17 cases of transfer of ownership of securities outside the securities trading systems in Vietnam

The Circular No. 119/2020/TT-BTC of the Ministry of Finance of Vietnam specified cases of transfer of ownership of securities outside the securities trading systems if such transfers are non-commercial in nature or fail to be executed via the securities trading system, including:

- Donation, offering and inheritance of securities as stipulated by the Civil Code of Vietnam;

- Transactions of securities in odd lots as per the law on securities and securities market;

- Issuers, public companies redeem stocks from their staff/employees in accordance with the regulation on issuance of stocks to staff/employees; issuers, public companies redeem preferred stocks from their staff/employees in accordance with the regulation on equitization; issuers, public companies redeem stocks upon requests of shareholders, redeem share of every shareholder in proportion to his/her share in the company as per the Law on Enterprises of Vietnam;

- Transfer of stocks of founding shareholders within the restricted trading period;

- Investors transfer their securities ownership to fund management companies where such fund management companies agree to manage the portfolio in the form of assets; fund management companies transfer securities ownership to investors in case of any change to the terms and conditions of the investment trust agreement; fund management companies transfer securities ownership to investors or other fund management companies in the event of contract termination; fund management companies wind up, go bankrupt, or cease operation and reimburse assets to investors or transfer the portfolio to other fund management companies; transfer of ownership between fund management companies of the same investor upon the request of such investor;

- Cases of ownership transfers as determined by judgments and decisions of the Court, awards of arbitrators or decisions of judgment enforcement agencies;

- Total division, partial division, consolidation, acquisition of enterprises, or capital contribution in form of shares into enterprises; restructuring of public sector entities; winding up of enterprises, household businesses as per the law;

- Tender offer; transferring capital of state or state-owned enterprises invested in listed entities, entities registered to trade according to methods of auctions, competitive offering, book building as per the law; transfer of ownership as shareholders of public companies make public offering via auctions via stock exchanges;

- Transfer of ownership of structure securities, fund certificates in swap transactions with the exchange-traded fund (ETF); transfer ownership; transfer of ownership of securities for issue or revocation of depository receipts in transactions between investors and foreign depository receipt issuers;

- Transfer of ownership of valuable papers on the money market at the request of the State Bank; transfer ownership of privately placed corporate bonds;

- Transfer of ownership in securities lending and borrowing as prescribed in Article 40 of the Circular No. 119/2020/TT-BTC, including transfer of ownership of securities from the lender to the borrower and vice versa or the transfer of ownership of collateral being securities from the borrower of securities to the lender of securities in case the borrower defaults on the loan; transfer of ownership of securities to handle cases of defaults on payments of securities;

- Transfer of ownership due to realization of collateral being securities registered with the Vietnam Securities Depository and Clearing (VSDC) and freezing according to Point c, Clause 1, Article 23 of the Circular No. 119/2020/TT-BTC. In case the transfer of ownership of securities related to a foreign investor leads to a change in the foreign ownership ratio in a public company, securities company or fund management company, it shall only be done after obtaining the approval from the State Securities Commission (SSC);

- Transfer of preferred shares without restricted transfer in accordance with the Law on Enterprises of Vietnam; transfer of ownership of securities due to division of marital property in accordance with the Law on Marriage and Family of Vietnam;

- Transfer of ownership of underlying securities to exercise covered warrants or government bond futures contracts by the method of transferring underlying securities;

- Transfer of ownership of securities upon total division, partial division, consolidation, acquisition, winding up of securities investment fund; establishing and increasing charter capital of individual securities investment companies; increasing or decreasing the charter capital of member funds; transfer of ownership of securities when the fund pays with securities in the sale and redemption of open-end funds;

- Transfer of share ownership between foreign investors in the event that the maximum foreign ownership ratio for such shares has been reached and the price agreed upon by the parties is higher than the ceiling price of such shares on the securities trading system at the time of trading;

- Other cases of transfer of ownership of securities after obtaining the approval from the SSC.

More details at the Circular No. 119/2020/TT-BTC of the Ministry of Finance of Vietnam, effective from February 15, 2021.

Ty Na

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