Regulations on the charter of a securities company in Vietnam

Regulations on the charter of a securities company in Vietnam (Internet image)

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

1. Rules for rendering services and business lines in Vietnam

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

- Designing and putting to use processes and procedures.

- Issuing and adopting codes of ethics or practice.

- 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.

- 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.

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

- 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.

- Carrying out accounting, auditing, statistics regimes and financial obligations in accordance with laws.

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

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

- Supervising securities trades or transactions according to regulations of the Minister of Finance.

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

- Discharging other obligations prescribed by the securities law and other relevant laws.

2. Regulations on the charter of a securities company in Vietnam

According to Article 5 of Circular 121/2020/TT-BTC stipulating that when formulating its corporate Charter, in addition to complying with regulations of Circular 121/2020/TT-BTC, a securities company must adhere to the following principles:

- Its corporate Charter is not in breach of regulations of the Law on Securities and the Law on Enterprises.

- If it is a public company, it must consult regulations of the Law on Securities and the Law on Enterprises and Circular 121/2020/TT-BTC to draw up its corporate Charter.

When formulating its corporate Charter, it must refer to the sample Charter applicable to public companies under regulations of corporate governance laws applied to public companies.   

- If it is a joint stock business not yet going public, or a limited liability company, when formulating its corporate Charter, it must ensure that its corporate Charter is conformable to the Law on Securities and the Law on Enterprises.

- When drawing up its corporate Charter, it must consult clause 2 and 3 of Article 5 of Circular 121/2020/TT-BTC. In addition, the corporate Charter must contain the following details:

+ Operating network;

+ Business scope;

+ Operating principles;

+ Licenses for establishment and operation of securities business activities;

+ Governing Board/Members’ Council; eligibility requirements or standards of its members;

+ Board of General Directors (Board of Directors), eligibility or qualification requirements or standards of its members; the Supervisory Board or Internal Control Board, eligibility or qualification requirements or standards of its members;

+ Audit Committee, eligibility or qualification requirements or standards of its members;

+ Prevention of conflicts of interests;

+ Reorganization, comprising: business split-up, split-off, amalgamation, merger or transformation.

- It must publish the full text of its corporate Charter on its official website.

Quoc Dat

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