Restrictions of securities investment fund management companies

Does transferring shares of a fund management company require approval from the State Securities Commission? What obligations and restrictions does the fund management company have? 

1. What obligations does a securities investment fund management company have?

According to Article 90 of the Securities Law 2019, the obligations of securities investment fund management companies and branches of foreign fund management companies in Vietnam are as follows:

– Comply with the obligations specified in Clauses 1, 2, 4, 5, 6, 7, 8, 9, 10 and 12 Article 89 of this Law.

– Carry out securities investment fund management activities, manage securities investment portfolios in accordance with the provisions of this Law, the Charter of the securities investment fund, contracts signed with investment entrustment customers and contracts signed with custodian banks.

– Carry out the determination of net asset value of securities investment funds according to regulations in Article 106 of this Law, the Securities Investment Fund Charter and the contract signed with entrusted investment customers.

– When managing entrusted assets, the securities investment fund management company must deposit all entrusted assets, ensuring the principle of independence and separation for each entrusting customer, separating the entrusted assets and the assets of the securities investment fund management company. securities.

2. What restrictions do securities investment fund management companies have?

According to Article 91 of the Securities Law 2019, regulations on restrictions for securities companies, securities investment fund management companies, branches of securities companies and foreign fund management companies in Vietnam are as follows:

– Do not make comments or guarantees to customers about the level of income or profits achieved on their investment or ensure customers do not suffer losses, except in the case of investing in fixed income securities.

– Do not disclose information about customers, unless agreed by the customer or at the request of a competent authority.

– Do not commit acts that mislead customers and investors about securities prices.

– Founding shareholders, capital contributing members upon establishment of a securities company, securities investment fund management company are not allowed to transfer their shares or capital contribution within 03 years from the date of issuance of the license, except in the case of transfer between founding shareholders, capital contributing members when establishing the company.

– Securities company, securities investment fund management company, Branches of foreign securities companies and fund management companies in Vietnam must conduct business activities and provide securities services in their own name; Do not use the name of another organization or individual or let another organization or individual use your name to do business or provide securities services.

– Securities companies are not allowed to contribute capital to establish, buy shares, or contribute capital of another securities company in Vietnam, except in the following cases:

+ Buy to carry out consolidation or merger import;

+ Buy to own or together with related persons (if any) own no more than 5% of the outstanding voting shares of a listed securities company, registered for trading.

– Securities investment fund management companies are not allowed to contribute capital to establish, purchase shares, or capital contributions of 01 other securities investment fund management company in Vietnam, except for in the following cases:

+ Purchase to carry out consolidation or merger;

+ Purchase to own or together with related persons (if any) own no more than 5% of the outstanding voting shares of a securities investment fund management company listed and registered for trading.

3. Does the transfer of shares of a fund management company require an approval decision from the State Securities Commission?

According to Article 87 of the Securities Law 2019, the following activities must be approved by the State Securities Commission:

“Article 87. Activities must be approved by the State Securities Commission

1. Securities company securities investment fund management companies must obtain written approval from the State Securities Commission before carrying out the following activities:

a) Temporarily suspend operations, except for temporary suspension due to force majeure reasons;

b) Offer and list securities of securities companies and securities investment fund management companies in the country foreign;

c) Indirect investment abroad;

d) Establishment and closure of domestic and foreign branches and representative offices; establish a subsidiary abroad; change business operations at the branch; establishing and closing transaction offices;

dd) Changing names and locations of branches, representative offices, transaction offices;

e) Performing services specified in Point b, Clause 1, Article 86 of this Law.

2. Branches of foreign securities companies and fund management companies in Vietnam that temporarily suspend operations according to the provisions of Point a, Clause 1 of this Article must be approved in writing by the State Securities Commission before implementation.

3. The Government regulates in detail the conditions, documents, order and procedures for approving the activities specified in this Article.”

Accordingly, securities companies and securities investment fund management companies must receive written approval from the State Securities Commission before carrying out the following activities:

+ Suspension of operations, except in cases of suspension due to unavoidable causes resistance;

+ Offering and listing securities of securities companies and securities investment fund management companies in foreign countries;

+ Indirect investment abroad;

+ Establishment and closure of domestic and foreign branches and representative offices; change of business operations at branches; transactions;

+ Changing name, location of branch, representative office, transaction office;

+ Performing services specified in Point b, Clause 1, Article 86 of this Law.

Thus, transferring shares of a fund management company is not included in the above activities, so it does not require approval from the State Securities Commission.