Asia Counsel Insights gives readers a concise insight into legal and business developments in Vietnam. This edition has news on the EU-Vietnam Free Trade Agreement; foreign investment in the securities market of Vietnam and foreign ownership in public companies; and mandatory consumer contract registrations for consumer credit contracts, life insurance contracts and other consumer contracts.
Investment restrictions for banks
One of the factors for bank’s poor performance in Vietnam is their over investments in related party projects. Below is a brief outline of investment restrictions for banks under law.
- Banks cannot own more than 11% of the charter capital of any enterprise (save as below).
- The total equity investment by a bank cannot exceed 40% of its charter capital and reserve funds.
- A bank cannot make equity investments in any corporate shareholder of the bank.
- A bank may only have subsidiaries that carry on securities business, insurance business and finance leasing business.
- SBV approval is required for a bank to make an investment outside prescribed financial sectors.
Circular 123/2015/TT-NHNN dated 19 August 2015 regulates the manner for foreign investors to invest in securities in Vietnam. Circular 123 prescribes the following:
- Registration of securities trading code may be done by a securities firm electronically in one working day.
- A foreigner may be suspended from trading for six months or have its trading code cancelled for breaches of the securities law.
- A foreign investor must open an indirect capital account with one commercial bank to invest in securities.
- A foreign investor must report to the Vietnam Securities Depository on changes to a number of matters including change of name, change in contact details, a restructure, merger or acquisition and any change to its incorporation certificate.
Please click on Asia Counsel Insights 31 August 2015 for more information.
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