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The Ministry of Finance of Vietnam is currently seeking public comments on a draft Circular that aims to amend and supplement several articles of Circular No. 51/2021/TT-BTC. This Circular guides the obligations of organizations and individuals engaged in foreign investment activities in the Vietnamese stock market. The proposed amendments are designed to enhance the regulatory framework and ensure smoother operations for foreign investors.
Key Amendments to Indirect Investment Capital Accounts
One of the significant changes proposed in the draft Circular pertains to the regulations on indirect investment capital accounts, as outlined in Article 3. According to the draft, foreign investors are required to open one indirect investment capital account at a depository bank licensed to trade foreign exchange to conduct transactions in the Vietnamese stock market. This account will facilitate all money transfer activities, including transactions, investments, and other payments related to securities investment activities.
Furthermore, organizations issuing depository certificates abroad must also open one indirect investment capital account at a licensed depository bank. This account will handle the issuance and cancellation of depository certificates and other related activities in compliance with the law. All transactions involving the reception and use of dividends, profits, and the purchase of foreign currency for remittance abroad must be processed through this indirect investment capital account.
Reporting and Disclosure Obligations
The draft Circular also introduces amendments to the obligations of foreign investors regarding ownership reporting and information disclosure on the Vietnamese stock market. Under the new regulations, relevant foreign investor groups are required to appoint one depository member, a securities company, a securities investment fund management company, their representative office, or another authorized organization or individual to handle ownership reporting and information disclosure.
The appointed or authorized entity must notify the State Securities Commission and a subsidiary of the Vietnam Stock Exchange of their appointment or any changes within 24 hours of the effective date. This notification must include a valid copy of the License for establishment and operation, a Certificate of enterprise registration, a Fund registration certificate, or an equivalent document for organizations. For authorized individuals, a valid copy of a passport or other legal personal identification is required.
Implications for Foreign Investors
These proposed amendments aim to streamline the processes involved in foreign investment activities in the Vietnamese stock market, ensuring compliance with legal requirements and enhancing transparency. By consolidating the management of indirect investment capital accounts and clarifying reporting and disclosure obligations, the amendments seek to create a more efficient and transparent investment environment.
Foreign investors will need to adjust to these changes by ensuring they open the requisite accounts and appoint appropriate representatives for reporting and disclosure purposes. The emphasis on timely and accurate reporting will enhance market integrity and provide a clearer picture of foreign investment activities in Vietnam.
The Ministry of Finance’s proposed amendments to Circular No. 51/2021/TT-BTC represent a significant step towards refining the regulatory framework for foreign investment in Vietnam’s stock market. By addressing the management of indirect investment capital accounts and clarifying the obligations related to reporting and information disclosure, the amendments aim to facilitate a more efficient and transparent market. Stakeholders are encouraged to review the draft Circular and provide their comments to help shape a robust investment environment that supports sustainable growth and development.
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