When is a branch of a foreign securities company in Vietnam placed under control?
- When is a branch of a foreign securities company in Vietnam placed under control?
- What are the measures included in the remediation plan of a branch of a foreign securities company in Vietnam under control?
- How many years does the remediation plan of a branch of a foreign securities company in Vietnam under control cover?
When is a branch of a foreign securities company in Vietnam placed under control?
Under Clause 1, Article 14 of Circular 91/2020/TT-BTC, there are the following provisions:
Control
1. The SSC shall issue the decision to place a securities-trading organization under control in the following cases:
a) The liquid capital ratio reaches from 120% to below 150% during the reporting periods in three (03) consecutive months; or
b) The liquid capital ratio that has been examined or audited by an accredited audit organization reaches from 120% to below 150%; or
c) The prudential indicator report about which the accredited audit organization issue a dissenting or contrary opinion, or a disclaimer of opinion, or fails to give any opinion, or issues a qualified opinion, the liquid capital ratio is from 120% to below 150%, if the exceptions are not included in the liquid capitals.
2. The control period must not exceed 12 months from the day on which the securities-trading organization is placed under control.
3. After 04 months from the day on which the control is placed, VNX shall partially suspend the trading by the affiliated securities companies that fail to successfully take remedial actions against the control. The suspension of affiliated securities companies of VNX will be lifted when SSC stops placing the securities company under control. Procedures for suspension shall comply with regulations of VNX.
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Thus, according to the above provisions, a branch of a foreign securities company in Vietnam is placed under control in the following cases:
- The liquid capital ratio reaches from 120% to below 150% during the reporting periods in three (03) consecutive months; or
- The liquid capital ratio that has been examined or audited by an accredited audit organization reaches from 120% to below 150%; or
- The prudential indicator report about which the accredited audit organization issues a dissenting or contrary opinion, or a disclaimer of opinion, or fails to give any opinion, or issues a qualified opinion, the liquid capital ratio is from 120% to below 150% if the exceptions are not included in the liquid capitals.
What are the measures included in the remediation plan of a branch of a foreign securities company in Vietnam under control?
Under Clause 3, Article 15 of Circular 91/2020/TT-BTC, the remediation plan of a branch of a foreign securities company in Vietnam under control includes the following measures:
- Sale of high-risk assets; restriction on or cessation of the purchase of treasury stock;
- Recovery of debts; resale of shares or stake to the creditor;
- Reduction of operating and corporate governance costs; reorganization of the management apparatus and human resources or staff reduction;
- Narrowing of the operation scope and area; shutdown of some branches or transaction offices; reduction of securities services;
- Suspension of the payment of stock dividends and distribution of profits; increase of capital in accordance with law;
- Consolidation into or merger with a securities-trading organization conducting the same business line or of the same type in accordance with law;
- Other measures that are not contrary to regulations of law.
How many years does the remediation plan of a branch of a foreign securities company in Vietnam under control cover?
Under Clause 2, Article 15 of Circular 91/2020/TT-BTC:
Remediation plan
1. Within fifteen (15) days from the day on which the SSC issues the decision to place a securities-trading organization under control, the securities-trading organization shall submit a detailed report on financial condition, reasons and remediation plan to the SSC.
2. The remediation plan shall cover the next 02 years with a specific roadmap, conditions and deadline for each month and quarter. The SSC may request the securities-trading organization to make adjustments to the remediation plan at any time if it is unfeasible or inconsistent with market conditions or regulations of law.
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Thus, according to the above provisions, the remediation plan of a branch of a foreign securities company in Vietnam under control must cover the next 02 years with a specific roadmap, conditions and deadline for each month and quarter.
The State Securities Commission of Vietnam may request the securities-trading organization to make adjustments to the remediation plan at any time if it is unfeasible or inconsistent with market conditions or regulations of law.
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