DECISION No. 78/2000/QD-UBCK OF DECEMBER 29, 2000 AMENDING AND SUPPLEMENTING A NUMBER OF ARTICLES OF THE REGULATION ON ORGANIZATION AND OPERATION OF SECURITIES COMPANIES, ISSUED TOGETHER WITH DECISION No. 04/1998/QD-UBCK3 OF OCTOBER 13, 1998 OF THE STATE SECURITIES COMMISSION CHAIRMAN
THE STATE SECURITIES COMMISSION CHAIRMAN
Pursuant to Decree No. 15/CP of March 2, 1993 of the Government on the tasks, powers and State management responsibilities of the ministries and ministerial-level agencies;
Pursuant to Decree No. 75/CP of November 28, 1996 of the Government on the establishment of the State Securities Commission;
Pursuant to Decree No. 48/1998 of July 11, 1998 of the Government on securities and securities market;
At the proposal of the director of the Department for Securities Business Management,
Article 1.- To amend, supplement a number of articles of the Regulation on organization and operation of securities companies, issued together with Decision No. 04/1998/QD-UBCK3 of October 13, 1998 of the State Securities Commission Chairman as follows:
1. To supplement Clauses 6 and 7 of Article 2 as follows:
6. Valid copies are those certified by the public notaries of Vietnam or other competent bodies as prescribed by law.
7. Valid dossiers are those containing all documents with correct and full contents as prescribed by law.
2. To annul Clause 4 of Article 5.
3. To amend Points b, d, e and f, Clause 1 of Article 6, as follows:
b) The valid copy of the business registration certificate granted by the competent State body; the record on capital contribution by founding shareholders for securities joint stock companies, founding members for securities limited liability companies with two members or more or the capital allocation decision of the owner organization (for one-member securities limited liability companies);
d) The curricula vitae of the following persons:
- Members of the Managing Board, for securities joint stock companies;
- Members of the Managing Board or company chairmen, for one-member securities limited liability companies;
- Chairmen of the Members� Councils, for securities limited liability companies with two or more members;
- Members of the Control Board (if any);
- Directors (general directors) of the companies.
e) The list of members of the directorate and business personnel of the company, enclosed with the valid copies of the practice licenses (excluding accountants, paper work personnel, cashiers);
f) The financial statements for the latest two years of the parties being legal persons contributing 10% or more of the company�s charter capital, for securities companies which do not apply for dealing operation permits, 5% or more of the company�s charter capital, for securities companies which apply for dealing operation permits.
4. To annul Point c, Clause 3 and amend Clause 1, of Article 7 as follows:
1. Securities companies established after amalgamation, division, separation, transformation or merger of companies must apply for renewal of licenses for securities trading activities and carry out necessary procedures as provided for by law.
5. To amend Clause 1 of Article 8 as follows:
1. Apart from abiding by the provisions of the Enterprise Law and other relevant legal documents, the securities companies must obtain the written approval of the State Securities Commission before doing the following things:
- Relocating their head-offices, branch offices;
- Changing and/or supplementing the contents and/or scope of operations of their branches;
- Renaming the companies, amending and/or supplementing the charter, changing the charter capital level.
Within 15 days after receiving the companies� notices on the above-said changes and enclosed relevant documents, the State Securities Commission shall reply in writing whether it has approved or not. In case of non-approval, the State Securities Commission has to explain the reasons therefor.
6. To replace Article 9 with the new Article 9 as follows:
1. Securities companies which wish to establish or close their branches, apart from having to abide by the provisions of the Enterprise Law and other relevant legal documents, shall have to obtain the prior written approval of the State Securities Commission.
2. The dossier of application for establishment of branches shall include:
a) The application for branch establishment;
b) The plan for the branch�s operation in the first year after its establishment;
c) The full name of the director and the list of the staff members of the branch.
3. The dossier of application for closure of branches shall include:
a) The application for branch closure;
b) The explanation of the reasons for branch closure.
4. The time limit for approving the establishment or closure of a branch of a securities company is 45 days at most after the full receipt of the dossiers of application therefor.
5. Securities companies may set up securities transaction bureaus in the provinces and cities where their approved head-offices or branches are located as prescribed by law and/or select a number of legal persons to act as their order- receiving agents in the provinces and cities where they do not have their head-offices or have not yet had their branches.
6. The securities companies� transaction bureaus as prescribed in Clause 5 of this Article may open accounts for securities transactions, accept collateral and custody securities, receive and transmit orders to head-offices/ branches which the transaction bureaus are attached to. The transaction bureaus must satisfy the following requirements:
a) Having at least 1 employee with the securities trading practice license;
b) Having information disclosure equipment;
c) Having minimum material foundation for temporary management of money and securities before transferring them to the head-offices/branches of the companies.
7. The order-receiving agents as prescribed in Clause 5 of this Article may receive, preliminarily check and transmit orders to the head-offices/branches of securities companies under the contracts signed with the securities companies. The order-receiving agents are not allowed to open accounts for securities transactions for customers, to receive collateral as well as custody securities of customers or to conduct any activities of providing consultancy for customers. The order-receiving agents shall have to satisfy the following conditions:
a) Having equipment to disclose information on transaction to customers;
b) The order-receiving personnel and the persons competent to preliminarily check the orders of the agents must have the professional certificates of securities and securities market.
8. Securities companies shall have to bear responsibility for their selection of order-receiving agents and the operation thereof, and at the same time send written notice on the locations thereof, the lists of persons competent to preliminarily check the orders together with their curricula vitae and identity card numbers and the lists of order-receiving personnel at transaction bureaus as well as organizations acting as order-receiving agents of the companies to the State Securities Commission before commencing the operation of the transaction bureaus/order-receiving agents.
7. To amend Clause 2 of Article 10 as follows:
2. To transfer the whole amount of charter capital or the amount of additionally contributed charter capital into the frozen accounts at the designated payment banks. This money amount shall be released only when the companies officially receive the securities trading operation licenses or when the companies receive the written approval of the charter capital level change from the State Securities Commission.
8. To amend Point d, Clause 1 of Article 11 as follows:
d) The serial numbers, dates of issuance and durations of the business registration certificate and the securities trading operation license.
9. To amend Clause 2 of Article 11 as follows:
2. In the course of business operation, the securities companies must post up:
a) The valid copies of the securities trading operation licenses and the lists of the companies� representatives at their head-offices;
b) The valid copies of their branches� operation registration certificates, the valid copies of the decisions approving the branch establishment at the offices of their branches.
10. To annul Clause 5 of Article 11.
11. To replace Article 12 with the new Article 12 as follows:
1. The State Securities Commission considers and grants the securities business practice licenses to:
a) Individuals at the proposals of the securities companies;
b) Managers of the companies at the proposals of the representatives of the founding members, the representatives of the founding shareholders or owners of the securities companies.
2. Vietnamese citizens shall be granted the securities business practice licenses when they meet the following conditions:
a) Having legal capacity and full civil act capacity;
b) Not falling under one of the following cases:
- Having been convicted of serious crimes, very serious crimes and particularly serious crimes in infringing upon the political regime, the economic regime, infringing upon the property of organizations and/or citizens;
- Having been convicted of other crimes and having not yet had their criminal records written off;
c) Having the diploma of senior secondary education graduation or higher level;
d) Having all professional certificates for securities business, granted by the State Securities Commission;
e) Having passed the test examinations organized by the State Securities Commission.
3. Foreign nationals shall be granted the securities business practice licenses when they meet the following conditions:
a) Having satisfied the conditions prescribed in Clauses 2.a and 2.b of this Article;
b) Having the securities business practice licenses granted by competent foreign agencies or foreign professional organizations;
c) Having certificates on laws applicable to securities sector, granted by the State Securities Commission of Vietnam;
d) Having been permitted to reside and work in Vietnam.
12. To replace Article 13 with the new Article 13 as follows:
The dossiers of application for practice licenses for Vietnamese citizens shall include:
1. The application for securities business practice license;
2. Valid copies of diplomas, certificates certifying their educational levels, professional qualifications prescribed in Clauses 2.c and 2.d of Article 12;
3. Curriculum vitae with certification by the competent State body that the person being considered by the State Securities Commission for the granting of practice license have fully met the conditions prescribed in Clause 2.b of Article 12;
4. The labor contract or the decision to appoint the practitioner to work at the securities company;
5. The remarks of the agency where the to be- grantee of securities business practice license previously worked (if any).
13. To replace Article 14 with the new Article 14 as follows:
The dossiers of application for practice licenses for foreign nationals shall include:
1. The application for securities business practice license;
2. The copy of the passport, the valid copy of the permit to reside in Vietnam;
3. The valid copy of the work permit granted to the foreigner by the Ministry of Labor, War Invalids and Social Affairs;
4. The valid copies of diplomas and certificates proving the professional qualifications prescribed in Clause 3.b and 3.c of Article 12;
5. The remarks of the agency where the to be- grantee of securities business practice license previously worked (if any).
14. To replace Article 15 with the new Article 15 as follows:
The securities companies, the founding members, the founding shareholders and owners of securities companies shall have to pay fees for the granting of securities business practice licenses to their employees and managers at the levels prescribed by law.
15. To supplement Clauses 3, 4, 5 and 6 of Article 16 as follows:
3. A securities business practice license shall be valid only for 3 years as from the date of issuance. The practice licenses may be extended and the duration for each extension shall be 3 years.
4. One month before the expiry of the practice licenses, the securities companies must file their application for extension of the practice licenses for their employees to the State Securities Commission. The State Securities Commission shall organize test examinations for employees of the companies. Those who pass such test examinations shall have their practice licenses extended by the State Securities Commission.
5. Where practitioners move to work for another securities company, such company shall have to fill in the procedures applying for the change of the practice licenses for such persons.
6. Where their practice licenses have not yet expired, the individuals considered and permitted for the change of their practice licenses shall not have to sit for the test examinations. The new licenses shall be valid only for the remaining duration of the old licenses.
16. To add Clauses 4, 5 and 6 to Article 17 as follows:
4. To open securities transaction accounts at the securities companies where the practitioners work.
5. To hand, request or receive any remuneration contrary to their duties in securities business practice operation.
6. To set, raise or lower or collude with customers in setting, raising or lowering, the securities prices in order to cause price fluctuation.
17. To add Clauses 8, 9 and 10 to Article 20 as follows:
8. To disclose information fully, truthfully and in time to customers.
9. To ensure the separation between business activities of organizations being owners of the securities companies with the business activities of the securities companies; to work out strict regulation on internal organization, avoiding conflict of interests between the companies, their personnel as well as attached organizations and the customers and among customers.
10. The securities companies must ensure the separation between the activities of brokerage for customers and the dealing activities of the companies themselves, between the dealing activities of the companies themselves and the portfolio management activities.
18. To replace Article 21 with the new Article 21 as follows:
1. The opening and management of customers� accounts must be effected on the basis of contracts signed between securities companies and their customers. In addition to the contents agreed upon by the two parties under the provisions of law, the contracts for opening accounts for securities transactions between securities companies and their customers must contain the basic contents prescribed in this Decision.
2. The securities companies shall have to manage the securities property of customers separately from their own securities property.
3. Securities companies may select payment banks and send written notices on such payment banks to the State Securities Commission. The securities companies shall have to fully transfer the customers� collateral for purchase of securities into the investors� deposit accounts on securities transactions opened by the companies at the payment banks and may only keep the deposit money of the investors in accounts already opened at such banks.
4. Securities companies must not disclose information on customers� accounts if not so agreed in writing by the customers. This provision shall not apply to cases where such information must be reported to the State Securities Commission, the Securities Trading Centers, the Stock Exchanges or where they are requested by competent State bodies according to the provisions of law.
5. Securities companies may act as listed and unlisted securities distribution agents for issuing organizations, except the Government bonds which shall comply with the regulations of the Finance Ministry.
6. Securities companies must sign written contracts with customers when performing the management of portfolio entrusted by customers. In addition to the contents agreed upon by the two parties according to the provisions of law, the portfolio management contracts signed between securities companies and customers must contain the principal contents prescribed in this Decision.
7. Securities companies must open their own accounts for investment entrusting customers at a bank agreed upon by the two parties and may only use the money in such accounts in strict accordance with provisions in the portfolio management contracts the companies have signed with the customers or under the written instructions of the customers.
8. Securities companies must immediately notify the customers of the cases where the securities prices in the customers� investment lists undergo abnormal fluctuations and make periodical reports relating to the investment for the customers.
19. To amend Clauses 1 and 3 and supplement Clause 5 of Article 23 as follows:
1. Using more than 50% of the charter capital to procure equipment and fixed assets (for securities companies licensed for dealing operation); using more than 75% of the charter capital to procure equipment and fixed assets (for securities companies not licensed for dealing operation);
3. Investing more than 15% of the total securities being in circulation of a unlisted company or contributing more than 15% of the total contributed capital of a limited liability company;
5. Investing in shares of the parent companies;
20. To amend Point a, Clause 1 of Article 24 as follows:
a) When exceeding the level prescribed in Clause 1 of Article 23, it must be reported to the State Securities Commission within 5 working days at most as from the date the prescribed level is exceeded and all necessary measures must be applied (increasing the charter capital or selling property) to observe the prescribed levels within 3 months at most.
21. To amend Point a, Clause 4 of Article 28 as follows:
a) To report on the annual operation situation, on changes in the ownership structures of the securities companies or the ownership structures of organizations being owners of the one-member securities limited liability companies if the owner organizations are joint stock companies and the important decisions on organization and operation in the year.
22. To add Clause 6 to Article 28 as follows:
6. Monthly reports:
Monthly, the securities companies shall have to make reports on liquidity capital and reports on the situation of operation in the month, in two copies and send them to the State Securities Commission (The Department for Securities Business Management) and the Securities Trading Center within the first 5 days of the following month.
23. To add the following paragraph to the end of Article 29:
Besides the above-mentioned cases of extraordinary reports, in cases of necessity to protect the common interests and the interests of investors, the State Securities Commission and the Securities Trading Centers may request securities companies to report in writing on information regarding the organization and operation of the companies.
24. To amend Article 34 as follows:
Besides the provisions of the Enterprise Law and other relevant legal documents, the dissolution of securities companies must be approved in writing in advance by the State Securities Commission.
25. To annul Appendices No. 01, 02, 04, 05, 06, 07, 08 and 09 issued together with Decision No. 04/1998/QD-UBCK3 of October 13, 1998 of the State Securities Commission Chairman and to promulgate together with this Decision Appendices No. 01, 02, 04, 05, 06, 07, 08, 09, 10 and 11.
Article 2.- This Decision takes effect 15 days after its signing.
Article 3.- The director of the Office, the director of the Securities Business Management Department, the heads of the units under the State Securities Commission, the Securities Trading Centers, the securities companies and concerned parties shall have to implement this Decision.
The State Securities Commission Chairman
NGUYEN DUC QUANG