Circular 121/2020/TT-BTC regulating the operation of securities companies issued by the Minister of Finance

CIRCULAR

PRESCRIBING OPERATION OF SECURITIES COMPANIES

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

Pursuant to the Law on Enterprises dated June 17, 2020;

Pursuant to the Government's Decree No. 155/2020/NĐ-CP dated December 31, 2020, elaborating on the implementation of a number of articles of the Law on Securities;

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

Upon the request of the President of the State Securities Commission;

The Minister of Finance hereby promulgates the Circular on operation of securities companies.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and subjects of application

1. Scope of application

This Circular deals with business functions of securities companies in Vietnam, including:

a) Corporate governance, management and operations functions;

b) Services, business lines or core business functions;

c) Financial practices;

d) Corporate reporting approaches.

2. Subjects of application

a) Securities companies;

b) Organizations and individuals involved in operation of securities companies.

Article 2. Definition

For the purposes of this Circular, terms used herein shall be construed as follows:

1. Securities company refers to an enterprise licensed by State Securities Commission to perform one or several services or business activities prescribed in clause 1 of Article 72, clauses 1, 2, 3, 4 and 5 of Article 86 in the Law on Securities.

2. Valid dossier means a dossier that contains all papers prescribed in this Circular and is fully completed in accordance with law.

3. Working capital refers to the difference between short-term assets and short-term liabilities that exist at the same calculation time.

4. Lending refers to an approach in which a securities company gives or undertakes to give a recipient or user an amount of money, property or securities for an agreed-upon period of time on condition that both principal and interest, or only principal, must be repaid.

5. Reorganization of a securities company refers to the business split-up, split-off, amalgamation, merger or transformation that is allowed to take place among securities companies only.

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.

Chapter III

SERVICES, BUSINESS LINES OR CORE BUSINESS FUNCTIONS

Article 13. Responsibilities of securities companies for rendering securities brokerage services

1. Securities companies must designate securities practitioners to hold the following positions:

a) Providing counsels and explanations about contracts, and helping customers in opening accounts used for trades in stocks;

b) Offering counsels on stock trades or transactions to customers;

c) Receiving orders from customers, controlling customers' orders;

d) Acting as heads of departments or divisions involved in securities brokerage services.

2. Securities companies must comply with regulations on anti-money laundering regulations under laws currently in effect.

3. Data on customers’ brokerage accounts at securities companies must be managed according to the centralization principles, and must be kept in reserve at other locations.

4. When rendering securities brokerage services, securities companies shall be prohibited from:

a) Advising on any increase or decrease in the stock prices without any ground to entice customers to participate in trades;

b) Agreeing on or proposing a specific interest rate or sharing of profits or losses with customers in order to entice customers to participate in stock trades;

c) Directly or indirectly setting up fixed locations outside those approved by the State Securities Commission to sign contracts to open accounts with customers, receive, execute orders from customers or pay for trades with customers, except for trading stocks online;

d) Receiving orders, making payment for stock trades with persons other than account holders without written authorization from account holders;

dd) Disclosing the contents of customers' orders or other confidential information obtained when performing trades or transactions on behalf of customers if such disclosure neither serves public announcement purposes nor meets inspection or examination demands as legally required;

e) Using customer’s names or accounts for registering or trading stocks;

g) Infringing upon other assets, rights and interests of customers.

Article 14. Responsibilities of securities companies to customers for rendering their securities brokerage services

1. When rendering securities brokerage services, securities companies must comply with regulations laid down in clause 1, 2 and 3 of Article 91 in the Law on Securities.

2. Securities companies are obligated to update customers on any change upon customer's request.

3. Securities company must sign contracts to open accounts with customers, directly performing stock trades or transactions on customers’ behalf, and being held legally liable for these activities.

4. Securities companies must fully keep track of money and stocks of each customer, providing information about balance, increased or decreased amount of money and securities to customers upon their request.

5. Securities companies must quote customers stock trading fees before performing transactions, securities and must published such fees on their websites.

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

Article 15. Opening securities trading accounts

1. Before buying and selling stocks on customers’ behalf, securities companies must take steps in opening accounts for each customer on the basis of contracts to open stock trading accounts with customers. These contracts must meet current regulations and at least contain required information shown in the form given in the Appendix III hereto.

2. Securities companies must give explanations about contractual terms and conditions and relevant documents when rendering stock trades or transactions on customers’ behalf, learning about financial capacity, risk tolerance and expectations of profits earned by customers.

3. An account opening contract prescribed in clause 1 of this Article shall not include any of the following agreements:

a) Agreement for avoidance of legal obligations of a securities company without plausible reasons;

b) Agreement for limitation on the scope of compensation of the securities company without plausible reasons, or transfer of risk from the securities company to customers;

c) Agreement that binds customers to fulfill compensation obligations in an unfair manner;

d) Agreements made unfairly to the detriment of customers.

4. Investors opening accounts at securities companies must fill out all information required on account opening contracts.

Article 16. Receiving and executing orders

1. Securities companies can receive orders from customers according to the following approaches:

a) Receiving orders directly at counters;

b) Receiving orders via phone, fax, internet and other transmission modes.

2. Securities companies are only allowed to perform online stock transactions according to the provisions of Article 201 of the Decree, detailing the implementation of a number of articles of the Law on Securities.

3. In case of receiving orders online, via phone, fax and other transmission modes, securities companies must comply with the following rules:

a) Complying with the Law on Electronic Transactions and other instructional documents;  

b) Providing customer authentication and recording full information at the time of receiving orders, and retaining evidence of the customer’s placement of orders that are accessible when necessary;

c) Conforming to the rule under which confirmation is sent to customers before entering orders into the trading system;

d) Taking measures to ensure the safety and security of transmission modes and applying appropriate remedies when the customer's order cannot be entered into the trading system through the company's fault.

4. Securities companies shall only be allowed to execute customers' orders when these orders contain complete and accurate information about customers, trading dates, order receipt time, stock codes, methods, order types, quantity and trading prices. The time (day, hour, minute) of receipt of customers’ trading orders must be recorded by securities companies at the time of receipt of these orders.

5. Securities companies must execute customers' trading orders in a fast and accurate manner.

6. When making payment for purchase or sale of securities to their customers, securities companies must provide sufficient money and securities as prescribed and must take necessary measures to ensure customers are capable of making payments for the orders to be executed.

7. Securities companies must notify the results of the execution of orders to their customers right after these orders are matched according to the method agreed upon between the customers and securities companies under binding contracts.

8. In case clients open depository accounts at the depository members who are not trading members, trading members and depository members must enter into contracts under which trading members are bound to execute trading orders; depository members are bound to examine the percentage of customers’ margins and stock pledges, ensuring their customers are paid in accordance with laws.

Article 17. Custody of funds of customers

1. Securities companies must hold customers’ funds for purchase of stocks separately, and customers' funds separately from money of securities companies.

2. Securities companies are not allowed to directly receive and pay cash for customers' stock trades, but must do so through commercial banks.

3. Securities companies are not allowed to abuse customers' money in any form. Trades or transactions related to customers' money are only allowed if they meet regulations of laws.

4. Securities companies must set up systems to give customers custody of their funds separately according to the methods or approaches specified at Point a of this Clause. In addition, securities companies may build additional systems according to the methods or approaches specified at Point b of this Clause for customers’ choice as follows:

a) Clients of securities companies open accounts directly at commercial banks selected by these securities companies to hold their funds used for securities trades or transactions. On employing this method, customers, securities companies and commercial banks shall enter into contracts on methods of confirmation, freezing of balances and money transfer for payments for stock trades or transactions of customers. After a customer's securities purchase order is matched, a securities company shall have the right to request the bank where the investor opens account to transfer money corresponding to the value of the matched order to the checking account for securities trades or transactions opened in the name of the securities company at the commercial bank designated by the securities company. The securities company is obliged to act on its customer’s behalf to pay for securities trades or transactions to interested parties;

b) Customers of securities companies open special-purpose accounts at commercial banks to hold funds used for their securities trades or transactions. Special-purpose accounts must be opened separately and independently from other securities company’s accounts.

These special-purpose accounts are only intended for customer’s transactions, specifically including:

- Paying or transferring money into accounts;

- Withdrawing or transferring money from accounts;

- Paying for trading of stocks;

- Putting up margin payments for stock trades or paying money for purchase of stocks at auction;

- Paying for exercise of call options;

- Other payments made upon customer’s request and in compliance with laws.

Securities companies shall be responsible for establishing accounting systems to provide each investor with safe custody for funds. Securities companies shall be obligated to clearly determine each customer’s balance at all times and provide customers or competent state authorities, upon their request, with detailed statements of balance at any time.

A securities company shall be responsible for guaranteeing that any request of a customer for withdrawal or transfer of funds within their balance will be accommodated when that requesting customer no longer owe any payment obligation to the securities company.

Securities companies are not allowed to receive authorization from their customers for intracorporate money transfer between their accounts.

5. Securities companies must publish the list of commercial banks designated to perform two methods of custody of customers' funds for securities transactions on their websites and at their branches and transaction offices.

6. Within the maximum duration of 03 working days from the contract signing date as prescribed at Points a and b, Clause 4 of this Article, securities companies must submit reports, enclosing valid copies of contracts between securities companies and commercial banks, to the State Securities Commission.

7. In case of using weekly reports, before 16:00 every Monday or the first working day of the week, securities companies with special-purpose accounts must report to the State Securities Commission on the number of customers, the balance of customers’ funds existing at the securities companies’ special-purpose accounts opened at commercial banks by using the form specified in Appendix II to this Circular. These reports must use data available at the end of the working day immediately preceding the reporting date.

Article 18. Custody of securities of customers

1. Regulations on custody of securities registered for the centralized deposit:

a) Securities companies must hold customers’ stocks separately from securities companies’ stocks;

b) Securities companies must re-deposit customers’ securities into Vietnam Securities Depository and Clearing Corporation in accordance with laws on registration, depositing or clearing of stock trades;

c) Securities companies are responsible for promptly and fully notifying customers of rights associated with customers' securities;

d) Entrustment for depository, withdrawal and transfer through accounts of securities must be subject to orders from customers and regulations on registration, depositing and clearing of stocks.

2. As for securities not yet registered for centralized depository, securities companies are allowed to register and deposit customers' securities at securities company under their contracts with customers and in accordance with Article 21 of the Circular.

Article 19. Entrustment for custody of stock trading accounts of individual investors

1. General principles

a) Securities companies obtaining securities brokerage service licenses as prescribed in Clause 1, Article 86 of the Law on Securities may render the service of authorized custody of securities trading accounts of individual investors;

b) Services are provided to investors under contracts between securities companies and individual investors;

c) Securities companies are not entitled to take on fiduciary duties to decide all transactions on securities trading accounts on behalf of individual investors. Customers must clarify the scope of entrustment or authorization prescribed in Clause 2 of this Article:

d) Securities purchased and sold in trust are stocks and fund certificates listed on the Stock Exchange, excluding those registered on the stock trading system of unlisted public companies (UpCom);

dd) Securities company may appoint securities practitioners holding certificates of financial analysis or fund management practice to hold trust trading accounts. Such appointment must be specified in the contract between a securities company and an individual investor.

2. The scope of entrustment or authorization covers the followings:

a) Types of securities to be traded;

b) Maximum volume of securities of specific kinds that can be bought or sold;

c) Maximum value of each order;

d) Maximum total value per a transaction day;

dd) Trading approaches and types of orders.

3. Securities companies shall be responsible for keeping themselves updated with information about financial capacity, investment term, investment objectives, acceptable risk level, investment restrictions, investment portfolio (if any) and other requirements of customers before entering into contracts. In case where any customer does not provide sufficient information or provide inaccurate information, securities companies shall have the rights to refuse to sign contracts.

4. Trust agreements

a) A trust agreement has the maximum term of 1 year and commences on the signature date;  

b) Each trust agreement must include, but not limited to, the followings:

- Customer’s particulars;

- Information about the securities practitioner trusted to have custody of a customer’s account;

- Fiduciary activities;

- Rights and obligations of contracting parties;

- Retention fees and rewards;

- Methods of contractual payment and settlement;

- Dispute resolution methods.

5. In case where a securities company fails to comply with the contract with its customer, causing damage to the customer, the securities company shall compensate the trustor according to the written agreement between both parties; in case of earning any profit, this profit must belong to the trustor.

6. Rights and obligations of the securities company acting as the trustee

a) Act honestly and in the best interests of customers, and avoid racketeering on customer’s information and cause any loss or damage to customers;

b) Request customers to provide required information;

c) Sell or purchase securities intra vires or within its delegated authority;

d) Clearly explain and fully provide information to customers about all of the potential risks in the entrustment for custody of securities trading accounts;

dd) Provide customers with statements of monthly or irregular transactions at the trustor’s request;

e) Notify the customer in advance within 24 hours from the time when the assets in the trustor’s trading account fall below 25% of total value of the trust agreement;

g) Make a monthly report using the form provided in Appendix II to this Circular, or at the request of the State Securities Commission, on the account custodial activities;

h) Provide a list of qualified securities practitioners that customers designate to hold their trust accounts;

i) Set up an independent supervisory division to supervise the custody of securities and securities trades on accounts held in trust by securities practitioners to ensure that trades performed through these accounts conform to terms and conditions of trust agreements and investment goals of customers;

k) The time of execution of all trading orders under the trust agreement must be recorded exactly;

l) Securities companies must notify and seek written consent from customers in case of making investment in securities that they underwrite during the underwriting period.

Article 20. Online trading of securities

1. Obligations of securities companies to provision of online securities trading services

a) Ensuring continuous and smooth services;

b) Ensuring security, safety and confidentiality for data of the trading system;

c) Having a standby system or an alternative in case of failure or emergency;

d) Separating from their other electronic information systems;

dd) Issuing the procedures for operation, management and operation of the online securities trading system.

2. When providing online securities trading services to customers, securities companies must sign contracts or annexure to contracts to have customer’s accounts opened, including the following terms and conditions:

a) Disclosure of the risks that can occur when trading securities online;

b) Stipulations as to the responsibility of customers and securities companies for the confidentiality of information about customers' online transactions.

3. Securities companies must report to the State Securities Commission on online securities trading activities, the condition of the online securities trading system and disclose information in accordance with the laws on instructions about electronic trading activities.

Article 21. Registration, depository and clearing of securities

1. Scope of services

a) Providing securities registration and depository services to customers;

b) Paying for securities transactions on the Stock Exchanges on customers’ behalf;

c) Rendering the service of management of shareholder, transfer agent registries at the request of issuers other than public companies.

2. Rights and obligations of securities companies

a) Opening depository accounts for customers at securities companies, managing customers' securities depository accounts in accordance with the provisions of law. Customer's securities depository accounts must be separate from the company's securities depository accounts;

b) Recording accurate, complete and updated information about customers opening depository accounts and securities under customers’ ownership who are deposited at securities companies;

c) Preserving, storing, collecting and processing data on customers' securities registration, depository and clearing activities;

d) Designing procedures for registration, depository, clearing and management of registries of shareholders, transfer agents, and internal control procedures, in order to manage and protect the interests of customers or owners of securities;

 dd) Collecting fees for securities registration and depository services and other service fees in accordance with laws.

Article 22. Proprietary trading of securities

1. Securities companies must ensure that they have enough money and securities to pay for trading orders on their own accounts.

2. Proprietary trading functions of securities companies must be performed in their own name, not in the name of other person or performed by using the individual’s name or letting others use their proprietary trading accounts.

3. The following activities are not deemed as the proprietary trading of securities:

a) Buying or selling securities due to post-trading error correction.

b) Buying or selling stocks of one’s own.

4. Securities companies must prioritize the execution of customer’s orders before executing their own orders.

5. Securities companies must inform customers of the case in which they are partners to contractual transactions with customers.

6. In case where customer’s buy or sell orders can considerably affect the prices of securities, securities companies shall be prohibited from the pre-market trading of securities of the same kind with themselves, or the disclosure of information to any third party wishing to buy and sell these securities.  

7. When customers place limit orders, securities companies are not allowed to buy or sell the same security for or to themselves at a price equal to or better than the price applied before these customers' orders are executed.

Article 23. Securities underwriting services

1. If securities companies underwrite the public offering of securities by way of buying part or all of the securities of issuers, they shall only be allowed to underwrite that total issuance of securities is not greater than equity and is not over 15 times more than the difference between the value of short-term assets and short-term liabilities according to the latest quarterly financial statements.

2. A securities company is not allowed to underwrite the issue of its securities by entering into a firm commitment or becoming a principal underwriter in the following cases:

a) Securities company operating independently or joining with its subsidiaries or related persons owns at least 10% of the charter capital of an issuer, or has control over an issuer, or has the right to appoint the General Director (Director) of the issuer;

b) At least 30% of the charter capital of a securities company and at least 30% of the charter capital of the issuer are held by the same individual or entity;

c) Issuer that is independent or joins with its subsidiaries or related persons, owns at least 20% of the charter capital of a securities company, or has control over a securities company, or has the right to appoint the General Director (Director) of the securities company;

d) Any member of the Governing Board, General Director (Director) and related persons of a securities company is also a member of the Governing Board or the General Director (Director) of another issuer;

 dd) Any member of the Governing Board, General Director (Director) and related persons of an issuer is also a member of the Governing Board or the General Director (Director) of a securities company;

e) A securities company and an issuer have the same legal representative.

3. Any securities company underwriting securities must open standalone accounts at commercial banks to receive money to buy securities from investors.

Article 24. Securities investment counseling service

1. In order to provide securities investment counseling services to customers, securities companies must enter into contracts with customers, including but not limited to the followings:

a) Rights, obligations and responsibilities of contracting parties;

b) Scope of service;

c) Method of rendering the service;

d) Service charge.

2. Securities companies must collect and manage customer’s information, including:

a) Financial health;

b) Investment objectives;

c) Risk tolerance;

d) Investment experience and knowledge.

3. Securities investment counsels must be provided on a reasonable and appropriate basis by using reliable information and logical analysis. Investment recommendations must relate and correspond to analyses of securities and stock markets. Stock and market analysis reports and investment recommendations must clarify the sources of data to be cited and the names of the persons in charge of implications of reports and investment recommendations.

4. When providing investment counsels to customers, securities companies must ensure that customers make their investment decisions after being provided with information in full, including implications and risks of provided products or services.

5. Securities companies must ensure that information received from users of counseling services is kept confidential during the process of providing counseling services, unless otherwise agreed by customers or otherwise provided by law.

6. Securities companies must provide investment counsels relevant to investment objectives and financial health of customers and shall be responsible for analysis results and reliability of information to be provided to customers.

7. A securities company is not allowed to provide its securities investment counseling services for another company of which at least 10% of the charter capital is held by the former.

Article 25. Other financial services

1. When performing other financial services as prescribed in Clause 5, Article 86 of the Law on Securities, a securities company must ensure that these services relate to and support other licensed business functions; must ensure that the interests of its customers or its own and the stock market are not affected.

2. A securities company is not allowed to provide counseling services related to offering and listing of securities, equitization and valuation of another company of which at least 10% of the charter capital is held by the former.

3. Securities companies are only allowed to provide other financial services in accordance with laws after making written reports to the State Securities Commission. The State Securities Commission has the right to request temporary suspension or termination of the provision of other financial services by any securities company if the provision of such services is in breach of the provisions of law or poses risks to the stock market.

Chapter IV

FINANCIAL REGULATIONS APPLICABLE TO SECURITIES COMPANIES

Article 26. Restrictions on borrowing

1. Total liability of a securities company is not over 5 times more than its equity. Total liability prescribed herein does not include the followings:

a) Customers' funds held in trust for trading of stocks;

b) Reward and welfare fund;

c) Redundancy or lay-off provisions;

d) Provisions for compensation for investor’s losses.

2. The maximum short-term liability of a securities company is equal to total short-term asset.

3. Securities companies offering securities for sale shall comply with regulations laid down in Article 31 in the Law on Securities, the Decree elaborating on the implementation of several articles of the Law on Securities, laws on issuance of corporate securities, and must comply with the ratio prescribed in clause 1 and 2 of this Article.

Article 27. Restrictions on lending

1. Except as provided by clause 1 of Article 86 in the Law on Securities, securities companies are not allowed to lend money or securities in any form.

2. Securities companies are not allowed to put up money or assets in their or customers’ ownership as security for third-party payment obligations.

3. Securities companies are not allowed to offer loans in any form to owners, major shareholders, members of the Supervisory Boards, members of the Governing Boards, members of the Members' Councils, members of the Boards of Directors, Chief Accountants, other officeholders appointed by the Governing Boards and related persons of the aforesaid persons.

4. Any securities company which is allowed to perform trades on margin in accordance with laws, can lend money to customers to buy securities in the form of margin trading under the guidance of the Ministry of Finance.

5. Securities company may lend securities to correct transaction errors, or perform swaps of exchange traded funds or other transactions in accordance with relevant laws.

Article 28. Restrictions on investment

1. Securities companies shall not be allowed to buy, contribute capital to buy real estate, unless they are not used as head offices, branches or transaction offices directly performing services or core business functions of securities companies.

2. Securities companies can buy and invest in real property as prescribed in Clause 1 of this Article and fixed assets on condition that the residual value of fixed assets and real property does not exceed 50% of their total asset.

3. Total investment in corporate bonds by a securities company does not exceed 70% of its equity. Securities companies obtaining licenses for the proprietary trading of securities may buy back listed bonds according to relevant regulations on bond repurchases.

4. A securities company is not allowed to directly perform, or give trust to other entity or person to perform the following acts:

a) Holding stocks of or making capital contribution to any company owning more than 50% of the former’s charter capital, except in case of buying the odd lot of stocks upon the customer’s request;

b) Joining with related persons to own at least 5% of the charter capital of another securities company;

c) Holding over 20% of total number of outstanding shares or fund certificates of a listed entity;

d) Holding over 15% of total outstanding shares or fund certificates of an unlisted entity. This restriction shall not be applied to member fund certificates, exchange traded funds and open-ended funds;

dd) Investing in or contributing to over 10% of total contributed capital of a limited liability company or business project;   

e) Investing in or contributing to over 15% of total equity of a business entity or project;  

g) Investing more than 70% of equity in stocks, share capital and business projects, including more than 20% of equity which is invested in unlisted stocks, share capital and business projects.

5. Securities companies may establish or acquire fund management companies as their subsidiaries. In this case, securities companies are not required to comply with regulations laid down in point c, d and dd of clause 4 of this Article. Securities companies wishing to establish or acquire fund management companies as their subsidiaries must meet the following requirements:

a) The equity existing after contributing capital to establish or acquiring fund management companies as subsidiaries must be equal to the minimum charter capital required for parent companies’ current business activities;  

b) The minimum liquidity ratio existing after contributing capital to establish or acquiring fund management companies as subsidiaries must be 180%;

c) After contributing capital to establish or acquiring fund management companies as subsidiaries, parent securities companies must obey restrictions on borrowing prescribed in Article 26 herein and restrictions on investment prescribed in clause 3 of this Article and point e of clause 4 of this Article

6. Where any securities company makes investments in excess of the prescribed limit due to its underwriting in the form of firm commitment, amalgamation, merger or any change in assets or equity of its own or capital contributors, it must take necessary actions to comply with the limits specified in Clause 2, 3 and 4 of this Article for a maximum period of 01 year.

Chapter V

REPORTING REGIME

Article 29. Reporting rules and regulations

1. All reports of securities companies must be complete, timely and accurately reflect their actual situations.

2. Securities companies must send periodic reports by using electronic data files to the State Securities Commission through its information system according to the time limits and regulations as follows:

a) Within 05 working days of the following month, the monthly operations and business performance report (according to the form specified in Appendix I and Appendix II of this Circular) must be sent;

b) Within 20 days from the end of a quarter, the quarterly financial statement must be sent. If the quarterly consolidated financial statement is needed, that statement must be sent within 30 days from the end of that quarter;

c) Within 45 days from the end of the first 6 months of the financial year, the semi-annual financial statement and the prudential ratio report made as at June 30 and reviewed by an approved auditing body must be sent. In case where the semi-annual consolidated financial statement is needed, such statement that is reviewed within 60 days from the end of the first 6 months of the financial year must be sent;

d) Annual reports

 By January 20 in the subsequent year, the general operations and business performance report (according to the form specified in Appendix I and Appendix II of this Circular) must be sent.

 By March 31 of the following year, the annual financial statement and prudential ratio report made on December 31 and audited by an approved auditing company must be submitted to the State Securities Commission. In case where the annual consolidated financial statement is needed, such statement that is audited within 100 days from the end of the financial year must be submitted.

dd) The financial statements sent to the State Securities Commission as prescribed at point b, c, d of this Clause must encompass all the components and contents in accordance with regulations of laws on accounting applicable to securities companies;

e) In case where the financial statement is subject to an auditor’s qualified opinion that does not clearly states affected items or reasons, the securities company must send a written explanation certified by the competent auditor to the State Securities Commission within 30 days at the longest from the date of submission as prescribed at points c and d of this clause.

3. Within 3 working days from the dates on which the following events take place, the securities company must report to the State Securities Commission in writing on such events:

a) Borrowing or investment in excess of the limits prescribed in Article 26 and 28 herein;

b) Opening ceremony of its main office, branch or transaction office.

4. Risk management reports

By January 31 and July 31 each year, the annual/biannual report on risk management activities (using the form given in Appendix IV hereto) must be submitted.

5. On-demand reports

Where necessary, the State Securities Commission shall reserve the right to request securities companies to submit written reports, clearly stating reporting scope and time limits.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 30. Entry into force

1. This Circular shall enter into force as from February 15, 2021.

2. This Circular shall replace the Circular No. 210/2012/TT-BTC dated November 30, 2012 of the Minister of Finance, providing instructions on establishment and operation of securities companies, and the Circular No. 07/2016/TT-BTC dated January 18, 2016 of the Minister of Finance, amending several articles of the Circular No. 210/2012/TT-BTC dated November 30, 2012 of the Minister of Finance.

3. As from the effective date of this Circular, securities companies shall be responsible for ratifying their Charters in the latest Shareholders' General Meetings as per the Law on Securities dated November 26, 2019, the Law on Enterprises dated June 17, 2020, this Circular and other regulations of relevant laws.

4. In the course of implementation of this Circular, if there is any difficulty that may arise, entities and persons concerned should send their feedbacks to the Ministry of Finance for its further examination, guidance and action./.

APPENDIX I

SAMPLE OF OPERATIONS AND BUSINESS PERFORMANCE REPORT
(to the Circular No. 121/2020/TT-BTC dated December 31, 2020 of the Minister of Finance)

To: State Securities Commission

Chart of the business performance report

1. File type: excel

2. Font: Times New Roman, size 12 point

3. At the "Corporate type” indicator: "CTĐC" refers to public company; "CTCP" refers to non-public joint stock company; "TNHH" refers to limited liability company.

4. “After-tax profit” (biannual): Financial statement reviewed on a biannual basis.

5. Line No. 26 “Investment restrictions”: The company can rate itself as compliance/failure to compliance with Article 26 and Article 28 herein.  

6. Line No. 4,5,6,7,8,9: Mark an “x” into the corresponding indicators at column (4) (where applicable).

7. Line No. 27, 28: Applicable to violations that are sanctioned under decisions of the State Securities Commission.  Enter the number and date of issuance of each decision.

8. Write Normal/Cautioned/Controlled/Specially Controlled into column (4) at Line No. 30

9. Enter Yes/No into column (4) at Line No. 31, 32, 33 

APPENDIX II

SAMPLE OF DETAILED OPERATIONS AND BUSINESS PERFORMANCE REPORT
(to the Circular No. 121/2020/TT-BTC dated December 31, 2020 of the Minister of Finance)

To: State Securities Commission

Securities company:…

Chart II.1: Personnel

Quarter/6 months/year

Unit: person

Annotation:

- Column (3), (4), (5), (6): Enter numbers. Place negative numbers in brackets ( ).

Chart II.2: Shareholders/capital contributing members holding at least 5% of the company’s charter capital

6 months/year

Annotation:

- Column (4): Use the date format (DD/MM/YYYY)

- Column (6): Clearly enter the country’s name.

- Column(7) and (9): Enter numbers.

- Column (8) and (10): Enter % (rounded to the nearest hundredth).

Chart II.3: Changes that must be approved within the reporting period

6 months/year

Annotation:

- The report prepared using this sample can be submitted in case of needing to updating the latest report on any change made from the date of the State Securities Commission’s issuance of decision on approval of such change.

- Column (3), (6), (7), (8): Enter numbers indicating the times of change made till the reporting time.

- Column (4) and (5): Enter numbers indicating quantity.

- Column (7): Write the title of senior personnel, including legal representative with respect to the main office, and branch’s head. 

Chart II.4: Number of stock trading accounts of investors

Quarter/6 months/year

Annotation:

- Column (3), (4), (5), (6): Enter numbers. Place negative numbers in brackets ( ).

Chart II.5: Investor’s funds held in trust for investment in stocks

Month/year

Annotation:

- Make a detailed list of accounts opened at banks keeping investor’s funds for stock trading activities.

- Line No. 1, column (3): Total balance of Account A1, A2,…

- Line No. 5, column (3): Total balance of Account B1, B2,…

Chart II.6: Trading of listed securities/securities registered for trades

Month/6 months/year

Unit: million dong

Annotation:

- HNX denotes the Stock Exchange of Hanoi

- HSX denotes the Stock Exchange of Ho Chi Minh city

Chart II.7: Trading of unlisted securities/securities not yet registered for trades

Month/6-month/year

Annotation:

- Detailed report specific to issuers must be made.

- Indicators given in Column (3), (4) and (5) are applicable to “bonds”. Mark “x” onto the term of each bond.

- Column (6) and (9): Enter numbers.

Chart II.8: Margin trading of securities

Month/year

Annotation:

- Data used in the report are those completely calculated on the last day of the month.

- Use the detailed chart No. II.8B when at least 50 codes exist.

Chart II.8B: Detailed report on margin lending specific to stock codes

Month/year

Annotation:  This report is applicable if at least 50 stock codes are involved in the margin lending service.   

Chart II.9: Authorized custody of stock trading accounts of individual investors

Month/year

Annotation:

- Column (3), (4): Use solar calendar days at beginning/end of month (First/last sessions of month).

- Column (3), (4), (5), (6): Enter numbers. Place negative numbers in brackets ( ).

Chart II.10: Holding of listed securities

Month/year

Annotation:

- Specify stock codes (as for listed securities or securities registered for trades) at Column (2).

- Column (3) indexes securities that securities companies are holding, except securities in transit to accounts.

- Holdings under forward contracts must be eliminated.

- Value of holdings is calculated at the purchase price.

Chart II.11: Investment in and contribution of capital to other organizations

Quarter/year

Annotation:

Total* = Total value of listed securities (shown in chart II.10)+ total value of column (4) + Total value of column (7)

Rate of investment in stocks, share capital and business projects = Total*/Equity of the securities company

Rate of investment in fixed assets = Total residual value of fixed assets/Total assets of the securities company

Total investment in corporate bonds = Total value of corporate bonds/Equity of the securities company.

Investment rate shown in column (5) = Number of unlisted stocks under a business entity’s ownership/number of outstanding stocks of an entity 

Investment rate shown in column (8) = Value of share capital/Equity of the securities company.

Chart II.12: Underwriting services

6 months/year

Unit: million dong

Annotation:  The data in the latest quarterly report must be used.

Column (6) and (7): Enter numbers.

Chart II.13: Serving counseling and rendering activities

6 months/year

Column (3) and (4): Enter numbers. Place negative numbers in brackets ( ).

General annotation:

- File type: excel

- Font: Times New Roman, size 12 point

APPENDIX III

BASICS OF THE CONTRACT FOR OPENING OF SECURITIES TRADING ACCOUNTS BETWEEN THE SECURITIES COMPANY AND CUSTOMER
(to the Circular No. 121/2020/TT-BTC dated December 31, 2020 of the Minister of Finance)

1. Contracting parties

a) Securities company

- Main office’s address:

- Legal representative/authorized person

+ Full name:                                      Title:

+ No. of old 9-digit/new 12-digit ID card or Passport (foreigner): ………….issued on………………in………………………………….

+ Authorization decision No. …………..dated: day……..month……year…….

b) Individual customer

- Full name:

+ No. of old 9-digit/new 12-digit ID card or Passport (foreigner): ………….issued on………………in………………………………….

- Permanent residence:

- Contact phone:

c) Institutional customer

- Entity’s name:

- Address:                                            Phone number:

- Enterprise Registration Certificate No.:

- Legal representative/authorized person:

+ Full name:                                      Title:

+ No. of old 9-digit/new 12-digit ID card or Passport (foreigner): ………….issued on………………in………………………………….

+ Authorization decision No. …………..dated: day……..month……year…….

+ Contact phone number:

2. Terms and conditions regarding specific agreements

a) Manners of receipt of orders;

b) Rate of margin for trading of securities to be applied;

c) Agreement on interest rate on funds held in trust for trading of securities;

d) Time limit and action for disposing of assets in case the customer is unable to pay by the due date;

dd) Agreement on time and method of conversion of foreign currency into Vietnamese dong in case of transferring money for securities transactions in foreign currency.

3. Terms and conditions regarding rights and obligations of concerned parties

a) Rights and obligations of the customer (e.g. possessing cash, securities and profits, other legitimate rights and interests associated with such cash or securities; providing information at the company’s request, paying fees on trades, …);

b) Rights and obligations of the securities company (e.g. collecting fees on trades, depository, implementing other legally authorized activities as agreed upon with the customer; storing and preserving cash and securities for the customer, performing trades, keeping information confidential, providing information at the customer’s request,....).

4. Terms and conditions regarding other agreements

a) Liabilities for breach of contract. This clause must clearly state that:

- The customer is compensated for loss or damage if the company breaches its obligations under this Contract;

- Amount of compensation for loss or damage: agreed upon between contracting parties or according to laws.

b) Action to be taken to deal with an account in case the company divests itself from brokerage services, is dissolved or their license is revoked;

c) Cases of early contract termination;

d) Validity period of the contract;

dd) Dispute settlement;

Other agreements reached in accordance with laws.

APPENDIX IV

SAMPLE OF RISK MANAGEMENT REPORT
(to the Circular No. 121/2020/TT-BTC dated December 31, 2020 of the Minister of Finance)

RISK MANAGEMENT REPORT

To: State Securities Commission

I. Risk management apparatus

1) Members of the Governing Board/Members’ Council/Owner(s)

-

-

2) Members of the Supervisory Board/Intracorporate Audit Committee

-

-

3) Members of the Board of General Directors (Board of Directors)

-

-

II. Documents, processes and procedures for risk management

1) Organizational structure of the risk management apparatus

- Duties and functions of each member of the risk management apparatus

- Mechanism for delegation of decision-making authority and responsibilities of each member

2) Risk policies

3) Risk limits and risk measurement

a) Risk limits and risk measurement for each service or business activity

b) Risk limits and risk measurement for all services or business activities

4) Risk determination processes

5) Contingency plan

III. The Company’s inspection and supervision of risk management activities

1) Scope of inspection or supervision 

a) Compliance with laws on securities and stock markets and other regulations of relevant laws.

b) Compliance with the Company’s procedures, rules and regulations

2) Inspection frequency in a year

3) Report of inspection and supervision results

IV. Evaluation of independence for prevention of conflicts of interest

1. Evaluation of integrity and avoidance of conflicts of interests of the company’s executive officers.

2. Evaluation of transactions with related persons.

3. Evaluation of transactions with the company’s shareholding executive officers and their related persons.   

4. Evaluation of protection of legitimate rights of persons having associated interests in the company.

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