Chương II Thông tư 121/2020/TT-BTC: Hoạt động quản trị, điều hành công ty chứng khoán

Chapter II

CORPORATE GOVERNANCE, MANAGEMENT AND OPERATIONS FUNCTIONS

Article 3. Rules of corporate governance, management and operations functions of securities companies

1. Securities companies must comply with the provisions of the Securities Law, the Enterprise Law, their charters and regulations of other relevant laws on corporate governance.

2. A securities company must clearly define the different responsibilities of the General Meeting of Shareholders, the Members’ Council, the Owner(s), the Governing Board, the Supervisory Board or the Board of Directors in accordance with the Securities Law, the Enterprise Law and other relevant laws.

3. A securities company must set up a system of communication with its shareholders or members to give them adequate information and fair treatment, and protect their rights and interests.

4. Securities companies must establish systems for internal control or audit, management of risks, surveillance, monitoring, prevention or mitigation of conflicts of interest from within or transactions with related persons.

5. Securities companies must ensure that employees working in their departments or divisions must hold suitable securities practicing certificates in accordance with regulations of securities and securities market laws.

Article 4. Rules for rendering services and business lines

When rendering their core business functions, securities companies must adhere to the following principles:

1. Designing and putting to use processes and procedures.

2. Issuing and adopting codes of ethics or practice.

3. Both securities companies and their employees are not allowed to make investments on behalf of their customers, except in case of the authorized custody of investors’ personal accounts as prescribed in Article 19 of this Circular.

4. Being honest with their customers, avoiding any infringement upon their customer’s assets, other rights and interests.  Managing each customer’s assets, assets of their customers' and theirs separately.

5. Entering into contracts with customers when providing services to them; providing complete and authentic information to customers.

6. Unless otherwise provided by law, when providing services to customers, they are not allowed to perform, whether directly or indirectly, the following acts:

a) Deciding to invest in securities on behalf of customers;

b) Agreeing with customers on sharing of profits or losses;

c) Advertising or declaring that contents, effectiveness or methods of their analyses on securities are of greater value than those of other securities companies; 

d) Providing false information to seduce or pester customers to buy and sell a certain type of securities;

dd) Giving false, fraudulent or misleading information to customers;

e) Performing other acts in contravention of laws.

7. Carrying out accounting, auditing, statistics regimes and financial obligations in accordance with laws.

8. Making public disclosure of information and reports in a timely, adequate and accurate manner in accordance with laws.

9. Setting up stand-by information technology systems and databases to ensure safety, prudence and continuity for their business activities.

10. Supervising securities trades or transactions according to regulations of the Minister of Finance.

11. Securities companies must set up specialized departments in charge of communicating with customers and dealing with customer's inquiries and complaints.

12. Discharging other obligations prescribed by the securities law and other relevant laws.

Article 5. Company charter

When formulating its corporate Charter, in addition to complying with regulations of this Circular, a securities company must adhere to the following principles:

1. Its corporate Charter is not in breach of regulations of the Law on Securities and the Law on Enterprises.

2. If it is a public company, it must consult regulations of the Law on Securities, the Law on Enterprises and this Circular to draw up its corporate Charter. When formulating its corporate Charter, it must refer to the sample Charter applicable to public companies under regulations of corporate governance laws applied to public companies.   

3. If it is a joint stock business not yet going public, or a limited liability company, when formulating its corporate Charter, it must ensure that its corporate Charter is conformable to the Law on Securities and the Law on Enterprises.

4. When drawing up its corporate Charter, it must consult clause 2 and 3 of this Article.  In addition, the corporate Charter must contain the following details:

a) Operating network;

b) Business scope;

c) Operating principles;

d) Licenses for establishment and operation of securities business activities;

dd) Governing Board/Members’ Council; eligibility requirements or standards of its members;

e) Board of General Directors (Board of Directors), eligibility or qualification requirements or standards of its members; the Supervisory Board or Internal Control Board, eligibility or qualification requirements or standards of its members;

g) Audit Committee, eligibility or qualification requirements or standards of its members;

h) Prevention of conflicts of interests;

i) Reorganization, comprising: business split-up, split-off, amalgamation, merger or transformation.

5. It must publish the full text of its corporate Charter on its official website.

Article 6. Shareholders and/or members

1. Shareholders and/or capital contributing members of a securities company must observe regulations laid down in subparagraphs c, d of paragraph 2 of Article 74 in the Law on Securities.

2. Shareholders and/or capital contributing members owning at least 10% of a securities company's charter capital are not allowed to improperly use their position to harm the rights and interests of the company and other shareholders and/or members.

3. Shareholders, capital contributing members owning at least 10% of a securities company's charter capital must fully notify the securities company within 24 hours after receiving information about the following situations:

a) The number of their shares or contributed capital is frozen, pledged or otherwise encumbered according to the court's decisions;

b) Shareholders and/or members that are entities decide to change their names, or are split up, split off, dissolved or bankrupted.

4. Securities companies must report to the State Securities Commission on the situations specified in Clause 3 of this Article within 05 days after receiving notices from their shareholders and/or members.

Article 7. General Meeting of Shareholders, Members’ Council and Owner(s)

1. A securities company must develop processes and procedures for convening and voting at the General Meeting of Shareholders or the meeting of the Members’ Council, and these processes and procedures must be submitted to seek approval from the General Meeting of Shareholders, the Members’ Council.

2. If a securities company is a joint stock company, it must hold the annual General Meeting of Shareholders within 4 months after the end of the fiscal year. In case of failure to do so within that time limit, the securities company must report to the State Securities Commission in writing, clearly stating the reasons, and must hold the annual General Meeting of Shareholders within the next 2 months.

3. If a securities company is a public company, it must announce the decision of the General Meeting of Shareholders in accordance with the law on securities and securities markets in terms of information disclosure.

4. The securities company must submit a post-meeting report to the General Meeting of Shareholders, the Members' Council and/or the Owner(s), enclosing the meeting resolution and relevant documents, to the State Securities Commission within 05 working days after the General Meeting of Shareholders or the meeting of the Members' Council or the Owner(s) is closed.

5. The General Meeting of Shareholders, the Members’ Council or the Owner(s) can hire an authorized auditing body to audit the company’s financial statement, and make a report on prudential ratios. In the same financial year, the securities company shall not change the authorized auditing body, except as the parent company changes the authorized auditing body, or the authorized auditing body is subject to suspension of their services or cancellation of their status of authorization for auditing services.

Article 8. Governing Board, Members’ Council

1. A member of the Governing Board or a member of the Members’ Council of a securities company are not allowed to hold office as a member of the Governing Board, a member of the Members’ Council, or a Director General (Director), of another securities company.

2. Functions, duties of and authorization granted the Governing Board, the Members’ Council, the President, every member of the Governing Board and every member of the Members’ Council must be prescribed by the corporate Charter.  

3. The Governing Board and the Members’ Council must design and develop processes and procedures for concerning and voting at the General Meeting of Shareholders or the meeting of the Members’ Council.

4. The Governing Board and the Members’ Council must set up departments or divisions or assign persons in charge of risk management in accordance with Article 11 herein, and intracorporate control in accordance with Article 12 herein.

Article 9. Supervisory Board or Intracorporate Audit Committee

1. The securities company employing the operating model stipulated in point a of clause 1 of Article 137 in the Enterprise Law must comply with the following regulations:

a) The Head of the Supervisory Board of a securities company shall not hold the dual office as the member of the Supervisory Board or the executive of another securities company;

b) The Supervisory Board must formulate control or supervision procedures that are submitted to the General Meeting of Shareholders or the Members’ Council to seek its approval decision;

c) If the Supervisory Board is composed of at least 02 members, it must convene at least twice every year. The meeting minutes must contain full and accurate discussions and must be deposited or archived as legally required;

d) When finding that any member of the Governing Board, the Members’ Council, the Board of General Directors (Board of Directors) violates laws, the corporate Charter, leading to infringement upon the rights and interests of the company, shareholders, Owner(s) or customers, the Supervisory Board shall be responsible for requesting explanations to be given within a certain period of time or recommending the General Meeting of Shareholders, the Members’ Council or the Owner(s) to convene to seek solutions. In case of any violation against laws, the Supervisory Board must report in writing to the State Securities Commission within 07 working days after such violation is detected.

2. The securities company employing the operating models stipulated in point a and b of clause 1 of Article 137 in the Enterprise Law must, depending on its functions and duties, implement the following regulations:

a) Carry out the independent assessment of conformity and conformance to legislative policies, the company’s Charter, decisions of the General Meeting of Shareholders, the Owner(s), the Governing Board or the Members’ Council;

b) Examine, review and assess the adequacy, effectiveness and efficiency of the internal control system under the control of the Board of General Directors (Board of Directors) with the aim of making it become perfect;

c) Assess the conformance of its business functions to intracorporate policies and processes or procedures;

d) Take counsels on formulation of intracorporate policies, processes or procedures;

dd) Assess the conformance to laws, and take control of measures property safety measures;

e) Assess the internal audit through financial information and business process;

 g) Assess the procedures for determination, review and management of business risks;

h) Assess effectiveness of business activities;

i) Assess the conformance to contractual commitments;

k) Control its information technology system;

l) Investigate internal violations;

m) Carry out the internal audit of the parent company and its subsidiaries.

3. The internal or intracorporate audit must adhere to the following principles:

a) Independence: The internal audit department or division must be independent from other departments of the securities company, including the executive board; internal audit activities must be independent from the corporate operations and business services or lines of the securities company; officers tasked with internal audit engagements are not allowed to undertake the audited work or hold multiple office at departments performing services or core business functions, such as investment brokerage, proprietary trading, investment analysis and consultancy, underwriting and risk management;

b) Objectivity: The internal audit and its staff must have an impartial, equal and unbiased attitude when performing their assigned duties. The securities company must ensure that the internal audit is free from any interference in duly performing their duties;

Internal audit staff must be impartial in the collection, assessment and communication of information about audited operations, processes, procedures or systems.    Internal audit staff should give a fair assessment of all relevant issues and not be influenced by their own interests or goals or by anyone else when giving their comments or opinions;

c) Integrity: Internal audit staff must perform their duties in an honest, discreet and responsible manner; must comply with laws and perform works in an overt manner in accordance with laws and professional ethics;

d) Confidentiality: Internal audit staff should respect the value and ownership of information received, not disclosing information without valid authorization, unless they are obligated to disclose information as required by laws and the company’s internal rules and regulations.

4. Personnel of the internal audit department or division must meet the following eligibility requirements and standards:

a) Its staff have not been subject to any fine or other more severe penalties for their violations that may arise in the securities, banking and insurance sectors for five (05) recent years until the year of their appointment;  

b) The Head of the internal audit department or division must have his/her professional qualification in law, accounting and auditing specialties; acquire enough experience, credibility and competence to effectively perform his/her assigned duties;

c) They are not related to heads of professional departments, persons performing core business functions, the General Director (Director), the Deputy General Director (Deputy Director), Directors of branches of the securities company;

d) They must hold professional certificates in securities and securities market fundamentals or securities practicing certificates, and professional qualifications in securities and securities market laws;

dd) They are not allowed to hold other offices of the securities company.

Article 10. Board of Directors

1. General Director (Director) is the person who runs the daily business of a securities company, is supervised by the Governing Board, the Members’ Council or the Owner, and is accountable to the Governing Board, the Members' Council or the Owner and before the law for the exercise of his/her assigned rights and duties.

2. General Director (Director), Deputy General Director (Deputy Director) of a securities company cannot concurrently work for another securities company, fund management company or enterprise; General Director (Director) of a securities company is not allowed to hold office as a member of the Governing Board or the Members' Council of another securities company.

3. General Director (Director), Deputy General Director (Deputy Director) in charge of core business functions must meet the requirements or standards specified in Clause 5, Article 74 of the Law on Securities.

4. A securities company must formulate the working rules and regulations of the Board of General Directors (Board of Directors) and submit them to seek approval or consent from the Governing Board, Members’ Council or the Owner of the company. These working rules and regulations must include, but not limited to, the following basics:

a) Specific responsibilities and duties of members of the Board of General Directors (Board of Directors);

b) Regulations on processes and procedures for holding and participating in a meeting;

c) Accountability of the Board of General Directors (Board of Directors) to the Governing Board, the Members’ Council, the Owner or the Supervisory Board.

Article 11. Risk management

1. The Governing Board, the Members’ Council or the Owner of a securities company must set up its risk management system according to the following principles:

a) The risk management system must include, but not limited to, the followings:

- Responsibilities of the Governing Board or the Members’ Council or the Owner of the securities company for management of risks;

- Responsibilities of the General Director (Director), the Supervisory Board, the Intracorporate Audit Committee and the internal control system for management of risks;

- Responsibilities of the risk management Department or Division and heads of departments in charge of core business functions of the securities company for management of risks;

- Clear and transparent risk management strategy shown through risk policies in the long term and over periods of time approved by the Governing Board or the Members’ Council or the Owner.

- Plan implemented through complete policies and procedures;  

- Regular examination and review duties of the General Director (Director);

- Fully adopting and implementing risk management policies and procedures, risk limits, and organizing proper risk management information operations.  

b) The risk management system to be set up must ensure that the securities company is capable of identifying, measuring, monitoring and reporting risks and effectively addressing material risks, and fully meeting its compliance obligations at all times;

c) The risk management system must ensure independence, objectivity, integrity and uniformity;

d) The risk management system must ensure that business operations departments and the risk management department are separate and independent, and any person in charge of an operations department is not concurrently in charge of the management department and vice versa.

2. Internal risk management procedures, rules and regulations of the securities company must adhere to the following principles:  

a) Its risk management system must operate according to internal procedures, rules and regulations existing in the form of written documents;

b) Internal procedures, rules and regulations must be clearly represented so that all involved individuals understand their duties and responsibilities, and can describe, in detail and to the exact extent, the concerned risk management procedures. The securities company must regularly review and update these internal procedures, rules and regulations;

c) Internal procedures, rules and regulations must make the company’s risk management activities understandable to state authorities, internal auditors, internal supervisors, controllers or the supervisory board;

d) Internal risk management procedures, rules and regulations must include, but not limited to, the followings:

- Organizational structure and description of functions, duties, decision-making authority delegation mechanism and responsibilities;

- Risk policies, risk limits, procedures for identifying, measuring, monitoring, reporting and exchanging information about risks and addressing risks;

- Compulsory satisfaction of obligations to comply with regulations of laws.

3. The securities company's risk management procedures must be comprised of such steps as identifying, measuring, monitoring, supervising and addressing risks.

4. Drawing up the contingency plan

a) The securities company must develop a contingency plan to respond to emergency situations in order to ensure continuity in the company’s business operations;

b) The General Director (Director) shall be responsible for drawing up and regularly reviewing the contingency plan.  This contingency plan must be submitted to the Governing Board, the Members' Council or the Owner to seek their approval.

5. Rules of retention or archival of documents and records

a) All records, documents, reports, meeting minutes and resolutions of the Governing Board or the Members’ Council or decisions of the Owner, risk reports, decisions of the General Director (Director) and other documents related to risk management must be fully archived and readily available to state authorities upon request;

b) The duration of retention or archival of documents and records prescribed in point a of clause 5 of this Article shall be subject to regulations of laws.

Article 12. Internal control

1. A securities company must set up an internal control department directly subordinate to the Board of General Directors (Board of Directors). The internal control system shall be composed of its operating machinery, sovereign and full-time personnel and its operating procedures.

2. The internal control department directly controlled by the Board of General Directors (Board of Directors) shall be responsible for controlling compliance, including:

a) Inspecting and supervising compliance with regulations of laws, the company’s charter, decisions of the General Meeting of Shareholders, decisions of the Governing Board, business rules, regulations and procedures, risk management procedures of the company, relevant departments or divisions and intracorporate securities practitioners;

b) Monitoring the implementation of internal regulations, activities likely to cause intracorporate conflicts of interest, especially business activities of the company itself and personal transactions of the company's employees; supervising the implementation of the responsibilities of the company’s officeholders and staff members, and the implementation of the partner's responsibilities for the trusted activities;

c) Checking contents and monitoring the implementation of rules of professional ethics;

d) Supervising the calculation and compliance with financial prudence regulations.

dd) Segregating customer’s assets;

e) Keeping and preserving customer's assets;

g) Controlling compliance with regulations of anti-money laundering laws;

h) Performing other duties assigned by the General Director (Director).

3. A securities company must establish its internal control system, including the organizational structure, internal procedures, rules and regulations applicable to all of its executives, staff members, units, departments and business activities to meet the following goals:

a) Its business activities must comply with regulations of the Securities Law and other relevant documents;

b) Customer’s interests and benefits are assured;

c) All of its business operations and functions are safe and effective; ensuring that its property and other resources are protected, managed and used in a safe and effective manner;

d) Its financial and management information system must ensure integrity, rationality, adequacy and promptness; the company's financial statements must be made according to the integrity principles.

4. Requirements of the internal control department's personnel

a) Assign at least 01 staff member to perform the tasks of control and supervision of compliance matters;

b) The Head of the internal control department must hold his/her professional qualification in legislation, accounting and auditing specialties; must be experienced, credible and competent enough to effectively perform his/her assigned duties;

c) These personnel are not related to heads of professional departments, persons performing core business functions, the General Director (Director), the Deputy General Director (Deputy Director), Directors of branches of the securities company;

d) These personnel must hold professional certificates in securities and securities market fundamentals or securities practicing certificates, and professional qualifications in securities and securities market laws;

dd) These personnel are not allowed to be in charge of the securities company’s other tasks.