Official Legal Advisor to the Vietnam Basketball Association

Securities

Offshore Securities Investment

On 29 June 2016, the Ministry of Finance issued Circular 105/2016/TTBTC on offshore indirect investment. Circular 105 takes effect from 15 August 2016. Circular 105 sets out the licensing process for securities firms, fund managers, investment funds and insurance enterprises to allow each of those entities to make indirect offshore investments: principally in offshore listed shares and other less risky securities investments.

The State Securities Commission issue these licenses. There are range of documents that must be filed in order for the above entities to be licensed to conduct offshore indirect investment.

They include (i) a shareholders’ approval; (ii) an internal risk management policy; (iii) a business plan for offshore investment; (iv) at least one international CFA qualified employee employed at the entity; (v) the tax authority have confirmed that the entity is tax compliant; and (vi) evidence that the entity has adequate facilities to provide the offshore indirect investment service.

A license is also required for a fund manager providing investment entrustment services for offshore investments.

An insurance enterprise and a securities business conducting selftrading in offshore securities must also be licensed.

Circular 105 sets an investment amount cap for self-trading in offshore securities. For securities firms, this is 30% of equity. For fund managers, this is 20% of equity. For investment funds, this is 20% of the net asset value. For insurance enterprises, the cap cannot exceed the cap registered with the State Bank of Vietnam.

Circular 105 requires the permitted entities to report to the SSC on a monthly basis on its offshore indirect investment activities in a prescribed form set out in Circular 2015.

For more information, click Asia Counsel Insights 18 August 2016.

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