Rights and obligations of branches of foreign securities companies in Vietnam

Rights and obligations of branches of foreign securities companies in Vietnam (Internet image)

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

1. What is a branch of a foreign securities company in Vietnam?

According to Clause 3, Article 2 of Circular 97/2020/TT-BTC, a branch means an affiliated unit of a foreign securities company or foreign fund management company that is not a juridical person, is established under the law of Vietnam and has all of its operations in Vietnam responsible before the law of Vietnam by its parent company.

In which, a branch shall provide analysis outcomes and reports, and recommendations for clients with or without collecting fees in the following cases:

- Provide reports on analysis of transactions on the securities market, and investment recommendations;

- Provide reports on analysis of operations of public companies, listed companies and other enterprises, and investment recommendations;

- Enter into securities investment consultancy service contracts with clients.

(Clause 2, Article 14 of Circular 97/2020/TT-BTC)

2. Rights and obligations of branches of foreign securities companies in Vietnam

2.1. Rights of a branch of foreign securities companies in Vietnam

Specifically, in Article 15 of Circular 97/2020/TT-BTC, a branch shall have the following rights:

- Collect consultancy service fees as agreed upon with clients and prescribed by laws.

- Open a foreign currency account or VND account converted from a foreign currency at a commercial bank that is licensed to provide foreign exchange services in Vietnam and only use this account for its operations.

The opening, use and closure of an account by the branch shall comply with regulations of relevant laws.

- Recruit both Vietnamese and foreign employees to work at the branch in accordance with regulations of relevant laws.

- Have its own seal under the law of Vietnam and only use this seal on transaction documents made within the ambit of rights and functions of the branch.

- Exercise other rights as prescribed by relevant laws.

2.2. Obligations of a branch of foreign securities companies in Vietnam

A branch shall discharge the following obligations:

- Sign contracts with clients when providing services to them; provide adequate and truthful information to clients.

- Collect information about financial status, investment purposes, risk tolerance of clients; make sure the recommendations and consultancy given by the branch are appropriate for financial status, investment purposes, risk tolerance of each client, unless information is not provided or not fully and accurately provided by the client.

- Protect the confidentiality of information provided by users of consultancy services during the provision of consultancy services, unless the information is provided with the client’s consent or at the request of a competent authority.

- Update and fully keep information about the clients, documents about the clients and the branch.

- Use allocated funds for licensed business operations only, and do not take loans from any entities other than the parent company.

- Do not directly or indirectly perform the following activities:

+ Make investments in securities on behalf of clients;

+ Reach agreements with clients for sharing profits or losses;

+ Advertise or declare that the efficiency or value of its securities analysis methods is higher than those of other securities companies;

+ Provide false information to incite or invite clients to buy or sell a certain type of securities;

+ Provide false, fraudulent or misleading information for clients.

- Discharge other obligations as prescribed by relevant laws.

(Article 16 of Circular 97/2020/TT-BTC)

Tran Thanh Rin

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