Circular 210/2012/TT-BTC guiding the establishment and operation of securities companies (“Circular 210”) has recently been adopted. Circular 210 will take effect from 15 January 2013. Circular 210 shall replace Decision 27/2007/QD-BTC of the MOF dated 24 April 2007 promulgating the regulation on organization and operation of securities companies and Decision 126/2008/QD-BTC of the MOF dated 26 December 2008 (collectively “Previous Regulation”).
Circular 210 provides a series of conditions for establishment of the securities companies. In particular, the conditions applied to founding shareholder/member of securities companies are stricter than those provided under the Previous Regulation, as below:
Ø The General Director(s) of a securities company must have Certificate of finance analysis practice or Certificate of fund management practice;
Ø Individual capital contributor contributing any percent of a securities company’s charter capital must obtain the certification on its financial capacity;
Ø Shareholders/members holding from 10% charter capital of a securities company and their related persons shall not contribute more than 5% charter capital of another securities company;
Ø Founding shareholders/members of securities companies are subject to a 3-year lock-up period;
Ø Other conditions as specified under the Previous Regulation.
Circular 210 prohibits a securities company which had been established and operating in Vietnam from establishing another securities company in Vietnam.
Furthermore, Circular 210 imposes several conditions for foreign securities companies which want to purchase share capital of or establish a securities company in Vietnam. Foreign securities companies must, among other things, operate in sectors of banking, securities or insurance with at least 2 years of operational history. The foreign ownership is also subject to the cap 49% as specified under the Vietnamese Commitments on joining World Trade Organization.
Under Circular 210, securities companies are not allowed to purchase shares from the following persons for reserve as treasury shares: (i) shares of major shareholders, the company managers and related persons (with the exception of listed shares on the Stock Exchange); and (ii) shares subject to restriction of transfer under current laws and the Charter.
The occurrence of Circular 210 as replacement of the previous securities regulation is expected to create a consistence and clear guidance for the establishment and operation of the securities companies in Vietnam.
