Decree 156: Supplementing 7 violations in securities and securities market in Vietnam

Decree No. 156/2020/NĐ-CP prescribing penalties for administrative violations against regulations on securities and securities market in Vietnam takes effect from January 01, 2021 and replaces the Decree No. 108/2013/NĐ-CP and Decree No. 145/2016/NĐ-CP. There are 7 highlights in this Decree.

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In comparison with the Decree No. 108/2013/NĐ-CP and Decree No. 145/2016/NĐ-CP (amending Decree 108) of the Vietnam’s Government, the Decree No. 156/2020/NĐ-CP has supplemented several provisions on penalties for administrative violations against regulations on securities and securities market in Vietnam. To be specific:

1. Violations against regulations on delisting of public company

According to Article 14 of the Decree No. 156/2020/NĐ-CP of the Vietnam’s Government, the following penalties shall be imposed for committing violations against regulations on notification to the State Securities Commission of Vietnam (SSC) when failing to satisfy the eligibility requirements for a public company laid down in Article 32 of the Law on Securities of Vietnam:

- A warning shall be imposed for late submission of notice to SSC of less than 15 days after the prescribed deadline;

- A fine ranging from VND 5.000.000 to VND 10.000.000 shall be imposed for late submission of notice to SSC of 15 days or more after the prescribed deadline;

- A fine ranging from VND 10.000.000 to VND 15.000.000 shall be imposed for failing to send notice to SSC as prescribed.

Moreover, a fine ranging from VND 30.000.000 to VND 50.000.000 shall be imposed for failing to submit an application for delisting as prescribed in Article 39 of the Law on Securities of Vietnam in case such application is compulsory.

2. Violations against regulations on changes requiring approval

Specifically, according to Article 25 of the Decree No. 156/2020/NĐ-CP of the Vietnam’s Government, a fine ranging from VND 50.000.000 to VND 100.000.000 shall be imposed upon a securities company, securities investment fund management company, securities investment company, or branch of a foreign securities company or foreign fund management company in Vietnam for changing name of the company, branch, representative office or transaction office before obtaining SSC’s written approval. The highest fine for violations in this regulation is VND 500,000,000.

3. Violations against regulations on operation of distribution agents for securities investment fund certificates

This is a prominent new point specified in Article 29 of the Decree No. 156/2020/NĐ-CP of the Vietnam’s Government. To be specific:

- A fine ranging from VND 10.000.000 to VND 30.000.000 shall be imposed upon a distribution agent for committing one of the following violations:

+ Failing to meet eligibility requirements for distribution agents;

+ Failing to identify investors’ information or failing to establish a system for managing and fully retaining investors’ information as prescribed by law;

+ Violating regulations on receipt and transfer of investors’ trading orders; failing to establish a system for receiving trading orders as prescribed by law;

+ Violating regulations on management of investors’ accounts and sub-accounts;

+ Failing to punctually, adequately and accurately update securities trading codes of foreign investors and their ownership status;

+ Failing to update information about investors’ ownership status after transactions or failing to send transaction confirmations to investors.

- A fine ranging from VND 30.000.000 to VND 50.000.000 shall be imposed upon a distribution agent for committing one of the following violations:

+ Violating regulations on distribution of fund certificates;

+ Violating regulations on execution of fund certificate subscription and redemption orders.

- A fine ranging from VND 70.000.000 to VND 100.000.000 shall be imposed upon a distribution agent for failing to apply for registration of distribution operations as prescribed by law.

4. Use of internal information for trading securities

According to Article 35 of the Decree No. 156/2020/NĐ-CP of the Vietnam’s Government, a fine that is 10 times the illegal revenue but does not exceed the maximum fine specified in Clause 2 Article 5 hereof shall be imposed for the use of internal information for trading securities if not liable to criminal prosecution. In case there is no illegal revenue or the fine calculated according to the illegal revenue is smaller than the maximum fine mentioned in Clause 2 Article 5 hereof, the maximum fine mentioned in Clause 2 Article 5 hereof shall apply.

5. Manipulation of securities market

Manipulation of securities market” means the performance of securities-related offenses specified in Clause 3 Article 12 of the Law on Securities of Vietnam. A fine that is 10 times the illegal revenue but does not exceed the maximum fine specified in Clause 2 Article 5 hereof shall be imposed for the act of manipulation of securities market if not liable to criminal prosecution. In case there is no illegal revenue or the fine calculated according to the illegal revenue is smaller than the maximum fine mentioned in Clause 2 Article 5 hereof, the maximum fine mentioned in Clause 2 Article 5 hereof shall apply. (Article 36 of the Decree No. 156/2020/NĐ-CP)

6. Violations against regulations on registration of provision of securities depositing, clearing and payment services

A fine ranging from VND 30.000.000 to VND 50.000.000 shall be imposed upon a securities company, commercial bank or foreign bank branch (FBB) that has been issued with certificate of securities depository registration or certificate of eligibility to provide securities clearing and payment services for failing to apply for registration of depository member/ clearing member and provide securities depositing, clearing and payment services within the prescribed time limit. The highest fine for violations in this regulation is VND 500,000,000. (Article 38 of the Decree No. 156/2020/NĐ-CP)

7. Violations against regulations on anti-money laundering and counter-terrorism financing in the fields of securities and securities market

This is a notable content specified in Article 45 of the Decree No. 156/2020/NĐ-CP of the Vietnam’s Government. According to this Article:

- A securities company or securities investment fund management company committing violations against regulations on identification and updating of information about clients shall be fined up to VND 150.000.000;

- A securities company or securities investment fund management company for committing violations against regulations on internal audit and review of clients in anti-money laundering shall be fined up to VND 80.000.000;

- A fine ranging from VND 60.000.000 to VND 100.000.000 shall be imposed upon a securities company or securities investment fund management company for committing violations against internal regulations on anti-money laundering;

- A securities investment fund management company obstructing the provision of information serving the performance of anti-money laundering tasks as prescribed in Clause 6 Article 7 of the Law on anti-money laundering of Vietnam; failing to provide information serving the performance of anti-money laundering tasks at the request of competent authorities as prescribed in Clause 4 Article 18 of the Law on anti-money laundering of Vietnam; or creating or maintaining anonymous accounts or accounts with fake names as prescribed in Clause 2 Article 7 of the Law on anti-money laundering of Vietnam shall be imposed a fine ranging from VND 30.000.000 to VND 150.000.000. Particularly, a fine ranging from VND 200.000.000 to VND 250.000.000 shall be imposed for organizing, participating in or facilitating money laundering activities;

- A fine ranging from VND 70.000.000 to VND 100.000.000 shall be imposed upon VNX and its subsidiaries for failing to retain and update basic information about the organizational structure, founders and beneficial owners of listed enterprises as prescribed in Clause 1 Article 18 of the Law on anti-money laundering of Vietnam;

- A securities company or securities investment fund management company for committing violations against regulations on counter-terrorism financing shall be fined up to VND 100.000.000.

The above is a summary of 07 administrative violations against regulations on securities and securities market in Vietnam newly added to the Decree No. 156/2020/NĐ-CP. Individuals, agencies and organizations should update the above regulations to comply with the law.

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