According to the
commitments made to the World Trade Organization (WTO) during its 2007
accession, Vietnam only allow the foreign investor to enter into Vietnamese
market in respect to the service under the list up which Vietnam committed to
open. In the case of not subject to the list, Vietnam has the right to decide
to allow a foreign investor to access the market or not on the basis of case by
case. That is subject to the approval of the Prime Minister or the managing
Ministries depending on the investment capital scale, type of service.
At present, Vietnam did
commit on opening up securities service sector under the WTO commitments,
accordingly, after 5 years from the date of accession (i.e. January 11th 2007),
the foreign investor is allowed to engage in securities service business with
establishment of 100% foreign invested capital enterprises and for some limited
services, the branches of foreign securities services suppliers shall be
permitted. Therefore, the foreign investor from a WTO member country generally
speaking, can freely acquire minority/majority shares in domestic enterprises;
establish a wholly – owned subsidiary or a branch in Vietnam.
The Foreign investor may
be allowed to do the following securities services (Quoted directly from Vietnam’s WTO commitments):
“(f) Trading for own account or for account of customers, whether on
an exchange, in an over-the-counter market or otherwise, the following:
-
Derivative products incl. futures and options;
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Transferable securities;
-
Other negotiable instruments and financial assets, excluding bullion.
(g) Participation in issues of all kinds of securities incl.
under-writing and placement as an agent (publicly or privately), provision of
services related to such issues
(i) Asset management, such as portfolio management, all forms of
collective investment management, pension fund management, custodial depository
and trust services
(j) Settlement and clearing services for securities, derivative
products, and other securities-related instruments
(k) Provision and transfer of financial information, and related
software by suppliers of securities services
(l) Advisory, intermediation and other auxiliary
securities-related excluding (f), including investment and portfolio research
and advice, advice on acquisitions and on corporate restructuring and strategy
(for other services under (l), refer to (l) under banking sector)”.
Conditions for engaging
in securities service business:
Under the law of
Vietnam, the securities service is considered as a conditional business to both
foreign and domestic companies. Currently, the securities service business is
regulated by the Securities Laws No. 70/2006/QH 11, Amended Securities Laws No.
62/2010/QH12 and Decree No. 58/2012/NĐ-CP of the Government dated July 20th
2012. In order to engaging in this business, the company must comply with legal capital; conditions for and structure of shareholders or capital
contributing members. The details are as follows:
i.
Legal capital:
The legal capital required for professional business activities of a
securities company in Vietnam are:
-
Brokerage: Twenty-five (25) billion dong;
-
Self-trading: One hundred (100) billion dong;
-
Underwriting securities issues: One hundred and sixty
five (165) billion dong;
-
Securities investment consultancy: Ten (10) billion
dong.
Where the company applies for a license for a number of business
activities, its legal capital shall be the total of legal capital corresponding
to each type of business activity for which a license is requested.
ii.
Conditions applicable to an organization contributing
capital for the establishment of a securities business organization:
(a) The organization must have legal entity status; it must not be in
the process of consolidation, merger, demerger, dissolution or bankruptcy; and
it must not be an entity ineligible to establish and manage an enterprise
pursuant to the law on enterprises;
(b) The business operation must have been profitable in the two (2)
preceding years, and it must not have accumulated losses. In addition:
If the organization is a commercial bank, insurer or securities business
organization then it must not be subject to control of its operation, or
subject to special control or other warning situations; and at the same time it
must also satisfy all the conditions for capital contribution and for
investment in accordance with specialized branch law.
If the organization is some other business organization:
- It must have, at the minimum, operated for the consecutive five (5)
year period immediately preceding the year of capital contribution to establish
the securities business organization;
- After deducting long term assets, the remaining equity must, at the
minimum, equal the amount of capital proposed to be contributed;
- Mobile capital must, at the minimum, equal the amount of capital
proposed to be contributed.
(c) It must only use its equity and other lawful capital sources as
stipulated by specialized branch law. There must be no reservation in the
audited financial statements of the most recent year.