Conditions for issuing the License for establishment and operation of securities business of a fund management company in Vietnam

Conditions for issuing the License for establishment and operation of securities business of a fund management company in Vietnam​ (Image from the Internet)

1. Conditions for issuing the License for establishment and operation of securities business of a fund management company in Vietnam

According to Article 75 of the Securities Law 2019, the conditions for the issuance of a license for establishment and operation of securities business of a fund management company are as follows:

- Capital conditions include contributed charter capital into the fund management company must be in Vietnamese Dong; the minimum charter capital required to obtain a license for the establishment and operation of a securities business in Vietnam is prescribed by the Government of Vietnam.

- Conditions regarding shareholders and capital contributors include:

+ Shareholders, capital contributors must meet the conditions prescribed at Points a and b, Clause 2, Article 74 of the Securities Law 2019;

+ Foreign investors as shareholders, capital contributors must meet the conditions prescribed in Article 77 of the Securities Law 2019;

+ Shareholders, capital contributors owning 10% or more of the charter capital of one fund management company and their related parties (if any) do not own more than 5% of the charter capital of another fund management company.

- Conditions regarding the structure of shareholders, capital contributors include:

+ There must be at least 02 founding shareholders or organizational capital contributors. In the case where the fund management company is organized under the form of a single-member limited liability company, the owner must be a commercial bank, insurer, securities company, or a foreign organization that meets the provisions in Clause 2, Article 77 of the Securities Law 2019;

+ Total capital contribution ratio of organizations must be at least 65% of the charter capital, in which organizations such as commercial banks, insurers, and securities companies must own a minimum of 30% of the charter capital.

- Conditions regarding physical facilities include:

+ Having a business address that ensures the security of securities business activities;

+ Having adequate infrastructure, technology, office equipment, suitable systems for securities business operations.

- Conditions regarding personnel include:

Having a General Director (Director), at least 05 employees with fund management practice certificates, and at least 01 compliance officer. The General Director (Director) must meet the following criteria:

+ Not currently under criminal investigation, serving a prison sentence, or prohibited from practicing in the securities sector as per legal regulations;

+ Having at least 04 years of experience in operational departments of organizations in finance, securities, banking, insurance, or in finance, accounting, investment departments of other enterprises;

+ Holding a fund management practice certificate or an equivalent certificate as prescribed by the Government of Vietnam;

+ Not being administratively penalized in the field of securities and securities market within the last 06 months preceding the date of submission of the application.

If there is a Deputy General Director (Deputy Director) in charge of operations, they must meet the standards specified at points a, b, and d of this clause and have a securities practice certificate suitable for the operations undertaken.

- The draft Charter must comply with the regulations at Clause 1, Article 80 of the Securities Law 2019.

2. Contents of the License for establishment and operation of securities business in Vietnam

The contents of the License for establishment and operation of securities business according to Article 81 of the Securities Law 2019 are as follows:

- The license for establishment and operation of a securities company, fund management company includes the following contents:

+ Company name;

+ Address of the head office;

+ Business operations;

+ Charter capital;

+ Legal representative.

- The license for establishment and operation of a branch of a securities company and a foreign fund management company in Vietnam includes the following contents:

+ Branch name, branch address, business operations of the branch;

+ Parent company name;

+ Address of the parent company’s head office;

+ Capital allocated to the branch;

+ Branch Director.

- Any changes related to the license for establishment and operation of securities business stipulated in Clauses 1 and 2 of Article 81 of the Securities Law 2019 must be approved by the State Securities Commission before making changes.

- Within 10 days from the date the State Securities Commission approves changes according to Clause 3, Article 81 of the Securities Law 2019, securities companies, fund management companies, branches of securities companies, and foreign fund management companies in Vietnam must register and notify changes related to the Business Registration Authority in accordance with legal regulations on enterprises.

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