The draft Circular proposes regulations on share purchase transactions by foreign institutional investors.
Specifically, Clause 2, Article 1 of the draft Circular proposes adding Article 9a, which regulates share purchase transactions by foreign institutional investors, after Article 9 of Circular 120/2020/TT-BTC, as follows:
(1) Securities companies shall assess the payment risk of foreign institutional investors to determine the required funds when placing share purchase orders (if applicable) based on agreements between the securities company and the foreign institutional investor.
(2) In cases where a foreign institutional investor fails to fully settle the payment for a share purchase transaction, the obligation to cover the outstanding amount is transferred to the securities company where the foreign institutional investor placed the order through the proprietary trading account, except in cases specified in (5).
(3) Securities companies are allowed to sell through negotiation on the securities trading system or transfer ownership off the securities trading system, as stipulated in point q1, Clause 2, Article 6 of Circular 119/2020/TT-BTC dated December 31, 2020, by the Minister of Finance, regulating securities registration, depository, clearing, and settlement for the shares that have been transferred to the proprietary trading account of the securities company on behalf of the foreign institutional investor that lacked sufficient funds to settle the share purchase transaction, as per (2). This must be done no later than the next trading day after the shares are credited to the proprietary trading account, provided that the transaction does not exceed the foreign ownership limit for that specific share as stipulated by law. Financial obligations arising from transactions under (2) and (3) are handled according to agreements between the securities company and the foreign institutional investor or their authorized representative.
(4) Except for transactions specified in (3), securities companies must sell the shares on the securities trading system. Financial obligations arising from transactions under (2) and (4) are handled according to agreements between the securities company and the foreign institutional investor or their authorized representative.
(5) The custodian bank, where the foreign institutional investor has a securities depository account, is responsible for covering the shortfall and any incurred costs (if applicable) in cases where the bank incorrectly confirms the investor’s cash balance to the securities company, leading to insufficient funds for the share purchase transaction.
* Regulations on Securities Registration at the Vietnam Securities Depository and Clearing Corporation (VSDC):
(1) The following types of securities must be registered with the VSDC:
- Listed shares, shares registered for trading on the securities trading system;
- Fund certificates, covered warrants, government debt instruments, government-guaranteed bonds, local government bonds, and other corporate bonds listed on the securities trading system;
- Securities of public companies and other types of securities required by law to be registered with the VSDC.
(2) Other securities may be registered with the VSDC based on agreements between the VSDC and the issuing organization.
(3) Securities specified in (1) and (2) are registered at the VSDC in the form of book entries or electronic data.
(4) Public companies must register their shares with the VSDC within 15 days from the date the State Securities Commission confirms the completion of public company registration.
(5) The Minister of Finance provides detailed guidance on securities registration, deregistration, securities code issuance, the exercise of rights by securities holders, securities ownership transfer, and other activities related to securities registration at the VSDC.
