12 Rules for rendering services and business lines of securities company in Vietnam

12 Rules for rendering services and business lines of securities company in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What is a securities company?

According to Clause 1, Article 2 of Circular 121/2020/TT-BTC, securities company refers to an enterprise licensed by State Securities Commission to perform one or several services or business activities prescribed in clause 1 of Article 72, clauses 1, 2, 3, 4 and 5 of Article 86 in the Law on Securities 2019.

2. Rules for rendering services and business lines in Vietnam

Specifically, in Article 4 of Circular 121/2020/TT-BTC, when rendering their core business functions, securities companies must adhere to the following principles:

(1) Designing and putting to use processes and procedures.

(2) Issuing and adopting codes of ethics or practice.

(3) Both securities companies and their employees are not allowed to make investments on behalf of their customers, except in case of the authorized custody of investors’ personal accounts as prescribed in Article 19 of this Circular.

(4) Being honest with their customers, avoiding any infringement upon their customer’s assets, other rights and interests.  Managing each customer’s assets, assets of their customers' and theirs separately.

(5) Entering into contracts with customers when providing services to them; providing complete and authentic information to customers.

(6) Unless otherwise provided by law, when providing services to customers, they are not allowed to perform, whether directly or indirectly, the following acts:

- Deciding to invest in securities on behalf of customers;

- Agreeing with customers on sharing of profits or losses;

- Advertising or declaring that contents, effectiveness or methods of their analyses on securities are of greater value than those of other securities companies; 

- Providing false information to seduce or pester customers to buy and sell a certain type of securities;

- Giving false, fraudulent or misleading information to customers;

- Performing other acts in contravention of laws.

(7) Carrying out accounting, auditing, statistics regimes and financial obligations in accordance with laws.

(8) Making public disclosure of information and reports in a timely, adequate and accurate manner in accordance with laws.

(9) Setting up stand-by information technology systems and databases to ensure safety, prudence and continuity for their business activities.

(10) Supervising securities trades or transactions according to regulations of the Minister of Finance.

(11) Securities companies must set up specialized departments in charge of communicating with customers and dealing with customer's inquiries and complaints.

(12) Discharging other obligations prescribed by the securities law and other relevant laws.

3. Operations of securities companies in Vietnam

A securities company shall be licensed to perform one, some or all of the following operations:

- Securities brokerage;

- Proprietary trading;

- Securities underwriting;

- Securities investment consultancy.

In which:

- A securities company shall only be licensed for proprietary trading when it is licensed for securities brokerage.

- A securities company shall only be licensed for securities underwriting when it is licensed for proprietary trading.

(Article 72 of the Law on Securities 2019)

4. Operations subject to approval by SSC in Vietnam 

According to Clause 1, Article 87 of the Law on Securities 2019, a securities company or fund management company shall obtain a written approval of SSC before initiating the following operations:

- Suspension of operation, except for force majeure events;

- Offering and listing securities of the company overseas;

- Making indirect outward investments;

- Establishing, closing a branch or representative office in Vietnam or overseas; establishing an overseas subsidiary; changing business operations at the branch; establishing or closing a transaction office;

- Changing the name or location of a branch, representative office or transaction office;

- Provision of the services mentioned in Point b Clause 1 Article 86 of the Law on Securities 2019.

Tran Thanh Rin

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