Law on Securities of Vietnam 2019

LAW

ON SECURITIES

Pursuant to the Constitution of Socialist Republic of Vietnam;

The National Assembly promulgates the Law on Securities.

Chapter I

GENERAL PROVISIONS

Article 1. Scope

This Law provides for securities activities and the securities market; rights and obligations of organizations and individuals in the securities market; organization of the securities market; state management of securities and the securities market.

Article 2. Regulated entities

1. Vietnamese and foreign organizations and individuals that invest in securities and operate in the securities market of Vietnam.

2. Securities authorities.

3. Other organizations and individuals involved in securities activities and the securities market.

Article 3. Application of the Law on Securities and relevant laws

Provisions of this Law and relevant laws shall apply to securities activities; rights and obligations of organizations and individuals in the securities market; organization of the securities market; state management of securities and the securities market.

Article 4. Definitions

For the purpose of this Law, the terms below are construed as follows:

1. “securities” include the following assets:

a) Shares, bonds, fund certificates;

b) Warrants, secured warrants, pull options, depository receipts;

c) Derivatives;

d) Other kinds of securities defined by the Government.

2. Shares are securities that certify their holders’ lawful rights and interests to a portion of share capital of the issuer.

3. Bonds are securities that certify their holders’ lawful rights and interests to part of the debt of the issuer.

4. Fund certificates are securities that certify their holders’ ownership of a stake in a securities investment fund.

5. Warrants are the securities that are issued together with bonds or preference shares and bestow upon their holders the right to buy a certain amount of common shares at a specified price over a specific period of time.

6. Secured warrants are securities secured by collateral and issued by a securities company. They allow their holders to have the right to buy (call option) or the right to sell (put option) the securities to their issuer at a specified strike price prior to or on a specified date, or receive the difference between the strike price and the underlying security price at that time.

7. Call option is a type of securities which is issued a joint-stock company and bestows upon the existing shareholders the right to buy new shares under specific conditions.

8. Depository receipts are the securities issued on the basis of securities of an organization that is lawfully established in Vietnam.

9. Derivatives are financial instruments in the form of contracts, options, futures, forwards that determine rights and obligations of the parties to pay money and transfer a specific quantity of underlying assets at a specified strike price prior to or on a specified date in the future.

10. Underlying assets are securities, securities indexes or other assets prescribed by the Government upon which the derivative price is based.

11. Options are derivatives that certify the buyer’s right and the seller’s obligation to:

a) Buy or sell a specific quantity of underlying assets at a specified strike price prior to or on a specified date in the future;

b) Pay the difference between the value of the underlying assets determined upon contract conclusion and the value determined prior to or on a specified date in the future.

12. “futures” are listed derivatives that certify the parties’ agreement to:

a) Buy or sell a specific quantity of underlying assets at a predetermined price on a specified date in the future;

b) Pay the difference between the value of the underlying assets determined upon contract conclusion and the value determined on a specified date in the future.

13. Forwards are derivatives that certify the parties’ agreement to buy or sell a specific quantity of underlying assets at a predetermined price on a specified date in the future.

14. Securities activities include offering, listing, trading, investing in securities, providing securities-related services, disclosing information, public company administration and other activities provided for in this Law.

15. Securities investment means the purchase, sale and holding of securities by investors on the securities market.

16. Investors are organizations and individuals that make investments in the securities market.

17. Strategic investors are the investors selected the General Meeting of Shareholders according to their financial capacity, technological capacity and commitment to cooperate with the building work for at least 03 years.

18. A major shareholder means a shareholder that holds at least 5% of the voting shares of an issuer.

19. Public offering means the offering of securities:

a) Through mass media;

b) To at least 100 investors, not including professional investors; or

c) To unidentified investors.

20. Private placement means the offering of securities in cases other than those specified in Point a Clause 19 of this Article and:

a) The securities are offered to fewer than least 100 investors, not including professional investors;

b) The securities are only offered professional investors.

21. An issuer means an organization that that offers, issues securities.

22. An accredited audit organization means an independent audit organization on the list of audit organizations accredited by State Securities Commission (SSC) in accordance with this Law and independent audit laws.

23.  Prospectus means a physical or electronic document that contains accurate and objective information about the offering or listing of securities by an issuer.

24. Listing means the admission of eligible securities to trading on a system for trading of listed securities.

25. Registration means the admission of securities to trading on a system for trading of unlisted securities.

26. Securities trading systems include the systems for trading of listed securities and the systems for trading of unlisted securities, organized and run by Vietnam Stock Exchange (VSE) and its subsidiaries.

27. Securities market refers to a location or method of information exchange for trading securities.

28. Securities trading include brokerage, proprietary trading, securities underwriting, securities investment consulting, securities investment fund management, securities portfolio management and provision of securities-related services in accordance with Article 86 of this Law.

29. Securities brokerage means the brokerage of sale and purchase of securities.

30. Proprietary trading refers to a securities company that buys securities from or sells securities to itself.

31. Securities underwriting means an underwriter’s commitment to the issuer to buy part or all of the issuer’s securities for reselling, or to buy the unsold securities, or to put the best efforts to sell as much as possible of a securities offering.

32. Securities investment consulting means the provision of analysis result, analysis report to the client and giving recommendations regarding the purchase, sale or holding of securities.

33. Securities registration means the registration of information about the issuer, its securities and holders.

34. Securities depository services include the depositing, storage, transfer of securities for clients, assisting the clients in exercising their rights relevant to the deposited securities.

35. Securities portfolio management means the management of an investor’s sale, purchase and holding of securities and other assets of the investor under an agreement.

36. Securities investment fund management means management of the sale, purchase and holding of securities and other assets of the securities investment fund.

37. A securities investment fund is a fund established through capital contribution by investors to make investment in securities or other assets, including real estate. Investors do not have the right to daily control the investment decisions of the fund.

38. A public fund is a securities investment fund that publicly offer fund certificates.

39. An open-end fund is a public fund whose publicly offered fund certificates have to be redeemed at the request of the investors.

40. An close-end fund is a public fund whose publicly offered fund certificates cannot be redeemed at the request of the investors.

41. A private fund means a securities investment fund that has 02 – 99 capital contributors who are all professional investors.

42. An exchange-traded fund (ETF) is an open-end fund that is established on the basis of receipt of exchange of securities for fund certificates. The ETF certificates shall be listed and traded on the systems for trading of listed securities.

43. A real estate investment fund is a securities investment fund that primarily makes investments in real estate and securities issued by real estate enterprises at least 65% of revenue of which comes from ownership and trade in real estate according to their latest annual financial statements.

44. Internal information is information about a public company, listed organization, registered organization, public fund, public investment company which may considerably affect its securities price if published.

45. Internal actors are persons holding important positions in the management of an enterprise, public fund or public investment company. To be specific:

a) Internal actors of an enterprise include the President of the Board of Directors or the Chairperson of the Board of members or the company president or members of the Board of members, legal representative, general director (director), deputy general director (deputy director), financial director, chief accountant and persons holding equivalent positions elected or by the General Meeting of Shareholders or designated by Board of Directors, the Board of members or the company president; The chief and members of the Board of Controllers, members of the internal audit boards, secretaries, administrators and authorized spokespersons;

b) Internal actors of a public fund or public investment company are members of the representative board of the public fund or members of the Board of Directors of the public investment company, executives of the public fund or public investment company, or internal actors of the securities investment fund management company (hereinafter referred to as “fund management company”).

46. Relevant persons are:

b) An enterprise and its internal actors; a public fund or public investment company and its internal actors;

b) An enterprise and any organization or individual that holds more than 10% of voting shares or stakes of such enterprise;

c) Any organization or individual that directly or indirectly supervises or is directly or indirectly supervised by another organization or individual; two organizations or individuals under the management of the same entity;

d) An individual and his/her biological parent, adoptive parent, father- or mother-in-law, spouse, biological child, son- or daughter-in-law, sibling, brother- or sister-in-law;

dd) A fund management company and the securities investment funds or investment companies under its management;

e) An organization or individual that is the representative of another organization or individual in a contract;

g) Other organizations and individuals that are relevant persons as defined by the Law on Enterprises.

47. A certified securities professional is a person who has the securities professional certification granted by SSC and works for a securities company, fund management company, foreign branch in Vietnam of a foreign securities company or foreign fund management company (hereinafter referred to as “foreign securities company”) or a securities investment company.

48. A listed organization or registered organization is an organization whose securities are listed or registered on the securities trading system.

Article 5. Rules for securities activities

1. Respect of ownership and other rights to assets in securities activities; freedom to trade, invest and provide information about securities of organizations and individuals.

2. Fairness, openness, transparency.

3. Protection of investors’ the lawful rights and interests.

4. Accept risks.

Article 6. Policies on development of the securities market

1. The State shall introduce policies facilitating Vietnamese and foreign organizations and individuals to invest and operate in the securities market in order to mobilize medium-term and long-term capital.

2. The State shall introduce management and supervision policies to ensure the fairness, openness, transparency, safety and effectiveness of the securities market.

3. The State shall introduce policies on investment in modernization of infrastructure and information technology serving the operation of the securities market, develop human resources for the securities industry, provide basic knowledge about securities and the securities market.

Article 7. Measures for assurance of security and safety of the securities market

1. Measures for assurance of security and safety of the securities market include:

a) Supervision of security and safety of the securities market;

b) Response to and recovery from events that adversely affect the safety, stability and integrity of the securities market;

c) Suspension of certain listed or registered securities from trading on the system;

d) Suspension of some or all transactions of VSE and its subsidiaries;

dd) Partial or full suspension or restoration of securities registration, depositing, offsetting, payment functions of Vietnam Securities Depository and Clearing Corporation (VSDCC);

e) Temporarily or permanently prohibition from holding certain positions in securities companies, fund management companies, branches of foreign securities companies, investment companies; prohibition from securities activities due to commission of securities offences;

g) Freezing the securities account; requesting a competent person to freeze a deposit account involved in a securities fraud.

2. The Government shall provide for implementation of securities market safety measures mentioned in Clause 1 of this Article.

Article 8. State management of securities and the securities authorities

1. The Government shall uniform state management of securities and the securities authorities.

2. The Ministry of Finance shall be responsible to the Government for state management of securities and the securities market, and have the following duties and entitlements:

a) Propose strategies, plans, schemes and policies on development of the securities market to the Government and the Prime Minister for promulgation;

b) Promulgate or propose promulgation of legislative documents on securities and the securities market;

c) Direct SSC to implement the strategies, plans, schemes and policies on development of the securities market and legislative documents on securities and the securities market.

3. Other ministries and ministerial agencies, within the scope of their duties and entitlements, shall cooperate with the Ministry of Finance in state management of securities and the securities market.

4. The People’s Committees at all levels, within the scope of their duties and entitlements, are responsible for state management of securities and the securities market in their administrative divisions.

Article 9. State Securities Commission (SSC)

1. SSC is affiliated to the Ministry of Finance and is responsible for advising and assisting the Minister of Finance in state management of securities and the securities market, organizing implementation of regulations of law on securities and the securities market as authorized by the Minister of Finance, and has the following duties and entitlements:

a) Propose legislative documents on securities and the securities market, strategies, plans, schemes and policies on development of the securities market to the Minister of Finance or a competent authority for promulgation;

b) Organize and develop the securities market; directly manage and supervise securities activities; manage services related to securities and the securities market in accordance with regulations of law;

c) Issue, reissue, renew, revise, revoke licenses, securities professional certifications, certificates related to securities activities; revise, suspend and revoke decisions relevant to securities activities;

d) Manage, inspect, supervise operations of VSE, its subsidiaries and VSDCC; consider approving regulations of VSE, its subsidiaries and VSDCC; request VSE, its subsidiaries and VSDCC to revise their regulations; revise, suspend and revoke decisions relevant to operations of VSE, its subsidiaries and VSDCC; direct VSE, its subsidiaries and VSDCC to fulfill duties to protect the lawful rights and interests of investors;

dd) Consider approving new securities; change and apply new transaction methods;

e) Manage and supervise operations related to securities and the securities market of organizations and individuals;

g) Carry out inspections; settle complaints and denunciations; impose administrative penalties against securities-related offences;

g) Submit reports to the Ministry of Finance on the securities market developments. Submit a report to the Ministry of Finance, the Government and the Prime Minister on any adverse event that considerably affect the security and safety of the securities market in order to stabilize the market and maintain financial security and safety;

i) Implement or request a competent authority to implement measures for assurance of securities market safety and security;

k) Produce statistics and forecasting about securities activities and the securities market; modernize information technology serving securities activities and the securities market;

l) Provide or cooperate with relevant organizations in providing training for securities officials and certified securities professionals; spread knowledge about securities and the securities market in the public.

m) Issue instructional documents and other documents under the management of SSC;

n) Supervise securities-related socio-professional organizations implementing their charters and guidelines;

o) Prepare and submit reports on securities trading and securities market as prescribed by law;

p) Promote international cooperation and coordinate implementation of securities-related international agreements to which Vietnam is a signatory;

q) Other duties and entitlements provided for in this Law and relevant laws.

2. Functions, tasks, entitlements and organizational structure of SSC shall be specified by the Prime Minister.

3. Officials and public employees of SSC, in performance of their duties, shall ensure truthfulness and confidentiality of information, compliance with regulations on securities and the securities market and relevant laws.

Article 10. Securities-related socio-professional organizations

1. Securities-related socio-professional organizations shall be established and run in accordance with regulations of law on associations, comply with regulations of law on securities and the securities market, and be supervised by SSC.

2. Each securities-related socio-professional organization shall issue its own code of professional ethics after it is approved by SSC; cooperate with securities authorities in disseminate knowledge about securities and the securities market among its members.

Article 11. Professional investors

1. Professional investors are investors that have adequate financial capacity or securities qualifications, including:

a) Commercial banks, foreign branch banks (FBB), finance companies, insurers, securities companies, fund management companies, securities investment funds, international financial institutions, off-budget financial funds, state-owned financial institutions permitted to buy securities as prescribed by relevant laws;

b) Any company whose contributed charter capital exceeds 100 billion VND; every listed or registered organization;

c) Holders of securities professional certifications;

d) Any individual holding a quantity of listed or registered securities that is worth at least 02 billion VND as confirmed by the securities company;

dd) Any individual whose taxable income in the latest year is at least 01 billion according to his/her submitted tax return or tax deduction documents of his/her income payer.

2. The Government shall elaborate this Article.

Article 12. Securities-related offences

1. Direct or indirect commission of frauds, forgery of documents, provision or disclosure of false information to conceal true information or omit necessary information in a manner that causes misunderstanding, adversely affects the offering, listing, trading, investment of securities and provision of securities-related services.

2. Use of internal information to buy or sell securities to oneself or another person; revelation or provision of internal information; advising another person to buy or sell securities based on internal information.

3. Use of one or several accounts of oneself or another person, trading securities in a manner that creates artificial demand or supply; collaborating with another person in trading securities to manipulate securities prices; use of other methods, with or without false information, to manipulate securities prices.

4. Engaging in securities trade or provision of securities-related services without a license, certification or approval from SSC.

5. Use of a client’s account or asset without the client’s authorization or against the law; abuse of trust to appropriate a client’s assets.

6. Allowing another person to borrow the account to trade securities, hold securities in the name of another person for the purpose of manipulating securities prices.

7. Organizing the securities market against regulations of this Law.

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