Restrictions on securities companies, fund management companies in Vietnam

Restrictions on securities companies, fund management companies in Vietnam (Internet image)

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

1. Restrictions on securities companies, fund management companies in Vietnam

According to Article 91 of the Law on Securities 2019, the restrictions on securities companies, fund management companies, branches of foreign securities companies and foreign fund management companies in Vietnam in Vietnam are as follows:

- Do not comment on or guarantee income or profit on the clients’ investment; Do not make no-loss guarantee, except investment in fixed income securities.

- Do not reveal information about a client unless the provision of information is agreed by the client or requested by a competent authority.

- Do not make clients and investors confused about securities prices.

- Founding shareholders and capital contributors during establishment of the securities company or fund management company must not transfer their shares or stakes for 03 years from the licensing date, except transfer between those shareholders or contributors.

- Securities companies, fund management companies, branches and representative offices of foreign securities companies and foreign fund management companies shall provide their services in their own names; must use the names of others or allows others to use their names to provide securities services.

- A securities company must not contribute capital or purchase shares/stakes of another securities company in Vietnam, unless the purchase results in:

= Consolidation or acquisition of the latter;

= Ownership or joint ownership (with related persons) of up to 5% of voting shares of a listed or registered securities company.

- A fund management company must not contribute capital or purchase shares/stakes of another fund management company in Vietnam, unless the purchase results in:

= Consolidation or acquisition of the latter;

= Ownership or joint ownership (with related persons) of up to 5% of voting shares of a listed or registered fund management company.

2. Obligations of securities companies and branches of foreign securities companies in Vietnam 

Obligations of securities companies and branches of foreign securities companies in Vietnam according to Article 89 of the Law on Securities 2019 are as follows:

- Establish systems for internal control, risk management, supervision and preventing of conflict of interests within the company and in transactions with relevant persons.

- Make sure employees in specialized departments have appropriate securities professional certifications.

- Separately manage assets of each client, assets of clients and assets of the company.

- Sign written service provision contracts with clients; provide adequate and accurate information for clients.

- Give priority to execution of clients’ orders over the company’s orders.

- Collect information about financial status, investment purposes, risk tolerance of clients; make sure the recommendations and consultancy given by the company 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.

- Update and fully information about the clients; documents bout transactions of the clients and the company.

- Comply with regulations of law on accounting, audit, statistics, financial obligations.

- Disclose information and report fully, punctually and accurately as prescribed by law.

- Develop a information technology system and backup database to ensure safe and continuous operation.

- Supervise securities transactions in accordance with regulations of the Minister of Finance.

- Perform other obligations prescribed by the Law on Securities 2019 and relevant laws.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE