Provisions on operational authorization of the fund management company in Vietnam

According to Article 12 of the Circular No. 99/2020/TT-BTC of the Ministry of Finance of Vietnam, operational authorization of the fund management company is stipulated as follows:

- During its business, the fund management company may:

+ Authorize the depository bank, supervisory bank, and the Vietnam Securities Depository and Clearing Corporation (VSDCC) to provide fund management services or act as transfer agent for securities investment funds and securities investment companies;

+ Authorize foreign organizations to provide consulting services and manage assets abroad of trustors.

- When giving authorization, the fund management company shall:

+ Before entering into service contracts with the authorized party, the fund management company must carry out the due diligence and examine material facilities of such authorized party in order to ensure that it has adequate material facilities, technical solutions, operational process, and experienced and qualified personnel for performing authorized operations;

+ Enter into the authorization contract with the authorized party;

+ Carry out regular inspections to ensure that authorized operations have been prudently and safely performed in conformity with regulations of law, the fund's charter, charter of the securities investment company, trust agreement, and the quality of services provided by the authorized party is conformable with criteria and requirements of the company and trustors;

+ Maintain employees with experience, qualification and skills appropriate for supervising, identifying and managing risks arisen from authorized operations;

+ Establish systems/procedures to ensure that the fund management company, independent audit organization and the State Securities Commission of Vietnam (SSC) are able to access necessary information for inspecting and supervising authorized operations, evaluating and managing risks arising from such operations at any times;

+ The authorization shall neither reduce nor change responsibilities of the fund management company towards its trustors. The fund management company shall accept any financial and legal liabilities arising from its authorization, except legal liabilities and service charges/fees which are agreed upon and paid directly to the authorized party under the trust agreement, supervisory contract or depository contract, as prescribed in the fund’s charter, charter of the securities investment company and relevant laws;

+ Provide relevant information to the authorized party in a sufficient, timely and accurate manner in order that the authorized party can fully and promptly fulfill its rights and duties within the scope of authorization;

+ Adequately, punctually and accurately keep instructions, requests and documents sent to the authorized party for performing authorized operations, the authorization contract and record of assessment of capacity and material facilities of the authorized part. These documents must be provided at the request of SSC;

+ Within 10 days from the conclusion of the authorization contract with the authorized party to perform the authorized operations in Point b Clause 1 of this Article, the fund management company shall notify SSC of this authorization and provide it with documents proving the authorized party’s fulfillment of the requirements in Clause 2 of Article 12 of the Circular No. 99/2020/TT-BTC.

More details at the Circular No. 99/2020/TT-BTC of the Ministry of Finance of Vietnam, effective from January 01, 2021.

Le Thanh

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