06 conditions for issuance of the establishment and operation license to a investment company in Vietnam

Hello, Lawnet would like to answer as follows:

1. What is a investment company?

According to Article 114 of the Securities Law 2019 on the definition of securities investment company as follows:

- A securities company is a securities investment fund that is reorganized into a joint-stock company to invest in securities.

A securities company can be a:

+ private investment company

+ public investment company.

- Investment companies shall be licensed by SSC. After being licensed by SSC, the investment company shall apply for enterprise registration in accordance with the Law on Enterprises.

2. 06 conditions for issuance of the establishment and operation license to a investment company in Vietnam

To be granted a certificate of establishment and operation, a securities investment company must comply with the following conditions:

(1) Capital:

- Actual contributed charter capital shall be at least 50 billion. A public investment company shall authorize a securities investment fund management company to manage its capital. A private investment company may manage its own capital or authorize a securities investment fund management company to manage its capital;

- All assets of the public investment company shall be deposited at the supervisory bank.

(2) Headquarters

There are premises for securities investment operations. The public investment company or investment company may use the premises of the securities investment fund management company that is authorized to manage its capital as its headquarters.

(3) Personnel:

- The public investment company or investment company that authorizes a securities investment fund management company to manage its capital must not recruit personnel and Director/General Director, Deputy Director/Deputy General Director that are executives appointed by the securities investment fund management company.

- A private investment company that manage its own capital shall have a Director/General Director who meets the requirements specified in Clause 5 Article 75 of the Law on Securities and at least 02 employees having the financial analysis certificate or fund management certificate.

(4) Shareholders:

- The public investment company shall have at least 100 shareholders that are not professional securities investors;

- A private investment company may have up to 99 shareholders. Shareholders that are organizations shall contribute at least 03 billion VND. Shareholders that are individuals shall contribute at least 01 billion VND. In case of self-management, domestic shareholders shall be organizations that are licensed by securities, banking, insurance authorities or members of the Board of Directors, General Director/Director, Deputy Director/Deputy General Director of the company to be established.

(5) Members of the Board of Directors of the public investment company

At least two thirds of the members of the Board of Directors of the public investment company shall be independent from the securities investment fund management company, supervisory bank.

(6) Conditions for contributing assets: shareholders may contribute securities that are being listed, registered, traded at Stock Exchanges in accordance with the charter of the private investment company, and:

- The securities contributed shall be appropriate for the company’s investment targets and policies; not restricted from transfer, suspended or banned from transaction, or delisted; not being pledged, deposited, frozen or collateralized in other secured transactions as prescribed by law;

- The contribution of securities must be approved by all shareholders and will only be considered completed after the lawful ownership of these securities has been transferred to the private investment company;

- The prices of contributed securities shall be determined by the depository bank according to the closing price on the date of completion of ownership transfer at VSDCC and according to the charter of the private investment company. (pursuant to Article 259 of Decree 155/2020/ND-CP)

In addition, in Clause 2, Article 115 of the Securities Law 2019, a public investment company shall comply with the following regulations:

+ The investment limits specified in Article 110 of the Securities Law 2019;

+ Regulations on asset valuation and reporting in Article 106 and Article 107 of the Securities Law 2019;

+ Obligations of public companies specified in Points a, b, c Clause 1 and Clause 2 Article 34 of the Securities Law 2019;

+ The investment company‘s assets shall be deposited at 01 depository bank.

Thus, to be granted a license to establish and operate, a securities investment company needs to meet six main conditions, including capital, headquarters, personnel, shareholders, members of the Board of Directors, and a capital contribution with assets.

In particular, the minimum charter capital requirement of 50 billion VND and the regulation on the minimum number of shareholders are important conditions.

In addition to the above six conditions, public securities investment companies must also meet a number of additional regulations on investment restrictions, information disclosure, and asset custody.

Best regards!

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