1. Securities investment activities of foreign investors

Foreign investors shall invest in the Vietnamese stock market in the following forms:

Directly invest and trade on the Vietnamese stock market in accordance with the law on securities and the securities market. In this case, the foreign investor must register the securities trading code with the Vietnam Securities Depository and Clearing Corporation before carrying out investment activities.

Indirect investment in the form of entrusting capital to securities investment fund management companies, branches of foreign fund management companies in Vietnam. In case of indirect investment, foreign investors are not required to register securities trading codes; securities investment fund management companies, branches of foreign fund management companies in Vietnam that receive capital entrustment from foreign investors must register securities trading codes according to the principles specified at Points d and dd, Clause 2, Article 145 of Decree 155/2020/ND-CP.

Foreign investors are allowed to open a securities trading account and make an investment immediately after being granted a securities trading code in the form of electronic confirmation.

2. Conditions for selection of a transaction representative in Vietnam by foreign investors

Foreign investors may select a transaction representative in Vietnam who fully meet the following conditions:

• Not being subject to imprisonment or being banned from practicing business by the court;
• There are professional certificates in securities, including: certificates on basic issues in securities and the securities market, legal certificates on securities and the securities market;
• Being the sole transaction representative in Vietnam of the foreign investor and authorized in writing by the foreign investor.

3. Regulations on obligations in investment activities on the Vietnamese securities market

a) Securities Depository Account

After being granted a securities trading code, the foreign investor opens a securities depository account.

Foreign investors who open securities depository accounts at depository banks are allowed to open only 01 securities depository accounts at 01 unique depository banks for each securities transaction code issued.

In addition to securities depository accounts at depository banks, foreign investors are allowed to open securities depository accounts at securities companies in principle each securities company can only open 01 securities depository accounts.

b) Indirect Investment Capital Account

Foreign investors are allowed to open 01 indirect investment capital account corresponding to 01 depository bank licensed to conduct foreign exchange trading to carry out investment activities on the Vietnamese stock market.

When receiving entrusted capital from indirect investment, the securities investment fund management company or the branch of the foreign fund management company in Vietnam must open an indirect investment capital account in the name of the company or the company’s branch to receive capital from foreign investors who do not have an indirect investment capital account.

All remittance activities for transactions, investments, and other payments related to securities investment activities of foreign investors receiving and using dividends and divided interests, purchasing foreign currencies for remittance abroad (if any) and other related transactions must be carried out through indirect investment capital accounts.

c) In-service obligations in investment activities on the Vietnamese stock market

Foreign investors fulfill the obligation to declare, pay and finalize taxes, charges, fees and service prices related to securities activities in Vietnam in accordance with Vietnamese law.

The foreign investor or the relevant group of foreign investors shall be responsible for performing or appointing 01 depository member or 01 securities company or 01 securities investment fund management company or its representative office (if any) or 01 other organization or authorizing 01 individual to perform the obligation to report ownership and information disclosure. Notices of appointment or change of organizations and individuals performing the obligation to report ownership and disclose information must be sent to the State Securities Commission and subsidiaries of the Vietnam Stock Exchange within 24 hours from the date of appointment or authorization.

c) Obligations in the provision of services to foreign investors

Securities companies, securities investment fund management companies, branches of foreign fund management companies in Vietnam, and economic organizations with foreign investors holding more than 50% of charter capital when providing services to foreign investors must ensure:

• Fully comply with legal regulations on securities and securities market;
• When providing services and participating in securities auctions under the authorization of foreign investors, securities companies, securities investment fund management companies and branches of foreign fund management companies in Vietnam must separate the trading orders and investment directives of foreign investors from the trading orders. investment directives of domestic investors (if any) and themselves, ensuring compliance with the law on foreign ownership ratio in Vietnamese enterprises;
• Responsible for fair and reasonable allocation of assets to each customer in accordance with the signed contract. 

The above is the content of KALF’s advice on securities market regulations in Vietnam for foreign investors. All of our above advice is based on applicable legal regulations. If you have any questions or requests about legal issues, please contact us for timely answers.

K & ASSOCIATES LAW FIRM 

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