Thông tư 97/2020/TT-BTC về hướng dẫn hoạt động của văn phòng đại diện, chi nhánh công ty chứng khoán, công ty quản lý quỹ nước ngoài tại Việt Nam do Bộ trưởng Bộ Tài chính ban hành

CIRCULAR

PROVIDING GUIDANCE ON OPERATION OF REPRESENTATIVE OFFICES AND BRANCHES OF FOREIGN SECURITIES COMPANIES AND FOREIGN FUND MANAGEMENT COMPANIES IN VIETNAM

Pursuant to the Law on Securities dated November 26, 2019;

Pursuant to the Government’s Decree No. 87/2017/ND-CP dated July 26, 2017 defining functions, tasks, powers and organizational structure of the Ministry of Finance;

At the request of the Chairman of the State Securities Commission of Vietnam (“SSC”);

The Minister of Finance promulgates a Circular providing guidance on operation of representative offices and branches of foreign securities companies and foreign fund management companies in Vietnam.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and regulated entities

1. This Circular provides guidance on operation of representative offices and branches of foreign securities companies and foreign fund management companies in Vietnam (hereinafter referred to as "representative office or branch").

2. This Circular applies to:

a) Representative offices and branches of foreign securities companies and foreign fund management companies in Vietnam;

b) Other individuals and organizations involved in operation of representative offices and branches of foreign securities companies and foreign fund management companies in Vietnam.

Article 2. Definitions

For the purposes of this Circular, the terms below are construed as follows:

1. “valid copy” means a copy extracted from the master register or authenticated by a competent authority or organization or that has been compared and certified to correspond with its original.

2. “parent company” means a securities trading organization that is duly established in a foreign country and applies for registration of operation of a representative office or establishment of a branch in Vietnam. The parent company shall assume responsibility before the law of Vietnam for all operations and obligations incurred by its representative office or branch in Vietnam.

3. “branch” means an affiliated unit of a foreign securities company or foreign fund management company that is not a juridical person, is established under the law of Vietnam and has all of its operations in Vietnam responsible before the law of Vietnam by its parent company.

4. “branch’s Director” means the head of a branch of a foreign securities company or foreign fund management company in Vietnam.

5. “representative office” means an affiliated unit of a foreign securities company or foreign fund management company that is not a juridical person and is established under the law of Vietnam.

6. “chief representative” means the head of a representative office of a foreign securities company or foreign fund management company in Vietnam.

7. Competent representative of a foreign securities trading organization means:

a) Chairperson of Board of Directors, Chairperson of Board of Members, Company’s President, Managing Director or General Director or owner of the foreign securities trading organization;

b) The person authorized in writing by the one prescribed in Point a of this Clause;

c) The person that is fully competent as prescribed in the Charter of the foreign securities trading organization to sign documents prescribed in this Circular and perform other tasks within the ambit of his/her assigned power.

8. “home country” means the country or territory where a parent company is established and headquartered.

Article 3. Premises of a representative office or branch

1. Premises of a representative office or branch shall be situated in the territory of Vietnam, be the contact address of that representative office or branch and have identified address, telephone number, fax number, and email (if any), and must comply with regulations of the law of Vietnam on security, public order, occupational safety and health, and relevant laws.

2. The representative office or branch is not allowed to lend or sub-lease its premises.

Article 4. Language of transaction

Official transaction documents of foreign securities trading organizations, representative offices or branches of foreign securities companies or foreign fund management companies in Vietnam must be made in Vietnamese or in both Vietnamese and a common foreign language.

Article 5. Naming of a representative office or branch

1. Name of a representative office or branch must consist of letters in Vietnamese alphabet, the letters F, J, Z, W, digits and symbols.

2. Name of a representative office or branch must consist of name of the foreign securities company or foreign fund management company, and comply with the following rules:

a) It must comply with the Law on enterprises, the Law on commerce and relevant laws;

b) A representative office is named in the following order: “Representative office - name of the foreign securities company or foreign fund management company - in province or central-affiliated city”;

c) A branch is named in the following order: “Branch - name of the foreign securities company or foreign fund management company - in Vietnam”.

3. Name of the representative office or branch must be affixed/hung at its premises.

Article 6. Responsibilities of a chief representative or branch’s Director

1. Chief representatives or branch’s Directors shall assume responsibility before the law of Vietnam and their parent companies for their acts and operations of the representative offices or branches within the scope of authorization by parent companies.

2. Chief representatives or branch’s Directors shall authorize other persons in the representative offices or branches in writing to perform their rights and duties during their absence from Vietnam upon approval given by parent companies.  The maximum duration of authorization is 90 days. Chief representatives or branch’s Directors are still responsible for the performance of rights and obligations by authorized persons.

3. In case the chief representative or branch's Director has not returned to Vietnam when the duration of authorization mentioned in Clause 2 of this Article expires and does not make a new authorization, the authorized person shall notify the parent company. After receiving the authorized person’s notification, the parent company shall notify the SSC of the existing chief representative or branch's Director and appointment of new chief representative or branch's Director (if any). The authorized person may continue performing rights and duties of the chief representative or branch's Director within the scope of authorization for a maximum period of 30 days with the approval given by the parent company.

4. The parent company must appoint a new chief representative or branch's Director in the following cases:

a) The chief representative or branch's Director is not present in Vietnam for more than 30 consecutive days without authorizing another person to perform his/her rights and duties;

b) The chief representative or branch's Director is not present in Vietnam for more than 90 consecutive days;

c) The chief representative or branch's Director is dead, missing, kept in temporary detention or serving an imprisonment sentence, has limited legal capacity or is incapacitated.

5. A chief representative or branch's Director shall not concurrently hold the following positions:

a) Branch's Director of the parent company, chief representative or employee of a representative office or branch of another foreign organization in Vietnam;

b) The legal representative, General Director (Director), Deputy General Director (Deputy Director) or employee of an enterprise established under the law of Vietnam;

c) The legal representative, member of Board of Directors or Board of Members, General Director (Director), Deputy General Director (Deputy Director) of the parent company or another individual that works at the parent company and is entitled to act on behalf of the parent company to enter into economic contracts or asset transactions without a written authorization by the parent company.

6. The chief representative shall be only allowed to act on behalf of the parent company to sign contracts related to business and investment operations of the parent company with Vietnam’s business entities with the lawful written authorization from the competent representative of the parent company. The written authorization must be made separately for each transaction and its copy must be submitted to the SSC within 10 days from its effective date.

Article 7. Tax obligations and accounting of a representative office or branch

1. The representative office or branch and its employees must fulfill tax and financial obligations in accordance with regulations of laws on taxation and tax administration in Vietnam.

2. A branch of a foreign securities company or foreign fund management company in Vietnam shall comply with the same regulations on accounting in Vietnam as a domestic securities company or fund management company. 

3. A representative office of a foreign securities company or foreign fund management company in Vietnam shall perform accounting works in accordance with Vietnam’s regulations on accounting in force applicable to a representative office of a foreign enterprise in Vietnam.

Article 8. Financial mechanism for a branch

A branch shall apply the same financial mechanism under the law of Vietnam as a domestic securities company or fund management company. 

Article 9. Inspection of operations of representative offices and branches

1. SSC shall carry out inspection of operations of representative offices and branches in accordance with regulations of laws in force.

2. Before carrying out an inspection of operations of its branch in Vietnam, the parent company and competent authorities of the foreign country where the parent company is headquartered shall send notify and provide SSC with inspection outlines.

3. Within 30 days from the receipt of inspection conclusions from the parent company or foreign competent authority, the branch in Vietnam shall provide SSC with results and conclusions of internal control, internal audit and inspection of its operations given by the parent company or foreign competent authority.

Chapter II

OPERATIONS OF REPRESENTATIVE OFFICES OF FOREIGN SECURITIES COMPANIES AND FOREIGN FUND MANAGEMENT COMPANIES IN VIETNAM

Article 10. Scope of operations, rights and obligations of a representative office and its employees

1. The scope of operations of a representative office shall comply with Clauses 2, 3 Article 78 of the Law on Securities.

2. Rights and obligations of a representative office:

a) It is allowed to open a foreign currency account or VND account converted from a foreign currency at a commercial bank that is licensed to provide foreign exchange services in Vietnam and shall only use this account for its operations. Opening, use and closure of an account by the representative office shall comply with regulations of relevant laws;

b) It is allowed to recruit both Vietnamese and foreign persons to work at its premises in accordance with regulations of the law of Vietnam. Within 30 days from the date of recruitment of foreign persons to work at the representative office in Vietnam, the parent company or the representative office (with the authorization of the parent company) shall give a notification of such recruitment, enclosed with written approval given by competent authorities as prescribed in the Labor Code, to SSC;

c) It has its own seal under the law of Vietnam and shall only use this seal on transaction documents made within the ambit of rights and functions of the representative office;

d) It shall only perform operations according to the contents and within the period specified in the certificate of registration of operation of a representative office; shall not trade securities in Vietnam; shall not manage assets and investments for investors, including investments made by the parent company in Vietnam, and perform other securities trading activities in Vietnam;

dd) It shall perform other rights and obligations as regulated by the laws.

Article 11. Date of official operation

Within 15 days from the date of its official operation, the representative office shall provide SSC with a notice of operation made according to the form in Appendix V enclosed herewith and documents certifying its completion of information disclosure obligations as prescribed in the Law on Securities.

Article 12. Reporting and document retention by a representative office

1. During its operation, a representative office shall submit quarterly and annual reports on its operations to SSC. Such reports are prepared according the form in the Appendix I enclosed herewith.

2. The periodic reports mentioned in Clauses 1 of this Article shall be submitted within the following time limits:

a) A quarterly report shall be submitted within 20 days from the end of the quarter;

b) An annual report shall be submitted within 90 days from the end of the year.

3. The closing dates of the periodic reports mentioned in Clauses 1 of this Article are provided for as follows:

a) A quarterly report shall include data from the first day to the last day of the reporting quarter;

b) An annual report shall include data from January 01 to December 31 of the reporting year;

c) If the operating period of a new representative office is less than a reporting period, the reporting period shall commences on the date on which it is issued with certificate of operation registration and ends on the last day of the reporting period.

4. The representative office may submit periodic reports to SSC in either electronic or paper form.

5. The representative office shall keep documents at its premises in an adequate, accurate and timely manner, and update all information and data related to its operations. The representative office shall promptly provide information, documents or explanations about issues concerning its operations and operations of the parent company in Vietnam’s securities market at the request of SSC.

Chapter III

OPERATIONS OF BRANCHES OF FOREIGN SECURITIES COMPANIES AND FOREIGN FUND MANAGEMENT COMPANIES IN VIETNAM

Section 1. OPERATIONS OF BRANCHES OF FOREIGN SECURITIES COMPANIES IN VIETNAM

Article 13. Organizational structure and management of a branch of a foreign securities company in Vietnam (hereinafter referred to as “branch”)

1. The parent company shall decide the organizational structure and management of its branch in conformity with regulations of the law of Vietnam on organizational structure, management and internal control of domestic securities companies.

2. The employee in charge of compliance management of a branch must not a related person of the branch's Director, and must possess bachelor’s degree in finance, banking, law, accounting or auditing.  The employee in charge of compliance management must have securities qualifications, including certificates of fundamentals of securities and securities market and certificates of laws in securities and securities market, or foreign securities practicing certificates and certificates of laws in securities and securities market.

3. The branch must arrange its employees possessing securities practicing certificates to perform the following tasks:

a) Provide advice and explanation about contracts signed with clients;

b) Sign securities analysis outcomes or reports;

c) Provide recommendations about the purchase, sale and holding of securities.

Article 14. Scope and contents of operations of a branch

1. Scope of operations

A branch shall be allowed to provide securities investment consultancy services only.

2. Specific operations

A branch shall provide analysis outcomes and reports, and recommendations for clients with or without collecting fees in the following cases:

a) Provide reports on analysis of transactions on the securities market, and investment recommendations;

b) Provide reports on analysis of operations of public companies, listed companies and other enterprises, and investment recommendations;

c) Enter into securities investment consultancy service contracts with clients.

Article 15. Rights of a branch

A branch shall have the following rights:

1. Collect consultancy service fees as agreed upon with clients and prescribed by laws.

2. Open a foreign currency account or VND account converted from a foreign currency at a commercial bank that is licensed to provide foreign exchange services in Vietnam and only use this account for its operations. The opening, use and closure of an account by the branch shall comply with regulations of relevant laws.

3. Recruit both Vietnamese and foreign employees to work at the branch in accordance with regulations of relevant laws.

4. Have its own seal under the law of Vietnam and only use this seal on transaction documents made within the ambit of rights and functions of the branch.

5. Exercise other rights as prescribed by relevant laws.

Article 16. Obligations of a branch

A branch shall discharge the following obligations:

1. Sign contracts with clients when providing services to them; provide adequate and truthful information to clients.

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

3. Protect the confidentiality of information provided by users of consultancy services during the provision of consultancy services, unless the information is provided with the client’s consent or at the request of a competent authority.

4. Update and fully keep information about the clients, documents about the clients and the branch.

5. Use allocated funds for licensed business operations only, and do not take loans from any entities other than the parent company.

6. Do not directly or indirectly perform the following activities: Make investments in securities on behalf of clients; reach agreements with clients for sharing profits or losses; advertise or declare that the efficiency or value of its securities analysis methods is higher than those of other securities companies; provide false information to incite or invite clients to buy or sell a certain type of securities; provide false, fraudulent or misleading information for clients.

7. Discharge other obligations as prescribed by relevant laws.

Section 2. OPERATIONS OF BRANCHES OF FOREIGN FUND MANAGEMENT COMPANIES IN VIETNAM

Article 17. Organizational structure and management of a branch of a foreign fund management company in Vietnam (hereinafter referred to as “branch”)

The parent company shall decide the organizational structure and management of its branch in conformity with regulations of the law of Vietnam on organizational structure, management and internal control of domestic fund management companies.

Article 18. Scope of operations of a branch

A branch may only provide asset management services for capital raised overseas, including assets in Vietnam formed from capital raised overseas.

Article 19. Rights of a branch

A branch shall have the following rights:

1. Use assets raised overseas to support projects/enterprises, provide loans or perform investment contracts under orders from trustors, investment trust agreements, charters of foreign organizations, foreign funds in accordance with regulations of the law on foreign exchange management, law on banking and other relevant laws.

2. Transfer the branch’s profits overseas under the law of Vietnam.

3. Perform securities trading activities in conformity with the license for establishment and operation, the law of Vietnam and international treaties to which Vietnam is a signatory.

Article 20. Obligations of a branch

A branch shall discharge the following obligations:

1. A branch is not allowed to raise capital in Vietnam for management in any form.

2. During the management of assets, the branch must comply with the following regulations:

a) Unless otherwise ordered by trustors or prescribed by investment trust agreements or charters of foreign organizations, when providing asset management services to clients, the branch must comply with regulations on depositing, separately manage assets of each client, asset transactions between investment portfolios of trustors in accordance with regulations applicable to domestic fund management companies;

b) Protect confidentiality of information about clients and their asset transactions and investment portfolios, and other relevant information, unless such information is provided at the request of SSC or a competent authority;

c) Comply with regulations on foreign exchange, limitation on ownership in Vietnamese enterprises, anti-money laundering and other relevant laws;

d) Do not provide loans in the territory of Vietnam to clients, other entities or itself in any form; do not use trust assets or its assets as collateral, deposit or security for loans in the territory of Vietnam, including for trustors, other entities or itself;

dd) Do not offer or issue securities to raise capital in the territory of Vietnam;

3. When submitting ownership reports, reporting and disclosing information about transactions on securities market, the branch shall:

a) Represent trustors to report and disclose information about transactions in accordance with the Law on securities. The branch and trustors must comply with regulations on reporting on ownership and disclosure of information on securities market which apply to related persons, major shareholders and internal actors;

b) Before and after each securities transaction in Vietnam, a member of the management board or employee of the branch must report it to the branch’s internal control department. A report on the abovementioned personal transaction must include information about type (code) of securities, quantity, trading price, and securities company where trading account is opened. Reports on personal transactions must be kept and managed by the branch's internal control department, and provided at the request of SSC.

4. The branch may only use allocated capital and capital of trustors (excluding shares on portfolios of trustors that are exchange-traded funds) for performing tender offers as prescribed in Article 35 of the Law on securities with the written consent of trustors, or represent trustors in respect of tender offers, bid prices, estimated quantity of assets and method of transfer of assets after a tender offer. The branch shall perform tender offers in accordance with regulations on tender offers laid down in the Law on securities.

5. During its operations, the branch and its parent company shall comply with the followings:

a) Within 30 days after the parent company completes its investments in subsidiaries, joint ventures or associated companies in Vietnam, the branch shall report such investments to SSC; the parent company is not allowed to contribute capital, buy shares or stakes to own more than 5% of charter capital of a fund management company in Vietnam;

b) The branch is not allowed to contribute capital to, buy shares or stakes from fund management companies and securities companies in Vietnam, unless the purchase results in ownership or joint ownership with related persons of up to 5% of voting shares of a fund management company or securities company that has been listed or registered on the Stock Exchange.

6. The branch must promulgate business process, establish and operate a risk management system according to SSC’s guidance or adopt internal regulations that are promulgated by the parent company and conformable with its business to ensure the availability of the mechanism for control and risk management associated with each product or business operation.

7. The branch shall provide annual training for its employees or request its practitioners to attend training courses provided by SSC (if any) in order to ensure that its employees are fully updated with skills, professional operations and knowledge about law.

Section 3. REPORTING, DOCUMENT RETENTION AND INFORMATION DISCLOSURE BY BRANCHES OF FOREIGN SECURITIES COMPANIES AND FOREIGN FUND MANAGEMENT COMPANIES IN VIETNAM

Article 21. Reporting, document retention and information disclosure by branches of foreign securities companies and foreign fund management companies in Vietnam

1. A branch of a foreign securities company in Vietnam shall submit the following periodic reports to SSC:

a) Monthly and annual reports on its operation, made according to the respective forms in Appendix II and Appendix III enclosed herewith;

b) Quarterly, half-year and annual financial statements. Half-year and annual financial statements must be respectively reviewed and audited by accredited audit organizations;

c) Reports on the branch’s satisfaction of financial safety criteria according to regulations on financial safety criteria.

2. A branch of a foreign fund management company in Vietnam shall submit the following periodic reports to SSC:

a) The reports prescribed in Clause 1 of this Article, in which monthly and annual reports on operation shall be prepared according to the form in Appendix IV enclosed herewith;

b) Monthly report on investment portfolio management, made according to the form in Appendix IV enclosed herewith; annual financial statements of investment funds established overseas and making investments in Vietnam, prepared according to regulations of the home country.

3. Time limits for submission of reports:

a) A monthly report shall be submitted within 05 working days from the end of the month;

b) A quarterly report shall be submitted within 20 days from the end of the quarter;

c) A half-year report shall be submitted within 45 days from the end of Quarter II;

d) An annual report shall be submitted within 90 days from the end of the year.

4. The closing dates of the periodic reports mentioned in Clauses 1, 2 of this Article are provided for as follows:

a) A monthly report shall include data from the first day to the last day the reporting month (except data reflected at a given time);

b) A quarterly report shall include data from the first day to the last day the reporting quarter (except data reflected at a given time);

c) A half-year report shall include data from January 01 to June 30 inclusively of the reporting period (except data reflected at a given time);

d) A annual report shall include data from January 01 to December 31 inclusively of the reporting year (except data reflected at a given time);

e) If the operating period of a new branch in Vietnam of a foreign securities company or foreign fund management company is less than a reporting period, the reporting period shall commences on the date on which it is issued with the license for establishment and operation and ends on the last day of the reporting period.

5. The abovementioned periodic reports shall be submitted to SSC in either electronic or paper form.

6. A branch in Vietnam of a foreign securities company or foreign fund management company shall be also required to submit reports to SSC on any event that may seriously affect its financial capacity and operations within 03 working days from the occurrence of the event.

7. Apart from the reports prescribed in this Article, SSC may request branches of foreign securities companies or foreign fund management companies in Vietnam to submit reports on other activities performed in the territory of Vietnam by the branches themselves or their parent companies for the purposes of protecting common interests as well as investors’ interests.

8. The branch must submit reports within 48 hours from the receipt of the request as prescribed in Clause 7 of this Article.

9. The branch shall keep documents at its premises in an adequate, accurate and timely manner, and update all information and data related to its operations. The branch shall promptly provide information, documents or explanations about issues concerning its operations and operations of the parent company on Vietnam’s securities market at the request of SSC.

10. The branch shall disclose information in accordance with regulations on information disclosure and regulations on operations of securities companies and fund management companies.

Chapter IV

IMPLEMENTATION

Article 22. Effect

This Circular comes into force from January 01, 2021 and supersedes the Circular No. 91/2013/TT-BTC dated June 28, 2013 of the Minister of Finance providing guidance on establishment, organization and operation of representative offices of foreign securities trading organizations and branches of foreign fund management companies in Vietnam.

Article 23. Implementation organization

SSC, representative offices and branches of foreign securities companies and foreign fund management companies in Vietnam, and relevant entities are responsible for the implementation of this Circular./.