Vietnam: Tightening the regulations regarding securities companies and fund management companies that fail to meet the liquid capital ratio

On August 15, 2017, the Ministry of Finance of Vietnam issued Circular No. 87/2017/TT-BTC on prudential indicators and actions against securities-trading organizations that fail to achieve prudential indicators.

Circular No. 87/2017/TT-BTC supplements a number of articles of Circular No. 226/2010/TT-BTC dated December 31, 2010 prescribing prudential ratios and remedies to be taken by securities-trading institutions that fail to achieve these ratios and takes effect from October 10, 2017.

According to Circular No. 87/2017/TT-BTC, the State Securities Commission (SSC) shall issue the decision to issue warning to a securities-trading organization in the following cases:

- The liquid capital ratio reaches from 150% to below 180% during the reporting periods for three (3) consecutive months; or

- The liquid capital ratio that has been examined or audited by an accredited audit organization reaches from 150% to below 180%; or

- The prudential ratio report about which the accredited audit organization issues a dissenting or contrary opinion, or a disclaimer of opinion, or fails to issue any opinion, or issues a qualified opinion that, the liquid capital ratio is from 150% to below 180%, if the exceptions are not included in the liquid capital.

After 6 months from the day on which the control is placed, the Stock Exchange shall partially suspend the trading by the affiliated securities companies that fail to successfully take remedial actions against the control. The period of suspension of the trading by the Stock Exchange will end when the affiliated securities companies have the control lifted by the SSC.

Besides, the SSC shall issue the decision to place a securities-trading organization under special control in the following cases:

- The liquid capital ratio that is calculated by the securities-trading organization itself or has been examined or audited by an accredited audit organization is below 120%; or

- The securities-trading organization fails to take remedial actions against the special control within twelve (12) months; or

- The securities-trading organization has not prepared any prudential ratio report for two (02) consecutive reporting periods, or fails to carry out audits or examine prudential ratio reports or fails to publish the prudential ratio reports examined or audited by a accredited audit organization as prescribed; or

- The prudential ratio report about which the accredited audit organization issues a dissenting or contrary opinion, or a disclaimer of opinion, or fails to issue any opinion, or issues a qualified opinion, the liquid capital ratio is below 120%, if the exceptions are not included in the liquid capital.

After two (02) months from the day on which the special control is placed, the Stock Exchange shall partially suspend the trading of the affiliated securities companies that fail to take remedial actions against the special control. The period of suspension of the trading by the Stock Exchange will end if the affiliated securities companies have the special control lifted by the SSC.

Source: Bao Nguoi dong hanh

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