On June 30th 2021, The Ministry of Finance issued Circular 51/2021/TT-BTC Guiding the obligations of organizations and individuals in foreign investment activities on the Vietnamese stock market.
Regulated entities
– Foreign investors;
– Groups of affiliated foreign investors;
– Depository members, clearing members, securities companies, fund management companies, branches of foreign fund management companies in Vietnam, issuers of depositary receipts in foreign countries, business entities over 50% of charter capital of which is held by foreign investors.
Indirect investment capital accounts
Each foreign investor shall be allowed to open 01 indirect investment capital account at 01 custodian bank obtaining the license for foreign exchange trading in order to perform indirect investment activities in Vietnam’s securities market.
Each issuer of depositary receipts in a foreign country shall be allowed to open 01 indirect investment capital account at 01 custodian bank obtaining the license for foreign exchange trading in order to issue or cancel depositary receipts and perform other relevant activities.
When receiving trust capital from indirect investment, fund management companies or branches of foreign fund management companies in Vietnam shall be allowed to open indirect investment capital accounts to receive capital from foreign investors that do not have indirect investment capital accounts.
All activities such as transmitting money to perform transactions or investments and make payments relating to securities investment activities of foreign investors and activities of issuers of depositary receipts in foreign countries, receiving and using dividends or distributed profits, or buying foreign currency for the purpose of remitting them to foreign countries (if any) and other relevant transactions must be carried out through indirect investment capital accounts.
Depository accounts
Upon obtaining securities trading codes, foreign investors and issuers of depositary receipts in foreign countries shall open depository accounts.
Foreign investors and issuers of depositary receipts in foreign countries shall open depository accounts at custodian banks according to the rule that, for each securities trading code granted, only 01 depository account is opened at a custodian bank.
In addition to depository accounts opened at custodian banks, foreign investors and issuers of depositary receipts in foreign countries shall be allowed to open depository accounts at securities companies according to the rule that only 01 depository account is opened at each securities company.
Obligations arising from foreign investment in Vietnam’s securities market
Foreign investors and issuers of depositary receipts in foreign countries shall be obliged to declare, pay and finalize taxes, fees, charges and service prices related to securities trading activities in Vietnam in accordance with regulations of the law of Vietnam.
The foreign investor, The group of affiliated foreign investors shall itself/himself/herself fulfill, or appoint 01 depository member, or 01 securities company or 01 fund management company or its representative office (if any) or 01 other organization, or authorize an individual to fulfill the obligations to submit reports on ownership and disclose information. (The group of affiliated foreign investors can not itself fulfill the obligations to submit reports on ownership and disclose information).
The notification of appointment or change of the organization or individual fulfilling the obligations to make ownership reports and disclose information shall be made and sent to SSC and the subsidiary of VNX within 24 hours after the appointment or authorization takes effect.
In case the number of foreign investors in a group of affiliated foreign investors is changed but the organization or individual appointed or authorized to fulfill the obligations to make ownership reports and disclose information is kept unchanged, that appointed or authorized organization or individual shall submit reports to SSC and subsidiary of VNX within 07 working days from the occurrence of such change.
Obligations to provide services for foreign investors
When rendering services or participating in securities auctions with authorization of foreign investors, securities companies, fund management companies, or branches of foreign fund management companies in Vietnam shall separate trading orders and investment directions of foreign investors from those of domestic investors (if any) and their own trading orders.
Reporting
Depository members shall submit monthly reports (submitted within 05 working days from the end of the reporting month) to SSC on depository accounts and portfolios of foreign investors and issuers of depositary receipts in foreign countries.
The depository members that are branches of foreign credit institutions or wholly foreign-owned credit institutions established in Vietnam must also provide reports on their investment activities and investment portfolios.
Securities companies, fund management companies and branches of foreign fund management companies in Vietnam shall provide monthly reports (submitted within 05 working days from the end of the reporting month) to SSC on management of investment portfolios and investments for foreign investors.
Circular 51/2021/TT-BTC takes effect from August 16th 2021 and replaces Circular No. 123/2015/TT-BTC dated August 18th 2015.
