New regulations effective in August 2021

DUY ANH

This month BIDV Review introduces two legal regulations on credit information companies and foreign investment activities in Vietnam’s stock market.

CREDIT INFORMATION COMPANY MUST HAVE A MINIMUM CHARTER CAPITAL OF VND30 BILLION (USD1.3 MILLION)

On 10 June 2021, the government promulgated Decree No. 58/2021/ ND-CP regulating the provision of credit information services. The decree takes effect on 15 August 2021.

According to the decree, a credit information company shall be granted a certificate of eligibility for providing credit information services if it satisfies the following conditions: Having a minimum charter capital of VND30 billion; having a business plan that ensures to perform no business lines other than the provision of credit information services; having at least 15 participating organizations being credit institutions, foreign bank branches.

Concurrently, an information infrastructure system of the company must have at least 02 data transmission lines, each transmission line is provided by 01 service provider; have a server system located in Vietnam, a computer software system and technical solutions capable of performing the provision of credit information services for at least 5,000,000 borrowers; have a disaster contingency plan in order to ensure that the provision of credit information services is not interrupted for more than 04 working hours, etc.

Noticeably, within a maximum period of 12 months from the date on which the certificate is issued, the credit information company must start the provision of credit information services and send a written notification of the opening of operation to the State Bank of Vietnam within 05 working days from the date on which the credit information company starts its operation. The company that fails to start providing credit information services within 12 months from the date of granting the certificate shall have its certificate revoked.

FOREIGN INVESTORS' TRADING REPRESENTATIVES MUST NOT DIRECTLY MAKE INVESTMENT DECISIONS UNTIL RECEIVING TRADING ORDERS

On 30 June 2021, the Ministry of Finance issued Circular No. 51/2021/TT-BTC guiding obligations of organizations and individuals in the foreign investment activities in Vietnam's securities market. The circular takes effect on 16 August 2021.

According to the Circular, foreign investors, their trading representatives must ensure that investment transactions in Vietnam’s securities market and transactions conducted by affiliated persons and groups of affiliated foreign investors are not aimed at creating sham supply or demand, manipulating securities prices and other prohibited trading acts as prescribed by Vietnam’s law. When conducting transactions for foreign investors, trading representatives of such foreign investors shall strictly follow trading and payment instructions by foreign investors, and refrain from directly making investment decisions, including selection of securities type, amount, price and trading time, until they receive trading orders and investment instructions from foreign investors.

Additionally, in case they provide services or participate in securities auctions as authorized by foreign investors, securities companies, investment fund management companies, and foreign fund management company’s branches in Vietnam must separate trading orders and investment instructions of foreign investors from those of domestic investors (if any) and their own ones, ensuring compliance with provisions of the law on foreign ownership ratio in Vietnamese enterprises.