Offshore Indirect Investment

On 29 June 2016, the State Bank of Vietnam issued Circular 10/2016/TTNHNN regulating offshore investment.  Circular 10 will take effect from 13 August 2016 and the key rules are:

  • Vietnamese organisations are only permitted to trade either on its own account or under managed investment in limited offshore securities such as shares listed on an offshore securities market, investment funds and Government and corporate bonds with a good rating from international rating agencies.
  • For commercial banks and finance companies, the maximum amount of offshore securities investment is 7% of the equity capital of the entity.
  • The Vietnamese entity must open a separate account with a Vietnamese bank to conduct offshore securities trading.
  • A Vietnamese entity engaging in offshore securities trading must register is investment limit with the SBV to ensure compliance with the national limit.
  • Vietnamese employees can now participate in offshore employee share incentive schemes provided the offshore shares are from a company that has presence in Vietnam (eg through a subsidiary, a branch or rep office).
  • The share scheme must be registered with the SBV and the application includes a completed application form, establishment document of the issuer and Vietnamese employer, a summary of the scheme and a list of eligible employees.
  • The shares or options under the scheme may be in foreign currency.
  • The issuer under the ESOP must open a foreign currency account with a Vietnamese bank where all ESOP related transactions must conducted.

Click Asia Counsel Insights 1 July 2016 for more information.


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