Vietnam: The fund management company can not use its capital to make investments in derivatives

According to the Circular No. 99/2020/TT-BTC of the Ministry of Finance of Vietnam, when making financial investments with the owner's equity, the fund management company shall:

- Only use the owner's equity to make financial investments, and not use loans in any forms;

- Not use its capital, loans and other lawful funding sources to make investments in derivatives;

- Not lend or allocate the company’s capital to any entities in any forms, except deposits at credit institutions as prescribed by the Law on banking, investments in deposit certificates, treasury bills or listed bonds issued in accordance with regulations of law;

- Perform economic contracts/transactions between the company and its related persons after obtaining approval from the General Meeting of Shareholders (GMS) or Board of Directors or Board of Members or the company’s owner in accordance with the company’s charter and the Law on enterprises;

- Use lawful funding sources, including loans, to invest in the company’s headquarters. The fund management company may lease the unused area of its headquarters;

- The fund management company shall submit reports to the State Securities Commission of Vietnam (SSC) on investments in its subsidiary companies, joint-venture or affiliated companies and increase/decrease in these investments within 30 days from the completion of investment procedures, occurrence of changes in the investment value or disinvestment;

- The fund management company and its related persons (excluding related persons that are securities investment funds or companies it manage) may make an investment of up to 5% of voting shares of a securities company listed or registered on the Stock Exchange.

Legal basis: Clause 21 Article 10 of the Circular No. 99/2020/TT-BTC.

View more obligations of the fund management company 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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