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The State Securities Commission has issued notices outlining regulatory considerations for investors participating in the stock market. The commission said investors should understand securities laws to comply with legal requirements, protect their rights and legitimate interests, choose suitable investment forms, and avoid inadvertent violations or risks associated with activities not protected by law.
Under securities law, investing in securities refers to the purchase, sale, and holding of securities by an investor on the stock market. The investor may be an organization or an individual, including domestic and foreign investors, participating in investments on the stock market (Articles 4.15 and 4.16 of the Securities Law).
The law also provides for investors to become strategic or professional investors if they meet specific conditions, including capital, financial capacity, and professional qualifications. A strategic investor is selected by the General Meeting of Shareholders based on financial capacity, technological capability, and a commitment to cooperate with the company for at least three years. A professional investor is an investor with financial capacity or professional qualifications in securities (Articles 4.17 and 4.11 of the Securities Law).
When participating in securities activities and the stock market, investors have rights recognized by law. These include the right to buy, sell, and hold securities, transfer ownership of securities, and receive economic benefits arising from securities ownership, such as dividends, bond interest, or profits from investment funds. Investors are also entitled to access information related to issuers and listings, participate in governance and supervision (including attending General Meetings of Shareholders and investor meetings of investment funds), nominate candidates to the Board of Directors and Supervisory Board, and file complaints and lawsuits against acts that violate securities laws.
Alongside rights, investors must comply with obligations. These include complying with regulations on securities activities and transactions, publishing information, and following anti-money-laundering regulations. Investors are also prohibited from engaging in market manipulation, insider trading, or providing false information, and must publish information as required. The commission also noted that investors bear responsibility for investment decisions and must fulfill financial obligations, including paying for securities on time and paying taxes and fees as prescribed.
For foreign investors, the notices reference rules for entities with foreign ownership exceeding certain thresholds, registration requirements for trading IDs, and foreign ownership limits. The law also aligns with the business characteristics of financial institutions such as brokerage firms, fund managers, insurers, and banks.
Investors may participate in stock investment directly or indirectly. Direct investment involves trading on the Vietnamese stock market (primary and secondary markets) under the Securities Law and market regulations. Indirect investment can be carried out by entrusting asset management to a fund management company or by entrusting a foreign fund manager in Vietnam.
Direct trading on the stock market system requires opening a securities trading account with a member brokerage and opening a securities depository account at the central depository participant. Foreign non-residents may place orders through foreign securities firms or directly with their own trading accounts. Investors may hold multiple trading accounts with different securities companies, but typically one trading account per company, and one custodial account, subject to statutory exemptions.
In clearing and settlement, investors must maintain margin accounts as required to settle trades. Foreign-owned entities must comply with registration and ownership limits when participating in Vietnam’s stock market.
Investors may also invest in open-end fund certificates managed by fund managers through dedicated accounts with distributors. The notices state that open-end fund certificates are not listed on the stock exchange like other listed securities.
The commission described agency arrangements that include transfer agency services. These services are responsible for maintaining registers, managing investor accounts, recording orders, transferring ownership, updating registers, and communicating with investors, distributors, and authorities. They also provide financial statements, fund reports, prospectuses, and related documents.
Account trading and investment trust services include direct trading via a securities trading account, managing trading accounts for individual investors through a brokerage, and investment trust arrangements in which a fund manager manages the portfolio on behalf of the trustor under separate contracts. The notices state that investment trusts follow agreements under securities law.
In addition to direct trading, investors may delegate trading account management to a securities company or delegate investment management to a fund management company. The notices refer to short-term contracts (generally up to one year) and the use of professional handlers.
The notices also state that foreign investors must register a trading code with a custodian to enable registration with the Vietnam Securities Depository and Clearing Corporation (VSDC).
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