regulations of law on foreign ownership ratio when making investment on the securities market of Vietnam.
6. The Minister of Finance shall specify obligations of foreign investors, organizations providing services for foreign investors, other organizations and individuals relevant to foreign investment in the securities market of Vietnam.
Thus, the foreign investor must apply for a securities trading code at Vietnam Securities Depository and Clearing Corporation before making investment.
How many securities trading codes are granted to foreign securities investors?
According to the provisions of Clause 2, Article 145 of Decree No. 155/2020/ND-CP:
Rules for issuance of securities trading codes
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2. Each foreign investor, overseas issuer of depository receipts, foreign-invested business organization specified in Clause 1 Article 143 of this Decree shall be issued with 01 securities trading code, except the following cases:
a) A foreign securities company shall be issued with 02 securities trading codes: 01 securities trading code for the proprietary trading account and 01 securities trading code for the securities brokerage account;
b) A foreign investment fund, a foreign organization under management of multiple foreign fund management companies shall be issued with multiple securities trading codes. Each investment portfolio managed by a foreign fund management company shall be granted 01 securities trading code; each investment portfolio managed by the fund or foreign organization itself shall have 01 separate securities trading code;
c) An investment organization that belongs to a foreign government or an international investment/finance organization to which Vietnam is a member will be issued with multiple securities trading codes; each investment portfolio deposited at a depository bank will be issued with 01 securities trading code;
d) A securities investment fund management company will be issued with 01 securities trading code to in accordance with Clause 1 Article 143 of this Decree. A securities investment fund management company that becomes a foreign-invested business organization as prescribed in Clause 1 Article 143 of this Decree will be issued with an additional securities trading code to serve investment operations of the fund management company itself;
dd) The branch of a foreign investment fund in Vietnam will be issued with 02 securities trading codes, 01 of which will be issued to the branch, the other for management of investment portfolios of foreign investors.
Thus, each foreign investor, overseas issuer of depository receipts, foreign-invested business organization shall be issued with 01 securities trading code, except for the cases specified in Clause 2 Article 145 of Decree No. 155/2020/ND-CP.
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