06 cases for the dissolution of a securities investment fund in Vietnam

06 cases for the dissolution of a securities investment fund in Vietnam (Image from the Internet)

1. What is a securities investment fund under the law in Vietnam?

According to Clause 37, Article 4 of the Law on Securities 2019, a securities investment fund is a fund formed from the contributions of investors aiming to profit from investments in securities or other assets, including real estate, where investors do not have daily control over the investment decisions of the fund.

2. 06 Cases of dissolution of securities investment fund in Vietnam 

06 cases for dissolution of securities investment fund in Vietnam are regulated in Clause 1, Article 104 of the Law on Securities 2019 as follows:

• The end of the operational term stipulated in the charter of the securities investment fund;

• The investors' general meeting decides to dissolve the securities investment fund before the end of the operational term stipulated in the fund's charter;

• The securities investment fund management company has its establishment and securities trading operation license revoked, or it is dissolved or bankrupt, and the fund's representative board cannot appoint a replacement management company within 2 months from the event occurrence;

• The supervisory bank has its securities custody operating registration certificate revoked, is dissolved, bankrupt, or the supervision contract between the supervisory bank and the fund management company is terminated, and the fund management company cannot appoint a replacement supervisory bank within 2 months from the event occurrence;

• The net asset value of the securities investment fund falls below 10 billion VND for a continuous period of 6 months;

• Other cases as stipulated in the charter of the securities investment fund.

3. Regulations on Charters of securities investment funds in Vietnam

The charters of securities investment funds in Vietnam are regulated in Article 103 of the Law on Securities 2019 as follows:

• The charter of the securities investment fund is drafted by the fund management company and approved by the fund investors' general meeting.

• The charter of the securities investment fund includes the following main contents:

  • Name of the securities investment fund, fund management company, and supervisory bank;

  • Establishment date of the securities investment fund;

  • Operational goals; investment sectors; operational term of the securities investment fund;

  • Contributed capital and provisions on changes in the charter capital of the securities investment fund;

  • Rights and obligations of the fund management company, supervisory bank; cases of change of the fund management company, supervisory bank; regulations on authorizing the fund management company to sign a supervision contract with the supervisory bank;

  • Regulations on the fund representative board, investors' general meeting of the securities investment fund;

  • Investment restrictions of the securities investment fund;

  • Regulations on registering ownership of fund certificates and maintaining the investor registry of the securities investment fund;

  • Regulations on selecting the supervisory bank; selecting and changing the approved auditing organization;

  • Regulations on transferring, issuing, and buying back open fund certificates; regulations on listing closed fund certificates;

  • Types of expenses and income of the securities investment fund; fees and bonuses for the fund management company, supervisory bank; cases and methods of distributing the income of the securities investment fund to investors;

  • Method of determining the net asset value of the securities investment fund and the net asset value of each fund certificate;

  • Regulations on resolving conflicts of interest;

  • Reporting regime regulations;

  • Regulations on dissolving the securities investment fund;

  • Commitments of the supervisory bank and fund management company regarding obligations to the securities investment fund, investors, and compliance with the charter of the securities investment fund;

  • Procedures for amending and supplementing the charter of the securities investment fund.

Vo Tan Dai

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