When will a securities-trading organization placed under special control in Vietnam?

Specifically, according to Article 16 of the Circular No. 91/2020/TT-BTC of the Ministry of Finance of Vietnam, the State Securities Commission of Vietnam (SSC) shall issue the decision to issue 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 as prescribed in Clause 2, Article 14 of this Circular; or

- The securities-trading organization fails to prepare prudential indicator reports in two (02) consecutive reporting period, or fails to carry out audits or examine prudential indicator reports or fails to publish information about the prudential indicator reports examined or audited by a accredited audit organization as prescribed in Point b, Clause 1, Article 12 of this Circular; or

- The prudential indicator report about which the accredited audit organization gives dissenting or contrary opinions, or refuses to give any opinion, or fails to give any opinion, or gives opinions that the liquid capital ratio is below 120%, if the exceptions are not included in the liquid capitals.

Note: The special control period must not exceed four (04) months from the day on which the securities-trading organization is placed under special control.

Moreover, in case the special control is placed as prescribed in Point b, Clause 1 of this Article, after two (01) months from the day on which the special control is placed, Vietnam Stock Exchange (VNX) shall partially suspend the trading of the affiliated securities companies that fail to take remedial actions against the special control. The suspension will be lifted when SCC issues a decision to stop putting the securities company under special control. Procedures for suspension of subsidiary companies shall comply with regulations of VNX.

Besides, SSC will consider lifting the special control status when the securities-trading organization’s liquid capital ratio reaches 180% or more in three (03) consecutive months, the liquid capital ratio during the last reporting period has been audited by an accredited audit organization, and the securities-trading organization has submitted a report according to Appendix XI hereof to SSC.

After the special control period ends as prescribed in Clause 2 of this Article, if the securities-trading organization still fails to take remedial actions against the special control, its operation shall be suspended from operation. Procedures for suspension of operation shall comply with regulations on organization and operation of securities companies and fund management companies. Within twenty-four (24) hours after the securities-trading organization is suspended from operation, SSC shall disclose this information on SSC’s website.

After 06 months from the effective date of the suspension decision, SSC shall issue a decision to withdraw the securities brokerage license if the securities company fails to eliminate the causes of suspension as prescribed in Clause 5 Article 16 of this Circular.

View more details at the Circular No. 91/2020/TT-BTC of the Ministry of Finance of Vietnam, effective from January 01, 2021.

Le Vy

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