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| THE MINISTRY OF FINANCE | SOCIALIST REPUBLIC OF VIETNAM |
| No. 35/2007/QD-BTC | Hanoi, 15 May 2007 |
ISSUING REGULATIONS ON ORGANIZATION AND OPERATION OF FUND MANAGEMENT COMPANIES
THE MINISTER OF FINANCE
Pursuant to the Law on Securities dated 29 June 2006;
Pursuant to Decree 14/2007/ND-CP of the Government dated 19 January 2007 making detailed provisions for implementation of the Law on Securities;
Pursuant to Decree 77/2003/ND-CP of the Government dated 1 July 2003 on functions, duties, powers and organizational structure of the Ministry of Finance;
On the proposal of the chairman of the State Securities Commission:
DECIDES:
Article 1. To issue with this Decision the Regulations on Organization and Operation of Fund Management Companies.
Article 2. This Decision shall be of full force and effect fifteen (15) days after the date of its publication in the Official Gazette.
Article 3. The Head of the Office, Chairman of the State Securities Commission, fund management companies and parties concerned shall be responsible for implementing this Decision.
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FOR THE MINISTER OF FINANCE
DEPUTY MINISTER
Tran Xuan Hanoi
ON ORGANIZATION AND OPERATION OF FUND MANAGEMENT COMPANIES
(Issued with Decision 35/2007/QD-BTC of the Minister of Finance dated 15 May 2007)
These Regulations provide for the establishment, organization and operation of fund management companies and for the operation of securities and securities market service providers to fund management companies within the territory of the Socialist Republic of Vietnam.
Article 2. Interpretation of terms
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1. Fund management company means an organization with legal entity status which provides services being management of securities investment Funds and management of securities investment portfolios. Apart from licensed fund management companies, other economic institutions shall not be permitted to provide services being management of securities investment Funds and management of investment portfolios.
2. Entrusting investor means any organization or individual who entrusts a fund management company to manage investment of its/his/her assets.
3. Fund management practitioner means a person who has a fund management practising certificate issued by the State Securities Commission and who is working in a professional position in a fund management company.
4. Valid copy means a copy which is notarized [and/or] certified by a competent body of Vietnam.
5. Valid application file means a file containing all the documents required by these Regulations and with all items declared as required by law.
6. Net circulating assets means the difference between short-term assets and short-term debts.
7. Liquid capital means capital in money and assets which are convertible into cash within thirty (30) days.
8. Date of valuation means the day fixed by a fund management company to determine the net asset value of a securities investment Fund ("a Fund") or the net asset value of a securities investment company.
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Section 1. ISSUANCE OF LICENCE FOR ESTABLISHMENT AND OPERATION
Article 3. Conditions for issuance of licence for establishment and operation:
1. Having office headquarters and equipment for the professional operation including:
(a) Having the land use right for at least one year to the office headquarters, which must have safe and secure equipment;
(b) Having the minimum facilities and equipment comprising office equipment; a computer system together with software for conducting classification of investments, analysis and risk management; and a system for preserving securities.
2. Having minimum paid up charter capital equal to the level of legal capital stipulated in article 18 of Decree 14/2007/ND-CP.
3. Ensuring a sufficient number of employee are issued with a fund management practising certificate in accordance with the business plan, including at least five employees with a fund management practising certificate based at the head office.
4. The following personnel must satisify the conditions stipulated in article 10 of these Regulations and the conditions for fund management practioners stipulated by the Ministry of Finance: the director or deputy director in charge of fund management and investment portfolio management, the general director or deputy general director in charge of fund management and investment portfolio management, the head of the section in charge of fund management and investment portfolio management, and fund management practioners.
5. Conditions applicable to capital contributing individuals:
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(b) They satisfy the conditions stipulated in clause 2 of article 4 of these Regulations.
6. Conditions applicable to capital contributing legal entities:
(a) They are currently legally operating and are not prohibited from establishing and managing an enterprise in Vietnam as stipulated in clause 2(a) and (g), and in clause 4(a) of article 13 the Law on Enterprises;
(b) They satisfy the conditions stipulated in clause 3 of article 4 of these Regulations.
(c) They are not a legal entity operating in the banking finance sector, and their licence for establishment and operation, business licence or equivalent document has not been revoked.
7. Individuals stipulated in clause 3(a) and (b) of article 10 of these Regulations and organizations of which they are a major shareholder or the largest capital contributor may not be founding members contributing, or shareholders purchasing more than 5% of the charter capital or capital contribution with voting rights of the fund management company.
8. Organizations stipulated in clause 4(a) of article 13 the Law on Enterprises may not be capital contributors or purchase shares in a fund management company.
Article 4. Financial conditions for issuance of licence for establishment and operation:
1. Organizations and individuals contributing capital to establish a fund management company must use only their own capital funds to contribute capital and must not use capital entrusted for investment by, or capital obtained from other individuals or organizations.
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3. Capital contributing shareholders or members being organizations must use only legal capital sources which must be certified by an independent auditor. Organizations shall be deemed to have sufficient financial capacity to contribute capital when they satisfy the following conditions:
(a) Their equity (excluding long-term investment items) must be sufficient to make the full capital contribution as undertaken;
(b) Their net circulating assets must at least equal the amount of their capital contribution as at the date of the most recent audited annual financial statements;
(c) Their business and production has not suffered loss for the two most recent years and accumulated losses do not exceed equity as at the date of the most recent audited annual financial statements.
4. Founding shareholders or founding members must jointly register to purchase at least 20% of the charter capital in the fund management company and undertake to hold it for 3 years from the date of issuance of the licence for establishment and operation, except where it is assigned to other founding shareholders or founding members. This provision applies to any fund management company established before the Law on Securities became effective.
1. An application file for issuance of a licence for establishment and operation of a fund management company shall contain:
(a) Request for grant of a licence (on the standard form in Appendix 1 to these Regulations);
(b) Explanatory statement on material and technical facilities, showing they are adequate for the professional business activities of management of Funds and investment portfolios (on the standard form in Appendix 2 to these Regulations), and draft contract of lease of the location proposed as headquarters of the company;
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(d) List, plus summarized curriculum vitae which have been certified by the competent body (on the standard form in Appendix 4 to these Regulations), plus valid copies of people’s identity cards or passports and legal files of the proposed director or general director, of fund management practitioners, and of members of the Inspection Committee or inspectors; and copy fund management practising certificates of, or applications for same from the proposed director or general director and from fund management practitioners together with their undertakings to work for the company;
(e) List of founding shareholders or founding members and other shareholders or members (on the standard form in Appendix 3 to these Regulations), plus:
(i) Shareholders or members being individuals must provide a summarized curriculum vita which has been certified by the competent body (on the standard form in Appendix 4 to these Regulations), plus valid copy people’s identity card or passport;
(ii) Shareholders or members being organizations must provide a copy business registration certificate or licence for establishment and operation; company charter; minutes and resolution on capital contribution passed by the board of management or member's council or decision on capital contribution passed by the company owner and appointing an authorized representative; and a summarized curriculum vita which has been certified by the competent body (on the standard form in Appendix 4 to these Regulations) plus valid copy people’s identity card or passport of the authorized representative;
(f) Draft company Charter unanimously passed by all founding shareholders or founding members (on the standard form in Appendix 20 issued with these Regulations);
(g) Business operational plan for the initial three years, appropriate for the proposed professional business activities (on the standard form in Appendix 5 to these Regulations), together with professional ethics rules and internal control rules;
(h) Data proving the financial capacity of founding shareholders or founding members being individuals and proving the funding source of their capital contributions as required by article 4.2;
(i) In the case of shareholders or members being legal entities which undertake to contribute ten (10) per cent or more of the charter capital: annual financial statements for the most recent year calculated at the time of making the undertaking, certified by an independent auditor. If the auditor's certificate is qualified, such qualification must not have a major impact on the financial status of the entity. If 90 days have expired since the end of the most recent financial year, there must also be a quarterly report for the most recent quarter;
(j) In the case of legal entities which undertake to contribute less than ten (10) per cent of the charter capital, their capital must be audited, and their financial capacity and the funding source of their capital contributions as required by article 4.2 must be audited;
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2. The file stipulated in clause 1 of this article shall be prepared in two original sets, each with equal validity, and sent to the State Securities Commission.
Article 6. Procedures for issuance of licence for establishment and operation
1. Within thirty (30) days from the date of receipt of an application file, the SSC shall give approval in principle to the issuance of a licence, and if the SSC requires clarification of any matters in the application file then it shall have the right to request the representative of the founding shareholders or founding members or the person proposed to be appointed as director (general director) to explain these issues either directly [in person] or in writing. In a case of refusal to approve, the State Securities Commission shall provide a written response explaining its reasons.
2. Within six months from the date of receiving approval in principle, the applicant for the issuance of a licence must complete investment in the material and technical facilities and deposit the legal capital in an escrow account. An applicant being an organization shall be permitted to use part of the capital contribution portion of shareholders or members in order to invest in the material facilities servicing the business operation of the company. The remaining capital contribution portion must be deposited in an escrow account at a bank appointed by the SSC and such bank must certify the amount in the account. This capital amount may only be released after the SSC has officially issued the licence for establishment and operation.
3. With a time-limit of seven days from the date of receipt of confirmation about the capital amount in the escrow account from the bank, and minutes of inspection of the material facilities of the company and other valid data stipulated in article 5 of these Regulations, the SSC shall issue the licence for establishment and operation to the company. In a case of refusal, the SSC shall provide a written response explaining its reasons.
4. If there are any changes at all relating to the application file for issuance of the licence as from the date of approval in principle up until the date of officially commencing operation, the fund management company must report such change to the SSC within 3 days of its occurrence.
5. Within a time-limit of seven (7) days from the date of grant of a licence for establishment and operation, a fund management company must make an announcement of such licence on the website of the SSC and in three consecutive editions of one written or electronic newspaper legally operating in Vietnam. The announcement of the licence must contain the following main particulars:
(a) Name of the fund management company (both name in Vietnamese and name in English);
(b) Address of the head office of the company and of any branch or representative office;
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(d) Charter capital;
(e) Name of legal representative of the company.
6. Within six months from the date of issuance of the licence for establishment and operation, the fund management company must forward the SSC rules on Fund management, rules on investment portfolio management, and risk management rules. The fund management company must officially commence operation within twelve (12) months from the date of issuance of its licence.
Article 7. Naming a fund management company
1. The name of a fund management company must comply with articles 31 to 34 inclusive of the Law on Enterprises, and must contain the following elements:
(a) Type of enterprise;
(b) The words "fund management"; and
(c) A discrete name.
2. The names of any branch or representative office of a fund management company must comply with the Law on Enterprises.
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Article 8. Organization of a fund management company
1. The organizational structure of a fund management company must ensure separation and independence from the organizational structure (if any) of the owner, of founding members or founding shareholders of the company and from [the organizational structure] of other companies being affiliated persons or entities (if any).
2. A fund management company must ensure separation regarding organization and operation, information technology system and reporting system as between activities of managing assets [on the one hand] and other business operations of the same company and business activities of other organizations being affiliated persons or entities [on the other hand].
3. A fund management company must comply with the principles on corporate management stipulated in its charter consistent with the model charter set out in Appendix 20 issued with these Regulations.
A fund management company being a public company must comply with the law on corporate management applicable to public companies.
4. A member of the board of management or member's council or the chairman of any one fund management company shall not be permitted to concurrently act as a member on the board of management or member's council or the chairman of another fund management company.
5. The director (deputy director) or general director (deputy general director) in charge of management of a Fund or investment portfolio; the director of a branch; and staff managing a Fund or investment portfolio must have fund management practising certificates.
1. Fund management companies must issue internal control rules and set out professional ethics rules applicable to their employees.
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(a) To supervise and provide guidelines for observance of State regulations and laws, including the Law on Securities and other relevant legal instruments;
(b) To formulate, guide and supervise the implementation of the professional ethics rules in the company;
(c) To supervise activities with a potential conflict of interest including self-trading by the company and private transactions of employees of the company to ensure that such activities and transactions are not trading practices taking unlawful advantage of the market or are not in breach of the law on securities trading;
(d) To supervise observance of professional rules for management of Funds and entrusted assets and the implementation of other professional rules in accordance with law;
(e) To supervise the depository and separate management in independent accounts of assets and capital entrusted by each investor, assets of each Fund or each securities investment company managed by the company, and assets of the company;
(f) To supervise the valuation of the net asset value of a Fund or net asset value of a securities investment company and the valuation of fund certificates;
(g) To verify the validity, legality, truthfulness and level of prudence in fund management and management of entrusted assets and capital and in the work of accounting, statistics and preparation of financial statements;
(h) To supervise liquid capital and financial prudential limits in business and professional activities of the company; to assess financial statements, to inspect books of account and other documents of the company and management of Funds and entrusted assets at any time where deemed necessary or upon the request of the director (deputy director) or the general director (deputy general director);
(i) To formulate and propose options dealing with disputes and conflicts of interest;
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(k) Other relevant issues.
3. The internal control department shall have employees with professional qualifications in law and employees with professional qualifications and experience in accounting and auditing. Employees working for the internal control department must satisfy the following requirements:
(a) Have full capacity for civil acts and full legal capacity;
(b) Not be a person affiliated to the director (deputy director) or the general director (deputy general director), to a head of a professional section, to a major shareholder or to a member contributing more than 5% of the charter capital of the fund management company;
(c) Have a bachelor or higher degree specializing in economics or law and at least three years working experience in a professional section of a securities trading organization, financial institution or bank; and have an adequate certificate of professional qualification in securities and the securities market;
(d) The head of the internal control department must have a professional qualification in accounting and auditing;
(e) Satisfy the conditions stipulated in clause 3 of article 10 of these Regulations.
4. Fund management companies shall send the SSC the documents stipulated in clause 1 of this article and a list accompanied by curriculum vitae which have been certified by the competent body (on the standard form stipulated in Appendix 4 to these Regulations), and legal records of the employees of the internal control department mentioned in clause 3 of this article.
5. Employees working for the internal control department may concurrently work for other sections of the fund management company, but may nor conduct fund management activities or investment portfolio management for investors.
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1. A fund management practitioner must satisfy the following provisions:
(a) Have full capacity for civil acts and full legal capacity;
(b) Have at least three years working experience in the financial or banking sector;
(c) Have a fund management practising certificate issued by the SSC.
2. A person who is appointed as the director (deputy director) in charge of fund management or investment portfolio management, or the general director (deputy general director) in charge of fund management or investment portfolio management in a fund management company, or the director of a branch of a fund management company, must satisfy the following conditions:
(a) The provisions in paragraphs (a) and (c) of clause 1 of this article;
(b) Have professional qualifications in financial and banking services and at least five years working experience in the financial or banking sector.
3. The following persons shall not be permitted to act as the general director (deputy general director) or director (deputy director) in charge of fund management or investment portfolio management in a fund management company, or as director of a branch of a fund management company, or as a fund management practitioner or an employee working for the internal control department:
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(b) Persons who have been sentenced for a breach in relation to other sectors;
(c) Persons who were the owner of an enterprise, the chairman of the board of management or of the members' council or the director or general director at the time when such enterprise was declared bankrupt by a court, unless [they] participated at the request of the authorized State body in order to strengthen or re-structure such enterprise;
(d) Persons who were the legal representative of an enterprise at the time when its operation was suspended or compelled to be dissolved as a result of the commission of a serious breach of the law, unless [they] were the representative at the request of the authorized State body in order to strengthen or re-structure such enterprise;
(e) Persons prohibited from managing another enterprise as stipulated in article 13.2 of the Law on Enterprises;
(f) A securities practitioner whose practising certificate was revoked by the SSC in accordance with the provisions of article 80.1(b) of the Law on Securities or who was subject to a penalty imposed by the SSC in accordance with the law on securities and securities market within the last three years;
(g) Persons who concurrently are a member of the board of management or of the members' council or the chairman of a company or currently work for another organization having an ownership relationship with the fund management company or who concurrently work for another securities company or fund management company, or concurrently act as the director or general director of an organization offering its securities to the public or of a listed organization.
4. The documentation and procedures for issuance of a fund management practising certificate shall be subject to the regulations of the Ministry of Finance on fund management practising certificates.
Article 11. Branches of fund management companies
1. A fund management company must have approval from the SSC prior to opening or closing a branch.
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3. The establishment of a branch of a fund management company must satisfy the following requirements:
(a) The branch has headquarters and the necessary equipment to service the activities of managing assets as stipulated in article 3.1 of these Regulations;
(b) The branch has sufficient fund management staff for its business plan and at least three staff at the branch who are fund management practitioners;
(c) The director of the branch satisfies the conditions stipulated in clauses 2 and 3 of article 10 of these Regulations and other regulations of the Ministry of Finance on fund management practitioners.
4. An application file to establish a branch shall contain:
(a) Request for establishment of a branch (on the standard form in Appendix 6 to these Regulations);
(b) Minutes and decision on establishment of the branch passed by the board of management; minutes and decision on establishment of the branch passed by the members' council; or decision on establishment of the branch passed by the company owner;
(c) Business operational plan of the branch for the initial three years;
(d) Explanatory statement on material and technical facilities, showing they are adequate for the professional business activities (on the standard form in Appendix 2 to these Regulations), together with draft contract of lease of the location proposed as the branch;
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5. The SSC shall inspect the material facilities at the proposed branch of the fund management company prior to issuing a decision approving opening of the branch.
6. The branch of the fund management company must officially commence operation within six (6) months from the date of approval from the SSC.
7. An application file requesting closure of a branch shall contain:
(a) Request for closure of the branch explaining the reasons (on the standard form in Appendix 6 to these Regulations);
(b) Minutes and decision on closure of the branch passed by the board of management or by the members' council; or decision on closure of the branch passed by the company owner;
(c) Plan for dealing with still effective contracts for management of investments signed with clients.
8. Within a time-limit of fifteen (15) days from the date of receipt of a valid file and minutes of inspection of the material facilities of the branch (in the case of opening a branch), the SSC shall issue a decision approving opening or closing of the branch. In a case of refusal, the SSC shall provide a written response explaining its reasons.
9. The written approval for establishment of a branch of a fund management company shall be withdrawn in the following cases:
(a) The branch fails to commence operation within six months from the date of issuance of written approval for its establishment;
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(c) The application file for opening the branch contained false information;
(d) The operation of the branch is incorrect in terms of the objectives and items stipulated in the letter of approval to opening of the branch;
(dd) The branch no longer satisfies the conditions on an office, office facilities and personnel required for securities business activities of the branch.
Article 12. Representative offices
1. A fund management company wishing to open or close a representative office must have approval from the SSC.
2. A representative office of a fund management company shall not be permitted to conduct business activities.
3. An application file to establish a representative office shall contain:
(a) Request for establishment of a representative office (on the standard form in Appendix 6 to these Regulations);
(b) Minutes and decision on establishment of the representative office passed by the board of management or by the members' council; or decision on establishment of the representative office passed by the company owner;
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4. An application file requesting closure of a representative office shall contain:
(a) Request for closure of the representative office specifying the reasons for the closure (on the standard form in Appendix 6 to these Regulations);
(b) Minutes and decision on closure of the representative office passed by the board of management or by the members' council; or decision on closure of the representative office passed by the company owner.
5. Within a time-limit of fifteen (15) days from the date of receipt of a valid file, the SSC shall issue a decision approving opening or closure of the representative office. In a case of refusal, the SSC shall provide a written response explaining its reasons.
Article 13. Change of name or location of head office, branch or representative office
1. A fund management company must have approval from the SSC if it wishes to change the name or location of its head office or of a branch or representative office.
2. An application file requesting change of name of the company shall contain:
(a) Request for change of name specifying the reasons for the change (on the standard form in Appendix 6 to these Regulations);
(b) Minutes and resolution on change of name passed by the general meeting of shareholders or members' council; or decision on change of name passed by the company owner;
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3. An application file requesting change of location of the head office or of a branch or representative office shall contain:
(a) Request for change of location of the head office or of the branch or representative office (on the standard form in Appendix 6 to these Regulations);
(b) Minutes and resolution on change of location passed by the board of management or by the members' council; or decision on change of location passed by the company owner;
(c) Explanatory statement on material and technical facilities, showing they are adequate for the professional business activities to be conducted at the new location and draft lease (on the standard form in Appendix 2 to these Regulations);
(d) If there is to be a change of staff, list of proposed fund management staff who will work at the new location together with their curriculum vitae certified by the competent authority (on the standard forms in Appendices 3 and 4 to these Regulations).
4. Within a time-limit of fifteen (15) days from the date of receipt of a valid file and minutes of inspection of the material facilities (if any), the SSC shall issue a decision approving the change of name or location of the head office, or location of branch or representative office of the fund management company. In a case of refusal, the SSC shall provide a written response explaining its reasons.
1. A fund management company must have approval from the SSC if it wishes to temporarily cease its operation.
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(a) Request for temporary cessation of operation, specifying the reasons and the dates on which it is roposed to cease the operation and recommence the operation (on the standard form in Appendix 6 to these Regulations);
(b) Minutes and resolution on temporary cessation of operation passed by the board of management or members' council, or decision passed by the company owner;
(c) Plan for dealing with currently effective investment management contracts, including proof that the interests of investors will be protected.
3. [The original omits clause 3].
4. Within a time-limit of seven (7) days from the date of receipt of a valid file, the SSC shall issue approval for temporary cessation of operation of the company. In a case of refusal, the SSC shall provide a written response explaining its reasons.
5. The duration of a temporary cessation of operation shall not exceed sixty (60) days. After the SSC has issued approval, the fund management company must announce the temporary cessation on the mass media as stipulated in article 17 below.
6. The operation of a fund management company shall be suspended in the following circumstances:
(a) The application for issuance of, or for amending the licence for establishment and operation contained deliberately false information;
(b) After the expiry of the period of a warning stipulated in article 74 of the Law on Securities, the fund management company failed to remedy the situation giving rise to the warning and no longer satisfies the capital prudential requirements for a fund management company stipulated in article 24 below;
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(d) There was a breach of the nature or seriousness referred to in article 119.2 of the Law on Securities, or a breach adversely affecting the lawful rights and interests of investors;
(e) The company no longer meets the criteria and conditions for issuance of a licence as stipulated in article 3 of these Regulations.
7. Within a time-limit of 30 days from the date on which the SSC issues the decision suspending operation of the fund management company, the general meeting of investors or the members' council of a Fund shall be responsible to appoint a replacement fund management company. If a replacement fund management company is not appointed, then the SSC has the right to appoint another company to take over management of the Funds and investment portfolios of the suspended fund management company. In such a case, an automatic authorization relationship shall be established [as between the two companies].
8. If the operation of a fund management company is suspended, the company must continue to carry out management of its Funds and investment portfolios pursuant to contracts which it had previously undertaken to conduct or perform, until such time as there is a complete handover of rights and obligations of the Funds and investment portfolios to the replacement fund management company pursuant to article 21.3 of these Regulations.
9. The duration of a suspension shall be as decided by the SSC but shall not exceed 60 days, and the SSC shall be responsible to announce any decision on suspension of the operation of a fund management company on the website of the SSC and on the mass media.
10. The licence for establishment and operation of a fund management company shall be revoked in the following circumstances:
(a) Failure to manage Funds and investment portfolios for a period of twelve (12) months as from the date of issuance of its licence for establishment and operation;
(b) Failure to remedy the situation stipulated in clause 6(b) of this article within a period of six (6) months from the date of temporary cessation of operation;
(c) Failure to rectify a breach stipulated in sub-clauses (a), (c), (d) and (e) of clause 6 of this article within a period of sixty (60) days from the date of temporary cessation of operation;
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(e) Dissolution or bankruptcy; or division or consolidation of the company.
11. In a case where the licence of a fund management company is revoked pursuant to sub-clause (b) or (c) of article 10 of these Regulations, the company must complete all transactions in accordance with contracts which it had previously undertaken to perform. In a case where the licence of the company is revoked pursuant to sub-clause (d) or (e) of article 10 of these Regulations, the company must terminate all the activities stipulated in its licence immediately after it has completed handover of rights and obligations with respect to the Funds and investment portfolios it manages to the replacement fund management company, or to the new fund management company after completion of the division or consolidation and after the new company is licensed.
12. The SSC shall be responsible to announce revocation of the licence for establishment and operation of a fund management company on the website of the SSC and on the mass media.
1. The SSC must provide approval before a fund management company may divide, demerge, merge, consolidate, convert or dissolve.
2. An application file requesting approval for a division, demerger, merger, consolidation or conversion shall contain:
(a) Request for division, demerger, merger, consolidation or conversion (on the standard form in Appendix 6 to these Regulations);
(b) Plan on division, demerger, merger, consolidation or conversion of the company, including the method of implementation, business scope after the change and forecast financial status for the next three years; a plan on distribution and on dealing with currently effective investment management contracts and other economic contracts, and this plan must ensure it does not adversely affect the interests of current investors or of Funds which the company currently manages;
(c) Draft contract on consolidation or merger in the cases of consolidation or merger;
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(e) Legal opinion on the legality of the division, demerger, merger, consolidation or conversion;
(f) Opinion from a financial consultant or approved auditor on valuation and conversion ratio of shares or capital contribution portions in the case of a consolidation or merger;
(g) List of shareholders or members, values and percentage ownership and the charter capital of the organization to be formed after the division, demerger, merger, consolidation or conversion;
(h) List, summarized curriculum vitae and legal files certified by a competent body of members of the board of management, members' council, shareholders or capital contributing members being individuals with above 5 per cent of the charter capital, of the director (deputy director) or general director (deputy general director), of staff working in the internal audit department and fund management practitioners at the fund management company to be formed after the division, demerger, merger, consolidation or conversion, unless such staff already worked at the company prior to such division, demerger, merger, consolidation or conversion. Any new members must satisfy the conditions required by article 10 of these Regulations;
(i) Other data as required by articles 5 and 6 of these Regulations proving that the new company satisfies all the conditions for issuance of a licence for establishment and operation.
3. Within a time-limit of thirty (30) days from the date of receipt of a valid file, the SSC shall issue a decision approving the division, demerger, merger, consolidation or conversion of the company and issue a licence to the new company. In a case of refusal, the SSC shall provide a written response explaining its reasons.
4. The actual process of division, demerger, merger, consolidation or conversion shall be implemented in accordance with the Law on Enterprises and other relevant laws.
5. A fund management company shall be dissolved in the following circumstances:
(a) On expiry of the duration of its operation stipulated in the company charter, without any decision on extension;
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(c) The licence for establishment and operation of the company is revoked;
(d) The company is merged or consolidated with another fund management company.
6. An application file for dissolution shall contain the following documents:
(a) Request for dissolution, specifying the reason;
(b) Minutes and resolution of the general meeting of shareholders or the members' council, or decision of the company owner on dissolution;
(c) Plan for resolving investment management contracts and other economic contracts which are still effective. This plan must ensure that it protects the lawful rights and interests of investors and of other parties concerned.
7. Within a time-limit of 60 days from the date of receipt of a valid file, the SSC shall issue a decision approving dissolution of the company prior to expiry of the duration of its operation. In a case of refusal, the SSC shall provide a written response explaining its reasons.
8. A fund management company shall conduct procedures for dissolution or bankruptcy in accordance with the Law on Enterprises and other relevant laws.
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(a) Any organization or individual holding below 10 per cent, 25 per cent, 50 per cent or 75 per cent of the shareholding capital or the contributed capital of the fund management company intending to purchase in order to hold from 10 percent, 25 per cent, 50 per cent or 75 per cent or more of such shareholding capital or contributed capital.
(b) Any organization or individual holding from 10 per cent, 25 per cent, 50 per cent or 75 per cent or more of the shareholding capital or contributed capital of the fund management company intending to sell shares or capital contribution portion so that such entity will own less than 10 per cent, 25 per cent, 50 per cent or 75 per cent of the shareholding capital or contributed capital in the company.
2. Where the fund management company is not a public company, then no later than fifteen (15) days prior to undertaking a transaction as stipulated above, the entity involved in the transaction must forward a request via the fund management company to the SSC for approval, containing:
(a) Request for approval to assignment (on the standard form in Appendix 6 to these Regulations);
(b) Draft contract on such transaction;
(c) Summarized curriculum vita certified by a competent body enclosing copy people’s identity card or passport (on the standard form in Appendix 4 to these Regulations) of a purchasing shareholder or member being an individual, and copy business registration certificate in respect of a purchasing shareholder or member being an organization;
(d) Data proving the financial capacity of the purchasing shareholder or member as required by article 5.1(h), (i) and (j);
(e) Data proving the purchasing shareholder or member satisfies the conditions as required by article 3.7 and 3.8.
3. Within fifteen (15) days from the date of receipt of a complete application file, the SSC shall give approval to the transaction resulting in a change of ownership of shareholding or contributed capital, or in a case of refusal shall provide a written response explaining its reasons.
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5. Where the fund management company is a public company, then any entity intending to purchase voting shares leading to ownership of 25% or more of the number of currently circulating shares in the company must do so by way of a public offer to acquire as stipulated in article 32 of the Law on Securities and regulations of the Ministry of Finance on purchasing and selling share certificates and on a number of other cases of additional public offers of shares, and such entity must also implement the procedures stipulated in clauses 2, 3 and 4 of this article.
6. Where the fund management company is a public company, then any entity intending to purchase voting shares leading to ownership of 10% or more of the number of currently circulating shares in the company must also implement the provisions in clauses 2, 3 and 4 of this article.
Article 17. Announcement of changes
A fund management company must announce any change approved by the SSC on the fund management company's website or in a newspaper in the place where the change occurred, within a time-limit of 5 working days from the date of approval to such change.
Article 18. Provision on responsibilities and obligations of fund management companies
1. Fund management companies shall be permitted to conduct the following business activities:
- Management of securities investment Funds and securities investment companies;
- Management of investment portfolios.
2. A fund management company shall, as the representative of the interests of an investor, shareholder or entrusting investor as stipulated in a Fund charter or securities investment company charter or in an investment management contract, vote at the general meeting of shareholders or at meetings of the board of management of an issuing organization in which such Fund, securities investment company or entrusting investor is a shareholder; or vote at meetings of the members' council of an enterprise in which such Fund, securities investment company or entrusting investor is a capital contributor.
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(a) The amount of a bonus shall be calculated on the basis of that part of the profit which exceeds market growth rate (growth rate of market indicators) adjusted according to the investment portfolio structure of the Fund or securities investment company. The amount of a bonus must be stipulated in the Fund charter, the securities investment company charter and prospectus, and must be approved by investors.
(b) The bonus must be excluded and shall not be payable if the investment activities of previous years suffered losses not yet offset. The level of adjustment must be specified in the Fund charter, the securities investment company charter and prospectus, and must be approved by investors.
(c) A bonus shall only be payable after payment of other payable disbursements, and shall be calculated on the basis of the audited annual financial statements.
4. A fund management company must comply with the law of Vietnam, Fund charters, securities investment companies charters and investment management contracts.
5. A fund management company must act voluntarily, fairly and honestly and in the best interests of Funds, securities investment companies, investors and entrusting investors.
6. A fund management company must sign contracts with a depository bank and custodian bank containing specific clauses on the rights and obligations of the parties during management of assets of Funds, assets of securities investment companies and entrusted assets.
7. A fund management company must sign contracts with entrusting investors and with securities investment companies when providing services being management of investment portfolios and assets of securities investment companies.
8. A fund management company must invest assets of Funds and of securities investment companies and entrusted assets correctly in accordance with law, and in accordance with the charter of the relevant Fund or securities investment company or the relevant investment management contract.
9. A fund management company must compensate for loss to any Fund, any securities investment company, any investor in a Fund or securities investment company, or to any entrusting investor caused as a result of the fund management company or its staff failing to correctly discharge their obligations in accordance with law or breaching the law on securities and securities market. The amount of compensation must be approved by investors, including investors who previously held fund certificates or share certificates in the securities investment company and entrusting investors who have terminated their portfolio management contracts with the fund management company.
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11. A fund management company must have rules on distribution of traded assets which are uniform, reasonable and fair when conducting trading for Funds, for securities investment companies, for each entrusting investor and for the Company itself. These rules must be approved by entrusting investors, by the board of trustees1 of a Fund, by the board of management of a securities investment company, and by the custodian bank and depository bank. When the fund management company purchases or sells the same type of asset simultaneously for a Fund or a securities investment company which it manages and for the Company itself, traded assets shall be distributed in the following priority order:
(a) Priority distribution to the Fund/s and securities investment company/ies which the fund management company manages, ensuring fair and reasonable treatment of interests as between such Funds and securities investment companies;
(b) Distribution to the company itself only after satisfying the requirement in sub-clause (a) above.
12. A fund management company must ensure liability of third parties to which it delegates authority during management of Funds and investment portfolios, and must ensure that changes to the organizational and managerial structure of the fund management company do not adversely affect the interests of investors in Funds and in securities investment companies or the interests of entrusting investors. The above-mentioned relationship must ensure:
(a) The authorized party is a financial institution licensed to conduct the delegated task;
(b) Basic information about the authorized party is provided to the board of trustees of the Fund, the board of management of the securities investment company, and to the entrusting investor;
(c) Such delegation of authority must be approved by the board of trustees of the Fund, the board of management of the securities investment company, and by the entrusting investor;
(d) When a fund management company delegates authority, it must report to the SSC enclosing the written approval referred to in sub-clause (c) above.
13. A fund management company which delegates authority as referred to in clause 12 above shall be responsible to supervise and ensure delegated tasks are implemented quickly and in compliance with law, with the Fund charter or the securities investment company charter or in compliance with the investment management contract; and the fund management company shall bear full liability for losses arising from the delegation of authority and caused to a Fund, securities investment company or entrusting investor.
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15. A fund management company shall be responsible to keep, store and update in a prompt, complete and accurate manner a register of investors and a register of shareholders; and all the above- mentioned work may be performed by a department of the custodian bank or by a Securities Depository Centre on the basis of a contract between such bank or Centre with the fund management company; and the latter must supervise that the keeping, storing and updating of the register of investors and register of shareholders by the custodian bank or Securities Depository Centre complies with current regulations. The contents of the register of investors and of the register of shareholders shall comply with regulations of the Ministry of Finance on establishment and management of securities investment Funds and securities investment companies.
16. A fund management company shall promptly provide written notice to the custodian bank or depository bank about voting rights and instructions for voting which the fund management company authorizes such custodian bank or depository bank to exercise on behalf of and in the interests of any Fund, securities investment company or entrusting investor at a meeting of a general meeting of shareholders, board of management or members' council of an issuing organization or enterprise in which such Fund, company or investor is a shareholder or capital contributor.
17. A fund management company must promptly provide complete and essential information on a Fund, securities investment company and entrusted assets to the custodian bank or depository bank to enable the latter to exercise rights and discharge obligations in respect of such Fund, securities investment company and entrusted assets in accordance with law. At least once per month the fund management company must verify with the custodian bank or depository bank the assets of each Fund, securities investment company and investor.
18. In a case where the custodian bank discovers that a transaction involving assets of a Fund or of a securities investment company is inconsistent with law or with the Fund charter or securities investment company charter, or discovers that a transaction exceeds the authority of the fund management company and this has already been notified to the fund management company, then the fund management company must rescind such transaction or undertake to purchase or sell the assets of the Fund or securities investment company in order to restore the status quo as soon as possible. Such remedying of consequences must take place within 3 months from the date of discovery of the unlawful transaction. All expenses arising in relation to such transaction and any loss to the Fund or to the securities investment company shall be borne by the fund management company, and shall not be included in fund management expenses.
19. A fund management company must purchase professional indemnity insurance in accordance with law for fund practitioners managing Funds or it must establish a risks reserve in order to pay compensation for loss to investors as a result of breakdowns and errors by fund management practitioners during the course of professional activities.
20. A fund management company must formulate and issue professional rules applicable to each working position within the company, professional rules on internal control and professional ethics rules applicable to staff working at the company, aimed at preventing conflicts of interest which may arise within the company, between the company and Funds, between the company and securities investment companies which the company manages, between the company and entrusting investors, between clients of the company, and during transactions with affiliated persons. A provision requiring compliance with professional ethics rules shall be mandatory in the labour contracts signed by the fund management company with its employees.
21. Each year, a fund management company must hold training courses to raise the professional skills of its staff, ensuring that their professional skills and knowledge of the law is updated and is appropriate for the working tasks assigned to them. Information about annual training activities conducted by the company must be sent to the SSC at the same time as the fund management company submits its annual report on operational status.
22. A fund management company shall be responsible to prepare, issue and report to the SSC policies and professional rules on risk management which are in compliance with law, aimed at promptly analyzing, assessing and monitoring management of risks during investment activities conducted for Funds, for securities investment companies, and with entrusted assets.
23. A fund management company must comply with the regimes stipulated by law on accounting, auditing and statistics, discharge of financial obligations, and reporting and disclosure of information.
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(a) Distribution contracts;
(b) Investment management contracts;
(c) Vouchers relating to offers to sell fund certificates and securities investment company shares;
(d) Other data and vouchers stipulated by law.
25. The vouchers stipulated in clause 24 above must be archived for a minimum of fifteen (15) years, and they must be supplied to the SSC on request.
26. A fund management company shall be responsible to ensure, while managing investment portfolios and Member Funds which have foreign participation, that investment of assets by foreign investors complies with the law on restriction on the ratio of ownership (both direct and indirect) of foreigners in Vietnamese enterprises.
27. A fund management company must clearly write on the cover of a prospectus of a Fund and must include in data advertising investment, the following specific warning on risks:
"The Investment Fund (here name the Fund) described in this Prospectus is a securities investment Fund established pursuant to the Law on Securities passed by the National Assembly on 29 June 2006 and its implementing guidelines. This prospectus has been registered with the SSC on (here give the date).
The fact that the SSC has issued a certificate for a public offer of fund certificates only means that registration was implemented correctly in accordance with current regulations, and does not carry any implication guaranteeing the contents of this Prospectus or the investment objectives and strategies of the Fund.
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28. The use of entrusted assets which are mobilized in Vietnam in order to invest in securities issued by a foreign institution, in securities issued by an issuing organization which is regulated by foreign law, or in securities issued offshore must be approved by the general meeting of investors of a public Fund, by the members' council of a Member Fund, by the general meeting of shareholders of a securities investment company, or by the entrusting investor. Any offshore investment must comply with the law on offshore investments and with the law on foreign exchange control, and there must be written approval from the competent body.
1. A fund management company shall not be permitted to raise capital and manage a member fund which has from 31 or more capital contributing members.
2. A fund management company must not be an affiliated person or the owner of the custodian bank or the depository bank of a Fund or of a securities investment company which is managed by such fund management company. A member of the Board of Management, a member of the members' council, the Chairman, Director or Deputy Director, General Director or Deputy General Director or a fund management practitioner of the fund management company shall not be permitted to concurrently work for the custodian bank or depository bank of a Fund or a securities investment company which is currently managed by the fund management company, and vice versa.
3. An affiliated person of the fund management company, a fund management practitioner or a person working in the fund management company shall only be permitted to purchase or sell certificates in a public fund or shares in a public securities investment company which is managed by the company through the trading system by the method of matching orders at the Stock Exchange or a Securities Trading Centre and when permitted by the Fund Charter or the Charter of the securities investment company.
4. Except in the case of sale and purchase transactions as stipulated in clause 3 of this article, an affiliated person of the fund management company, a fund management practitioner or a person working in the fund management company must not be a party to other transactions with a public fund or Public securities investment company which is managed by the fund management company.
5. A fund management company, a person affiliated to such company, and a fund management practitioner at the company shall not be permitted to be a party to a transaction of the purchase or sale of investment assets in a portfolio which the company manages, unless such transaction is conducted through the trading system by the method of matching orders at the Stock Exchange or a Securities Trading Centre and is specifically provided for in the investment management contract and is agreed to in writing by the entrusting investor.
6. All securities transactions conducted by a member of the Board of Management, a member of the members' council, the Chairman, the Director or Deputy Director, General Director or Deputy General Director, a member of the Inspection Committee, an Inspector, a fund management practitioner or staff of the Fund Management Company must be reported to the internal control department prior to and immediately after such transaction is conducted and must be centrally managed at the company under the supervision of the internal control department. Information about the above-mentioned transactions shall comprise classes of securities, price of securities, trading time, trading methods and the total value of transactions, and shall be archived for fifteen (15) years and shall be provided to the SSC when required.
7. When the fund management company conducts the trading of assets of the Fund, of the securities investment company and entrusted assets, members of the Board of Management, members of the members' council, the Chairman, the Director or Deputy Director, the General Director or Deputy General Director, fund management practitioners and all staff of the fund management company shall not be permitted to request, require or receive, in the name of any individual or of the fund management company, any remuneration, profit or benefit derived from the implementation of transactions of the Fund assets, assets of the securities investment company or transactions of assets entrusted by a third party except for fees and bonuses specified in the Fund charter, the securities investment company charter or in the investment management contract. This provision applies to all types of member funds, public funds and securities investment companies.
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8. A fund management company shall not be permitted:
(a) To use assets of a Fund or of a securities investment company which it manages in order to invest in the same Fund or the same securities investment company;
(b) To use the assets of a Fund or of a securities investment company which it manages in order to invest in another public Fund or another public securities investment company which it also manages;
(c) To use the assets of a public Fund or of a public securities investment company in order to invest in another investment Fund or another securities investment company which it manages;
(d) To use assets of the company, or entrusted assets belonging to an investment portfolio which it manages in order to invest in public Funds or in public securities investment companies which were established in Vietnam and which it manages.
9. A fund management company shall only be permitted to use capital of the company, entrusted assets belonging to an investment portfolio, assets of a member Fund, or privately placed shares of a securities investment company in order to invest in member Funds or privately placed shares of securities investment companies established pursuant to the law of Vietnam which such fund management company manages in cases where the charter of the relevant Fund, the relevant investment management contract, or the relevant minutes of agreement on contribution so permit the fund management company to make these investments; and in this case the company shall only be entitled to the level of management fees approved by the investors.
10. A fund management company shall not be permitted to use assets of a public Fund or of a public securities investment company to make joint venture capital or associated capital contributions or to invest in such fund management company, in an economic organization being an affiliated person [entity] of the fund management company or in an economic organization being an affiliated person [entity] of a member of the Board of Management, a member of the members' council, the Chairman, the General Director or Deputy Director, the General Director or Deputy General Director of the fund management company or a fund management practitioner. The fund management company may use capital of a Member Fund or assets of entrusting investors to implement such investment activities in the case where provisions in the Fund charter, the investment management contract or the minutes of a capital contribution agreement permit the fund management company to make such investment with an appropriate level of fees for management approved by investors.
11. A fund management company shall not be permitted to use assets of a Fund or of a securities investment company or entrusted assets in order to provide a loan or to guarantee any loan of the company or of persons affiliated to the company, or to make payment of any debt of the company or of any persons affiliated to the company or to pay the debt of any other person or entity at all.
12. A fund management company must control and ensure that fees for trading assets of public Funds and of public securities investment companies are at an appropriate level and are not higher than the average level of such fees on the market.
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(a) It has at least two fund management practitioners managing the Fund with experience in managing funds and investment portfolios and who have had such work experience for at least two years;
(b) The fund management practitioners stipulated in sub-clause (a) above have not been subject to an administrative penalty in the securities and securities market sector during the course of their managing funds and investment portfolios.
14. A fund management company must comply with the restrictions on investment during management of public Funds as stipulated in Article 92 of the Law on Securities.
1. A fund management company shall only be permitted to terminate its rights and obligations owing to a fund and/or to a securities investment company in the following circumstances:
(a) The fund management company itself requests such termination pursuant to the charter of a fund or securities investment company, and such termination is agreed by the general meeting of investors or by the member's council of the fund or by the general meeting of shareholders;
(b) At the request of the custodian bank or depository bank, or at the request of the board of trustees of a fund or the board of management of the securities investment company, and the request is approved by the general meeting of investors or by the member's council or by the general meeting of shareholders;
(c) The licence for establishment and operation is revoked pursuant to article 70 of the Law on Securities;
(d) On voluntary termination of operation;
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(f) The fund management company merges or consolidates with another fund management company and the former has completed handover of rights and obligations owing to a fund or securities investment company to the new company formed after the merger or consolidation and the new company has been issued with a licence for establishment and operation. In the cases stipulated in clause 1 of this article, the rights and obligations owed to funds and/or a securities investment company by the old fund management company shall be transferred to a new company which is approved as a replacement pursuant to article 21 of these Regulations. The old fund management company must speedily transfer the whole of its source documents and other information regarding the fund and/or securities investment company to the replacement company to ensure that the latter has sufficient information to exercise the rights and discharge the obligations owed to such fund and/or securities investment company in accordance with the Law on Securities and other relevant laws.
Article 21. Change of fund management company
1. A change of fund management company may only be carried out after it is approved by the general meeting of investors or by the member's council of a fund, or by the general meeting of shareholders of the securities investment company. The new company chosen as a replacement must send the SSC the following documents:
(a) Written request to act as replacement;
(b) Request to terminate rights and obligations owing to a fund and/or securities investment company from the fund management company (in the case stipulated in article 20.1(a) of these Regulations); or
(c) Written request for replacement of the fund management company from the custodian bank, depository bank or board of trustees of a fund or board of management of a securities investment company together with a detailed report on the reasons for the change (in the case stipulated in article 20.1(b) of these Regulations); and
(d) Minutes and resolution of the general meeting of investors, member's council of a fund or the general meeting of shareholders of the securities investment company regarding the change of fund management company and selection of a replacement company;
(e) Plan on the change and method for dealing with issues regarding rights and obligations of relevant parties;
(f) Draft supervisory contract or depository contract;
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(h) Proposed new name of the fund or securities investment company (if any);
(i) Proposed date for conducting the change of fund management company.
2. Within five (5) business days from the date of approval from the SSC, the change of fund management company must be publicly announced for investors on the mass media by the custodian bank, depository bank and the new replacement fund management company.
3. The rights and obligations which the former fund management company owes to a fund and/or securities investment company shall only terminate after complete handover of such rights and obligations to the replacement fund management company, and the new replacement fund management company must send the SSC minutes of handover signed by both companies; and the former fund management company shall be liable for undischarged obligations (if any) owing to the fund and/or securities investment company.
Article 22. Provision of information to investors
1.A fund management company must ensure discharge of obligations regarding disclosure and provision of information to investors including entrusting investors as stipulated by law.
2. A fund management company must ensure all the following information is available at its head office, branches, representative offices, and offices of distribution agents, and that the information appears on the website of the company in order for investors to refer to it:
(a) Charters of funds, charters of securities investment companies, and prospectuses;
(b) Reports for the most recent month, and annual reports of funds and of securities investment companies for the most recent five (5) years;
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(d) All data, reports and contracts referred to in any prospectus;
(e) In the case of entrusting investors, the investment management contracts with the necessary information stipulated for such contracts.
3. The information stipulated in clause 2 above must be provided free of charge on the website of the fund management company.
Article 23. Increasing or reducing charter capital of a fund management company
1. A fund management company must report to the SSC at least fifteen (15) days prior to implementing an increase or reduction in its charter capital, reporting the following information:
(a) Decision passed by the general meeting of shareholders and board of management or decision passed by the member's council or company owner;
(b) Plan on the increase or reduction including information about the form of such increase or reduction, its purpose, the capital source for implementing it, the ratio of additional shares to be issued in the case of an increase, or the ratio of withdrawal or redemption in the case of the reduction of capital; and the proposed schedule for implementing same;
(c) Summarized curriculum vitae certified by a competent body (on the standard form in Appendix 4 to these Regulations) enclosing copy people’s identity cards or passports of new shareholders or members (where a fund management company which is not a public company increases its charter capital);
(d)Data proving the financial capacity of shareholders or members as required by article 5.1(h), (i) and (j) (where a fund management company which is not a public company increases its charter capital);
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2. If the increase or reduction in charter capital of a fund management company leads to a change of ownership as stipulated in article 16.1 of these Regulations, then it must be approved by the SSC. The procedures regarding approval shall be implemented as stipulated in clauses 2 to 6 inclusive of article 16 of these Regulations.
3. A fund management company shall implement an increase or reduction in its charter capital in accordance with the Law on Enterprises and other relevant laws, and if the form of such increase is a public offer of securities, then the company must also comply with the Regulations on public offers of securities. When increasing or reducing its charter capital, the fund management company must satisfy the conditions on legal capital, liquid capital, and financial safety criteria stipulated in article 24 of these Regulations.
4. Within a time frame of seven (7) working days after completing an increase or reduction in its charter capital, the fund management company must report to the SSC on the results, enclosing the following documents:
(a) A summarized report on the results of the increase or reduction in charter capital;
(b) A list of investors specifying their full name and people's identity card number or passport number in the case of individuals, or the number of the business registration certificate in the case of organizations, any bank account numbers, and contact addresses in the case of investors being individuals or head office addresses in the case of investors being organizations, the number of shares which they hold or their capital contribution portion, the ratio of ownership, and the date of registration of ownership. If the fund management company is a public company, then this list of investors must be certified by the Securities Depository Centre.
5. The paid up legal capital of a fund management company must satisfy the capital requirements stipulated in article 18.3 of Decree 14.
Article 24. Financial safety of a fund management company
1. A fund management company must ensure that its business capital reserved for financial and investment activities of the company is sourced from the paid up capital of the company and does not include any borrowings, entrusted capital or other capital appropriated from other organizations and individuals.
2. A fund management company must, during the process of its operation, continually comply with the regulations on liquid capital on the principle of ensuring that liquid capital is at least equal to 50% of the total expenses in the previous financial year in accordance with the annual financial statements audited by an independent auditor. In the case of a newly established fund management company, its liquid capital must be maintained at least equal to fifty (50) per cent of the total expenses forecast in the initial year of operation (details of this provision are set out on the standard form in Appendix 7 issued with these Regulations).
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PROFESSIONAL BUSINESS ACTIVITIES OF FUND MANAGEMENT COMPANIES
Section 1. MANAGEMENT OF SECURITIES INVESTMENT FUNDS AND SECURITIES INVESTMENT COMPANIES
Article 25. Management of securities investment funds and securities investment companies
Fund management companies shall raise capital and establish and manage securities investment funds and securities investment companies in accordance with the Regulations on establishing and managing securities investment funds and securities investment companies issued by the Ministry of Finance.
Section 2. MANAGEMENT OF INVESTMENT PORTFOLIOS
Article 26. Investment strategy
1. Before providing an investment strategy or implementing any investment for an entrusting investor, a fund management company must collate personal information about the investor and the investor shall be responsible to provide such information, aimed at understanding the financial capability of the investor, the period for conducting investments, the objective of investment, the level of risks which the investor is capable of bearing, the restrictions on investment and other investment requirements of the entrusting investor. A fund management company must, periodically and when necessary, update this information.
2. An investment strategy which the company implements in order to manage assets of an entrusting investor must be consistent with the needs of such investor on the basis of the information which he or she provides in accordance with clause 1 of this article. This investment strategy must be clear, detailed and specific, it must ensure that the entrusting investor has complete information on the type of risks which may affect profitability, complete information on investment fees which will arise, and other important relevant information. The investment strategy shall form an inseparable part of the investment management contract which the investor must sign and certify that it is consistent with his or her requirements.
3. The provision in clause 2 of this article shall not apply in a case where an entrusting investor does not wish to supply or update information stipulated in clause 1 for the fund management company. In this case, the investment management contract between the company and the entrusting investor must specify such fact, and the fund management company has the right to refuse to provide investment portfolio management services to such an investor.
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1. A fund management company shall accept the work of managing an investment portfolio on the basis of an investment management contract between the company and the investor. In addition to the contractual items agreed by the two parties in accordance with law, the contract must also contain the basic items on the standard form in Appendix 10 to these Regulations. The contract must specify the responsibilities and obligations of the fund management company and of the depository bank owed to the entrusting investor during the process of managing the assets of the entrusting investor.
2. An entrusting investor shall engage a fund management company to conduct asset investment on the investor's behalf on the basis of an investment management contract which must not contain any of the following provisions:
(a) A provision enabling the company to evade its legal liability as a result of gross negligence on the part of the company and affecting the interests of the investor;
(b) A clause limiting liability to compensate for financial obligations of the company without a legitimate reason or transferring risks from the company to the investor;
(c) A clause providing that it is mandatory for the investor to pay compensation in an unfair manner;
(d) A clause causing unfair disadvantage to the investor or creating bias or inequality as between investors.
3. In the case of an entrusting investor being an institution, the representative of the institution must have a power of attorney in order to sign the investment management contract.
4. In a case where an entrusting investor is an insurance company, in addition to compliance with the law on securities and securities market, entrusting capital and assets sourced from an insurance operation to a fund management company must comply with the relevant law in the insurance business sector. A fund management company must forward the SSC a copy of any investment entrustment contract which it signs with an insurance company.
Article 28. Distribution of assets between investment management contracts
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2. A fund management company must have a specific clause in an investment management contract about, and must provide information to an entrusting investor about the method for choosing investment assets, and the method for distributing securities to the investment account of the company and the investment account of the entrusting investor. A fund management company must ensure that investment transactions are conducted in a fair manner, without bias or priority to the interests of the company, an affiliated person or any entrusting investor.
Article 29. Implementing investments pursuant to investment management contracts
1. Prior to conducting a transaction for an entrusting investor, a fund management company must ensure there is sufficient money and assets in the investor's account in order to conduct such transaction in accordance with law.
2. A fund management company shall be permitted to conduct a transaction of the purchase or sale of investment assets between investment portfolios of the one entrusting investor which the company manages, if the transaction satisfies the following conditions:
(a) The transaction is consistent with the investment objectives and policies and the interests of the parties to the transaction;
(b) Each month, the trading terms and information about the transaction must be provided to the investor in a complete, accurate and detailed manner. Data explaining the reason for the transaction and transaction vouchers must be prepared and retained in a complete and detailed manner in order to provide them to the investor on request;
(c) An investment management contract must contain specific rules on classification, analysis, approval and issuance of an investment decision for each transaction, and must also contain principles and provisions on payment of fees for each such transaction.
3. If due to the fault of a fund management company the investment portfolio structure of any one entrusting investor exceeds the restrictions on investment stipulated in the investment management contract, then the company must amend such structure as soon as possible, and shall not be permitted to collect management fees in respect of that part of the portfolio which was prepared incorrectly in terms of the investment management contract, and the company must bear all trading fees relating to amendment of the portfolio and all other expenses which arise.
4. If a fund management company fails to conduct investments in accordance with the investment strategy stipulated in article 26 of these Regulations causing loss to an investor, then the company shall be liable to pay compensation to the investor for such loss, and the level of compensation must be approved by the investor in writing.
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1. When a fund management company manages an investment portfolio, it must open a depository account in the name of the company at a depository bank on behalf of the entrusting investor.
2. The assets of each entrusting investor must be managed in a separate account pursuant to a provision in the investment management contract, and the entrusting investor must approve such account. The investment management contract must also stipulate the relationship (if any) between the company with the depository bank and all fees and expenses payable to the depository bank in order for the client to consider and make a decision thereon.
3. The fund management company shall only be permitted to use entrusted assets in the account stipulated in clauses 1 and 2 of this article correctly in accordance with the provisions in the investment management contract or on written instructions from the entrusting investor.
4. A fund management company must prepare periodical detailed reports on an investment portfolio including other relevant information on investment activities and send it to each entrusting investor pursuant to article 32 of these Regulations.
Article 31. Depository contracts
1. A depository contract must be signed between the fund management company and a depository bank for each entrusting investor, must be consistent with the provisions in the investment management contract, and must contain the main items as stipulated on the standard form in Appendix 10 to these Regulations.
2. The fund management company must provide a copy of the depository contract to the entrusting investor on request.
Article 32. Reporting regime applicable to entrusting investors
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2. The report must contain the information set out on the standard form in Appendix 11 to these Regulations, namely the following items:
(a) The type, number and value of the assets in the portfolio at the beginning of the period;
(b) The puchasing and selling transactions during the period; and the type, quantity and value of each transaction and type of asset;
(c) The status of collection of fees during the period;
(d) The type, number and value of each type of asset in the portfolio at the end of the period.
REGIME ON REPORTING, AND ARCHIVING FILES AND VOUCHERS
Article 33. Regime on reporting and disclosure of information by fund management companies
1. A fund management company must implement the periodical reporting regime by providing monthly, quarterly and annual reports to the SSC regarding the activities of the company, the investment activities of each fund, securities investment companies and investment portfolios [which the company manages] as follows:
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(b) Report on operation or status of management of investment portfolios, provided on a monthly, quarterly and annual basis (on the standard form in Appendix 13 to these Regulations); the annual report must be audited by an independent auditor;
(c) Monthly, quarterly and anual reports on liquid capital of the fund management company (on the standard form in Appendix 7 to these Regulations);
(d) Quarterly and annual financial statements of the fund management company prepared in accordance with the law on accounting; the annual financial statements must be audited by an independent auditor.
2. A fund management company must forward the SSC monthly, quarterly and annual reports of the assets of each fund and securities investment company which it manages, as follows:
(a) Monthly, quarterly and annual reports regarding each fund and each securities investment company:
(i) Monthly, quarterly and annual reports on the assets of each fund and each securities investment company on the standard form in Appendix 14 to these Regulations;
(ii) Monthly, quarterly and annual reports on changes to net asset value of each fund and each securities investment company (on the standard form in Appendix 15 to these Regulations);
(iii) Monthly, quarterly and annual reports on the investment activities of each fund and securities investment company (on the standard form in Appendix 16 to these Regulations);
(iv) Report on status of the investment portfolio of each fund and securities investment comopany (on the standard form in Appendix 17 to these Regulations);
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(b) Financial statements of a fund and of a securities investment company: quarterly and annual financial statements of each fund and each securities investment company managed by the fund management company must be prepared in accordance with the law on accounting applicable to securities investment funds and securities investment companies. These annual financial statements must have auditing approval prior to submission to the SSC and other bodies;
(c) In a case where the fund management company represents a fund or securities investment company by voting at a meeting of the general meeting of shareholders, board of management or members' council of an enterprise in which such fund or securities investment company invests, then the fund management company shall be obliged to report matters on which it voted in the monthly report on activities of such fund or securities investment company. A fund management company must report changes to the net asset value of the fund at the same intervals at which it makes a valuation of the net asset value of the fund.
4. A fund management company must prepare a report on any assignment of a privately placed fund unit in a member fund, share or share certificate in a securities investment company within 15 days from completion of the assignment. The report must include details of the listed members and capital contributing shareholders (both before and after the assignment); the number of shares or capital contribution portion, and the ratio of such shareholding and capital contribution (both before and after the assignment); the level of change in the shareholding or capital contribution, and the form of the assignment.
5. A fund management company must provide a report to the SSC on occurrence of the following events:
(a) Change in membership of the board of management or members' council, of the chairman, director (deputy director) or general director (deputy general director) or any fund management practitioner. The report must specify the reason for the change in personnel and must name the replacement personnel;
(b) Amendments or additions to the company charter, to the charter or prospectus of any fund or any securities investment company which the fund management company manages;
(c) A report on any change to charter capital prior to implementing an increase or reduction of the charter capital of the company;
(d) Any event which may seriously affect the financial ability or investment activities of the company and of any fund or securities investment company which the company manages, or which may affect activities of managing investment portfolios.
6. The time-limits for lodging the reports stipulated in clauses 1 and 2 above shall be:
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(b) Quarterly reports on the fund management company, funds and securities investment companies must be submitted to the SSC within twenty days after the last date of the month;
(c) Annual reports on the fund management company, funds and securities investment companies must be submitted to the SSC within ninety (90) days after the last day of the financial year.
7. The time-limit for reporting the events mentioned in sub-clauses (a), (b) and (d) of clause 5 above shall be within 24 hours of the occurrence of the event, and the time-limit for reporting changes in charter capital shall be as stipulated in article 23 of these Regulations.
8. A fund management company must report to the SSC within 24 hours of discovery of any breach by the custodian bank or depository bank of a fund charter, a securities investment company charter and prospectus, the supervisory contract or depository contract, or of the law on securities and securities market.
9. A securities investment company must report to the SSC on the net asset value of a fund and of a securities investment company at the same time as it makes a public report to investors (on the standard form in Appendix 8 to these Regulations).
10. In addition to the cases stipulated in this article, in necessary cases in order to protect the general interest and the interests of investors, the SSC may require a fund management company to report on activities of the company.
11. On receipt of a request as stipulated in clause 10 above, the fund management company must report to the SSC within 48 hours.
12. All reports sent to the SSC by fund management companies as stipulated in this article must be sent in the form of an electronic data file.
13. Fund management companies must implement the regime on disclosure of information in accordance with the law on securities.
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1. A fund management company must store and update important databases relating to the activities of the company, and it must maintain back-ups of important databases outside the office headquarters of the company.
2. Fund management companies, custodian banks and depository banks must constantly maintain in a systematic manner and ensuring clarity, accuracy and uniformity, data relating to the following:
(a) Offers of fund certificates and shares in securities investment companies;
(b) Activities regarding registration of ownership;
(c) Financial statements, invoices and accounting source documents regarding transactions of assets of funds and securities investment companies for the entire duration of operation of such funds and companies; and data relating to the assets and trading for entrusting investors during the entire effective term of the contracts signed with such clients;
(d) Invoices, source documents, databases and other data evaluating the price of all types of securities and used to make net asset valuations of funds, securities investment companies, investment portfolio assets and fund certificates;
(e) Rules on conducting valuations, preparation of overall reports on making valuations, and compliance with law.
3. Fund management companies, custodian banks and depository banks must periodically and regularly inspect and check investment portfolios, data and vouchers on trading and registration of ownership, accounting books, and accounting vouchers and data relating to assets and trading for funds, securities investment companies and entrusting investors; ensuring that these items balance and are consistent with the provisions in the fund charters, charters of the securities investment companies and prospectuses, investment management contracts, and are in conformity with the law on accounting.
4. All data stipulated in clauses 1, 2 and 3 of this article must be archived for 15 years after termination of activities of the fund or securities investment company or after termination of the investment management contract with the client.
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INSPECTIONS, SUPERVISION, AND DEALING WITH BREACHES
Article 35. Inspections and supervision
Fund management companies, fund management practitioners, custodian banks and depository banks shall be subject to supervision by the SSC and other competent bodies in accordance with law.
Article 36. Dealing with breaches
Any Fund management company, fund management practitioner, depository bank or custodian bank which breaches the provisions of law in the securities and securities market sector shall be deal with in accordance with current regulations.
ORGANIZATION OF IMPLEMENTATION
1. Any organization or individual owning more than the percentage shareholding or capital contribution portion in a fund management company as stipulated in article 18.7 of Decree 14 must adjust such ownership ratio in accordance with Decree 14 and report to the SSC thereon within six (6) months from the date on which these Regulations take effect.
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3. Fund management companies, depository banks and custodian banks must adjust their relevant activities or operation for compliance with these Regulations and report thereon to the SSC within six (6) months from the date on which these Regulations take effect.
FOR THE MINISTER OF FINANCE
DEPUTY MINISTER
Tran Xuan Ha
LIST OF APPENDICES
(Only Appendix 20 has been translated)
No.
Description
Notes
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Request for grant of a licence for establishment and operation ofa fund management company.
2.
Explanatory statement on material and technical facilities, showing they are adequate for the professional business activities of management of securities investment funds and management of securities investment portfolios.
3.
List of shareholders or capital contributing members.
4.
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5.
Business operational plan.
6.
Request for approval to changes of name, location; to division, demerger, merger, consolidation or conversion of form; etc.
7.
Provisions on liquid capital of a fund management company.
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8.
Report assessing net asset value of a public Fund and of a public securities investment company.
9.
Main contents of an investment portfolio management contract.
10.
Contents of a depository contract during portfolio management activities.
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Report on investment portfolio status to be sent to investors.
12.
Report on monthly, quarterly and annual operational status of a fund management company.
13.
Report on operational status of management of an investment portfolio.
14.
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15.
Report on change to net asset value of each fund and securities investment company managed by the fund management company.
16.
Monthly, quarterly and annual report on investment activities of each fund and securities investment company managed by the fund management company.
17.
Report on investment portfolio status of each fund and securities investment company managed by the fund management company
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18.
Report on a number of indicators during operation of each fund and securities investment company managed by the fund management company.
19.
Main contents of a depository file with a custodian bank and fund management company.
20.
Model Charter of a Fund Management Company
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APPENDIX 20
(Issued with the Regulations on Organization and Operation of Fund Management Companies)
MODEL CHARTER OF A FUND MANAGEMENT COMPANY
SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom – Happiness
*****************
LEGAL BASES:
Pursuant to the Law on Enterprises 60/2005/QH11 passed by the National Assembly of the Socialist
Republic of Vietnam on 12 December 2005, and its implementing guidelines;
Pursuant to the Law on Securities 70/2006/QH11 passed by the National Assembly of the Socialist
Republic of Vietnam on 29 June 2006 and effective as from 1 January 2007;
Pursuant to Decree 14-2007-ND-CP of the Government dated 19 January 2007 making detailed provisions for implementation of the Law on Securities;
Chapter I
GENERAL PROVISIONS
Article 1. Definitions
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(a) The Company means (name of the company) Fund Management Shareholding2 (or Limited Liability) Company.
(b) Charter capital means the amount of capital the shareholders (members) contribute or the company owner assigns to the company and which is recorded in the company Charter.
(c) Law on Securities means the Law on Securities 70/2006/QH11 passed by the National Assembly of the Socialist Republic of Vietnam on 29 June 2006.
(d) Law on Enterprises means the Law on Enterprises 60/2005/QH11 passed by the National Assembly of the Socialist Republic of Vietnam on 12 December 2005.
(e) Date of establishment means the date on which the company was issued with its licence for establishment and operation.
(f) Law means all legal instruments stipulated in article 1 of the Law on Promulgation of Legal Instruments issued on 12 November 1996.
(g) Manager of the company means the chairman of the Members’ Council, chairman of the company, chairman of the Board of Management, a member of the Board of Management, a member of the Members’ Council, the director or general director and other managerial positions as stipulated in the company Charter.
(h) Affiliated persons means organizations and individuals related to each other as stipulated in article 6.34 of the Law on Securities.
(i) Vietnam means the Socialist Republic of Vietnam.
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(k) LL means limited liability.
(l) …..[blank]
(m) …..[blank]
2. In this Charter, references to any clause or document include any amendment to or replacement of such clause or document.
3. Headings are for reference only and shall not affect the meaning in this Charter. Words and expressions defined in the Law on Securities and the Law on Enterprises shall carry a similar meaning in this Charter unless that would contradict the subject matter or context in this Charter.
Article 2. Name of the Company
1. The Vietnamese name of the Company is ……..
2. The English name of the Company is (name of the company) Fund Management Limited (or Shareholding) Company.
3. The trading name of the Company is (name of the company) Fund Management Company.
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5. Any change of name of the Company must be approved by the SSC.
Article 3. Form of ownership and extent of liability
1. The Company is organized in the form of a limited liability (or shareholding) company, established and operating pursuant to the law of Vietnam on the terms and conditions set out in this Charter.
2. The Company owner (if a one member limited liability company) and members/shareholders contributing capital to establish the company shall be liable for the debts and other asset obligations of the company within the scope of the amount of their capital contribution/amount of charter capital of the company.
3. The Company is a legal entity with its own seal and bank account and has financial autonomy.
4. The Company is established on the basis of voluntary capital contributions from the shareholders/members/Company owner.
Article 4. Address of head office, branches and representative offices (house number, name of street, ward, district, city or province must be clearly stated)
1. Registered head office of the company:
- Address:
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- Fax number:
- Website (if any):
2. Branch of the company:
- Address:
- Telephone number:
- Fax number:
3. Representative office of the company:
- Address:
- Telephone number:
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4. The Company may, depending on its actual operational situation, open branches and representative offices and change the location of its head office, branches and representative offices. The opening of a branch or representative office or a change of location of the head office or of a branch or of a representative office must have written approved from the SSC.
Article 5. Objectives of operation and business sectors
1. Objectives of operation:
2. Business sectors:
The Company is permitted to conduct the business activities stipulated in its licence for establishment and operation issued by the SSC, including:
- Management of securities investment funds;
- Management of investment portfolios.
Article 6. Duration of operation
The duration of operation of the Company is … years (or is for an unlimited duration) commencing from the date on which the company was issued with its licence for establishment and operation, and this duration may be extended in accordance with law at the time of expiry except in the case of termination of operation pursuant to a decision of the General Meeting of Shareholders/Members’ Council/Company owner or pursuant to a decision of a competent State body.
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The director or general director/chairman of the Board of Management/chairman of the Members’ Council/chairman of the company is the legal representative of the Company with the rights and obligations stipulated in the company Charter.
Chapter II
CHARTER CAPITAL – SHARES – SHARE CERTIFICATES – SHAREHOLDERS – CAPITAL CONTRIBUTING MEMBERS – OWNER OF THE COMPANY
Article 8. Charter capital and increase or decrease in charter capital
1. The charter capital of the Company is …… VND contributed in cash by the shareholders/members/Company owner.
2. The charter capital of the Company may be increased or decreased depending on the business and investment needs and operational scale of the Company, consistent with current regulations.
3. The Company may increase its charter capital in the following forms:………..
4. The Company may decrease its charter capital in the following forms:………..
5. The Company must report to the SSC before and after an increase or decrease in its charter capital and must ensure any increase or decrease in charter capital satisfies the relevant law.
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[Articles 9 to 24 are applicable to a Shareholding Company:]
Article 9. Shares of the Company
1. The shareholding Company must have ordinary shares. Owners of ordinary shares shall be ordinary shareholders.
2. The shareholding Company may have preference shares. Owners of preference shares shall be called preference shareholders.
Preference shares shall be of the following classes:
(a) Voting preference shares;
(b) Dividend preference shares;
(c) Redeemable preference shares;
(d) Other preference shares stipulated in the company Charter.
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4. Persons who are entitled to purchase dividend preference shares, redeemable preference shares and other preference shares shall be stipulated in the company Charter or decided by the General Meeting of Shareholders.
5. Each share of the same class shall entitle its holder to the same rights, obligations and interests.
6. Ordinary shares may not be converted into preference shares. Preference shares may be converted into ordinary shares pursuant to a resolution of the General Meeting of Shareholders.
Article 10. Offer for sale and assignment of shares
1. The Board of Management shall determine the timing and method of and the price at which shares shall be offered for sale for the number of shares which may be offered for sale. The price at which shares shall be offered shall not be lower than the market price at the time of offering or the most recently recorded value in the books of shares, except in the following cases:
(a) Initial offering of shares to persons other than founding shareholders;
(b) Shares offered to all shareholders in proportion to the respective numbers of shares they currently hold in the company;
(c) Shares offered to brokers or underwriters. In this case, the specific amount of discount or rate of discount must be approved by the shareholders representing at least seventy five (75) per cent of the total number of shares with voting rights;
(d) Other cases and the rates of discount in such cases shall be stipulated in the company Charter.
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(a) The company must notify shareholders in writing by a method guaranteed to reach their permanent addresses. The notice must be published on newspaper in three consecutive issues within ten (10) working days from the date of notification.
(b) The notice must contain full name, permanent address, nationality, number of people’s identity card, passport or other lawful personal identification in respect of a shareholder being an individual; name, permanent address, nationality, number of decision on establishment or number of business registration in respect of a shareholder being an organization; the current number of shares and percentage of shares of shareholders in the company; total number of shares intended to be issued and number of shares for which a shareholder is entitled to subscribe; offered selling price of shares; time-limit for registration to subscribe; full name and signature of the legal representative of the company. The time-limit stated in the notice must be reasonable for shareholders to register to subscribe for shares. The notice must be accompanied by a registration form for share subscription issued by the company.
(c) Shareholders have the right to transfer their priority right in subscribing for shares to other people.
(d) If a registration form for share subscription is not sent to the company within the notified time- limit, the relevant shareholder shall be deemed as having rejected the priority right for subscription. Where shareholders and transferees of priority rights for subscription do not register to subscribe for all the shares intended to be issued, the remaining number of shares intended to be issued shall be managed by the Board of Management. The Board of Management may distribute such shares to shareholders of the company or to other people in a reasonable manner with conditions not more favourable than the conditions offered to shareholders, except where otherwise approved by the General Meeting of Shareholders or where shares are sold via the Stock Exchange or a Securities Trading Centre.
3. Shares shall be deemed to have been sold upon full payment and correct and full entry of the particulars on the purchaser stipulated in clause 2 of article 16 of this Charter in the register of shareholders; from such point of time, the purchaser of shares shall become a shareholder of the company.
4. After shares are sold, the company must issue and deliver share certificates to the purchasers. A company may sell shares without delivering share certificates. In this case, the particulars about a shareholder stipulated in clause 2 of article 16 of this Charter recorded in the register of shareholders shall be sufficient to certify the ownership of shares of such shareholder in the company.
5. Shares may be freely assigned, except in the cases stipulated in clause 4 of article 17 and clause 3 of article 20 of this Charter. Assignment shall be conducted in writing by normal methods or by hand delivery of share certificates. Assignment documents must be signed by the assignor and the assignee or their authorized representatives. The assignor shall remain the owner of the relevant share until the name of the assignee is registered in the register of shareholders.
Where only a number of shares in a share certificate indicating names are assigned, the old share certificate shall be cancelled and the company shall issue a new share certificate recording the number of shares assigned and the remaining number of shares.
6. The conditions, methods and procedures for offering shares to the public shall comply with the law on securities.
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1. Redemption of shares upon demand by shareholders:
- A shareholder voting against the re-organization of the company or against a change to the rights and obligations of shareholders stipulated in the company Charter may demand the company to redeem its shares. Such demand must be made in writing and specify the name and address of the shareholder, the number of shares of each class, the intended selling price, and the reason for demanding redemption by the company. Such demand must be sent to the company within ten (10) working days from the date on which the General Meeting of Shareholders passed a decision on a matter referred to in this clause.
- The company must redeem shares upon demand by the shareholder as stipulated in clause 1 of this article at the market price or the price determined on the basis of the principles stipulated in the company Charter within a period of ninety (90) days from the date of receipt of the demand. Where there is disagreement relating to the price, such shareholder may sell shares to other people or the parties may request valuation by a professional valuation organization. The company shall recommend at least three professional valuation organizations for the shareholder to select from and such selection shall be the final decision.
2. Redemption of shares pursuant to a decision of the Company:
The Company may redeem no more than thirty (30) per cent of the total number of ordinary shares sold, and part or all of the dividend preference shares sold in accordance with the following provisions:
(1) The Board of Management has the right to decide on redemption of more than ten (10) per cent of the total number of shares of each class already sold within each period of twelve (12) months. In other cases, redemption of shares shall be decided by the General Meeting of Shareholders.
(2) The Board of Management shall decide on the price for redemption of shares. The price for redemption of ordinary shares shall not be higher than the market price at the time of redemption, subject to the exception in clause 3 of this article. In respect of shares of other classes, unless otherwise provided in the company Charter or agreed between the Company and the relevant shareholders, the price for redemption shall not be lower than the market price;
(3) The Company may redeem shares of each shareholder in proportion to the number of shares each holds in the company. In this case, the decision to redeem shares of the company shall be notified by a method guaranteed to reach all shareholders within thirty (30) days from the date on which such decision is passed. The notice must include the name and address of the head office of the company, total number of shares and class of shares to be redeemed, price for redemption or principle for determination of the price for redemption, procedures and time- limit for payment, and procedures and time-limit for shareholders to offer to sell their shares to the company.
Shareholders who agree to have their shares redeemed must send an offer to sell their shares by a method guaranteed to reach the company within thirty (30) days from the date of notice. The offer must include full name, permanent address, number of people’s identity card, passport or other lawful personal identification in respect of a shareholder being an individual; name, permanent address, nationality, number of decision on establishment or number of business registration in respect of a shareholder being an organization; number of shares owned and number of shares offered; payment methods; signature of the shareholder or the legal representative of the shareholder. The Company shall only redeem offered shares within the above mentioned time-limit.
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1. The Company may only pay shareholders for redeemed shares in accordance with article 11 of this Charter if, after such redeemed shares are paid for, the company shall still be able to satisfy in full its debts and other property obligations.
2. All shares redeemed in accordance with article 11 of this Charter shall be considered shares not yet sold amongst the shares which may be offered for sale.
3. Share certificates certifying the ownership of redeemed shares must be destroyed immediately after the corresponding shares are paid for in full. The chairman of the Board of Management and the director or general director must be jointly liable for any loss caused to the Company by failure to destroy or delayed destruction of share certificates.
4. After the redeemed shares are fully paid for, if the total asset value recorded in the accounting books of the Company is reduced by more than ten (10) per cent, the company must notify all creditors thereof within fifteen (15) days from the date on which the redeemed shares are fully paid for.
Article 13. Inheritance of shares
Inheritance of shares of the Company shall be implemented in accordance with current regulations.
Article 14. Issuance of bonds
1. The shareholding company may issue bonds, convertible bonds and other classes of bonds in accordance with law and the company Charter.
2. The company may not issue bonds in the following cases except where otherwise stipulated by the law on securities:
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(b) The average after tax profit rate of the three previous consecutive years is not higher than the interest rate intended to pay for the bonds to be issued.
The issue of bonds to creditors being selected financial institutions is not restricted by the provisions in sub-clauses (a) and (b) of this clause.
3. Where it is not otherwise stipulated in the company Charter, the Board of Management has the right to make decisions on the class of bonds, total value of bonds and timing of issue, but must report to the General Meeting of Shareholders at its next meeting. The report must be accompanied by documents and a file to explain the decision of the Board of Management on issuing bonds.
Article 15. Share certificates
1. Share certificates may or may not indicate names. A share certificate of the company must contain the following main particulars:
(a) Name and address of head office of the company;
(b) Number and date of issuance of the licence for establishment and operation;
(c) Number of shares and class of shares;
(d) Par value of each share and total par value of shares included in the share certificate;
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(e) Summary of procedures for share assignment;
(g) Sample signature of the legal representative and seal of the company;
(h) Registration number in the register of shareholders of the company and date of issuance of the share certificate;
(i) Preference share certificates shall also include other details as stipulated in articles 20, 21 and 22 of this Charter.
2. Errors in the content and form of a share certificate issued by the company shall not affect the rights and interests of its owner. The chairman of the Board of Management and the director or general director shall be jointly liable for any loss caused by such errors to the company.
3. Where a share certificate is lost, torn, burnt or otherwise destroyed in another form, the company shall reissue the shareholder with a share certificate at the request of such shareholder.
A request of a shareholder must contain the following undertakings:
(a) That the share certificate has really been lost, torn, burnt or otherwise destroyed; in the case of loss, it is additionally undertaken that all best efforts have been exercised to look for the share certificate and if found, such share certificate shall be returned to the company for destruction;
(b) That (the shareholder) shall be responsible for any disputes arising from the re-issue of a new share certificate.
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4. If share certificates of the company are listed on the securities market, then registration of share certificates shall be governed by the law on securities.
Article 16. Register of shareholders
1. A shareholding company shall establish and maintain a register of shareholders from the date of issuance of its licence for establishment and operation. The register of shareholders may be in the form of a document or electronic data files, or both.
2. The register of shareholders must contain the following main particulars:
(a) Name and address of head office of the company;
(b) Total number of shares which may be offered for sale, classes of shares which may be offered for sale and number of shares of each class which may be offered for sale;
(c) Total number of shares of each class already sold and value of paid-up share capital;
(d) Full name, permanent address, nationality, number of people’s identity card, passport or other lawful personal identification in respect of a shareholder being an individual; name, permanent address, nationality, number of decision on establishment or number of business registration in respect of a shareholder being an organization;
(dd) Number of shares of each class of each shareholder and date of share registration.
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Article 17. Shareholders
1. A shareholder of the Company means a legal entity or individual owning at least one issued share of the Company.
2. A founding shareholder of the Company means a shareholder participating in the formulation, passing and signing of the initial company Charter.
3. A founding shareholder must undertake to contribute …% charter capital in ….VND, equivalent to .…ordinary shares (founding shareholders must register to contribute at least twenty per cent of the charter capital of the Company).
4. Right to assign shares:
Founding shareholders shall not be permitted to assign their shares within 3 years from the date of issuance of the licence for establishment and operation, except where they are assigned to other founding shareholders of the Company.
5. Structure of capital contribution by founding shareholders:
No.
Details (name, head office address, business registration certificate of legal entity); name, residential address, ID or passport number of individual)
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Percentage capital contribution:
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1. Ordinary shareholders shall have the following rights:
(a) To attend and express opinions at the General Meeting of Shareholders and to exercise the right to vote directly or through an authorized representative; each ordinary share shall carry one vote;
(b) To receive dividends at the rate decided by the General Meeting of Shareholders;
(c) To be given priority in subscribing for new shares offered for sale in proportion to the number of ordinary shares each shareholder holds in the company;
(d) To freely assign their shares to other shareholders and to non-shareholders;
(dd) To sight, look up and make an extract of information in the list of shareholders with voting rights and to request amendment of incorrect information;
(e) To sight, look up and make an extract or copy of the company Charter, the book of minutes of meetings of the General Meeting of Shareholders and resolutions of the General Meeting of Shareholders;
(g) Upon dissolution or bankruptcy of the company, to receive a part of the remaining assets in proportion to the number of shares contributed to the company;
(h) Other rights stipulated in this company Charter.
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(a) To nominate candidates to the Board of Management and the Inspection Committee (if any);
(b) To sight and make an extract of the book of minutes and resolutions of the Board of Management, mid-year and annual financial statements according to the forms of the Vietnamese accounting regime and reports of the Inspection Committee;
(c) To request the convening of a General Meeting of Shareholders in the case stipulated in clause 3 of this article;
(d) To request the Inspection Committee to inspect each particular issue relating to the management and administration of the operation of the company where it is considered necessary. The request must be in writing, must contain the full name, permanent address, nationality, number of people’s identity card, passport or other lawful personal identification of a shareholder being an individual; name, permanent address, nationality, number of the decision on establishment or number of business registration of a shareholder being an organization; number of shares and time of registration of shares of each shareholder, total number of shares of the group of shareholders and the percentage of ownership in the total number of shares of the company; issues to be inspected and purposes of the inspection;
(dd) Other rights stipulated in this company Charter.
3. A shareholder or a group of shareholders stipulated in clause 2 of this article shall have the right to request the convening of a General Meeting of Shareholders in the following cases:
(a) The Board of Management makes a serious breach of rights of shareholders, obligations of managers or makes a decision which falls outside its delegated authority;
(b) The term of the Board of Management has expired for more than six months and no new Board of Management has been elected to replace it;
(c) Other cases as stipulated in the company Charter.
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4. Except where otherwise stipulated in the company Charter, the nomination of candidates to the Board of Management and the Inspection Committee stipulated in sub-clause (a) of clause 2 of this article shall be carried out as follows:
(a) Ordinary shareholders who voluntarily form a group which satisfies the stipulated conditions to nominate candidates to the Board of Management and the Inspection Committee must notify attending shareholders of the group formation no later than the beginning of the General Meeting of Shareholders;
(b) Based on the number of members of the Board of Management and the Inspection Committee, the shareholders or group of shareholders stipulated in clause 2 of this article shall have the right to nominate one or more persons as decided by the General Meeting of Shareholders as candidates to the Board of Management and the Inspection Committee. Where the number of candidates nominated by a shareholders or group of shareholders is lower than the number of candidates they are entitled to nominate as decided by the General Meeting of Shareholders, the remaining candidates shall be nominated by the Board of Management, the Inspection Committee and other shareholders.
Article 19. Obligations of ordinary shareholders
1. To pay in full for the shares subscribed for as undertaken, in accordance with the law on securities and securities market; to be liable for debts and other property obligations of the company within the amount of capital contributed to the company.
Not to withdraw the capital contributed by ordinary shares from the company in any form, except where shares are redeemed by the company or other persons. Where a shareholder withdraws a part or all of the share capital contributed not in accordance with this clause, members of the Board of Management and the legal representative of the company shall be jointly liable for debts and other property obligations of the company within the value of shares withdrawn.
2. To comply with the Charter and the internal management rules of the company.
3. To observe decisions of the General Meeting of Shareholders and the Board of Management.
4. To perform other obligations as stipulated in this company Charter.
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(a) Breaches the law;
(b) Conducts business and other transactions for the personal benefit of himself or herself or other organizations or individuals;
(c) Pays debts prematurely before the company is likely to be in financial danger.
Article 20. Voting preference shares and rights of voting preference shareholders
1. A voting preference share is a share which shall carry more votes than an ordinary share. The number of votes per voting preference share is stipulated in the Charter at…).
2. Voting preference shareholders shall have the rights:
(a) To vote on matters which fall within the authority of the General Meeting of Shareholders with the number of votes in accordance with clause 1 of this article;
(b) Other rights as ordinary shareholders, subject to the exception in clause 3 of this article.
3. Voting preference shareholders may not assign such shares to other persons.
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1. A dividend preference share is a share for which dividend shall be paid at a rate higher than that paid for an ordinary share or at an annual fixed rate. Annually paid dividends shall include fixed dividends and bonus dividends. Fixed dividends shall not depend on the outcome of the business of the company. The specific rate of fixed dividends and method for determination of bonus dividends shall be stated in dividend preference share certificates.
2. Dividend preference shareholders shall have the following rights:
(a) To receive dividends at the rates stipulated in clause 1 of this article;
(b) Upon dissolution or bankruptcy of the company, to receive a part of the remaining assets in proportion to the number of shares contributed to the company after the company has paid in full its creditors and redeemable preference shareholders;
(c) Other rights as ordinary shareholders, subject to the exception in clause 3 of this article.
3. Dividend preference shareholders shall not have the right to vote, the right to attend General Meetings of Shareholders or the right to nominate candidates to the Board of Management and the Inspection Committee.
Article 22. Redeemable preference shares and rights of redeemable preference shareholders
1. A redeemable preference share is a share which shall be redeemed by the company at any time upon demand by its owner or in accordance with the conditions stated in the redeemable preference share certificate.
2. Redeemable preference shareholders shall have other rights as ordinary shareholders, subject to the exception in clause 3 of this article.
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Article 23. Payment of dividends
1. Dividends paid to preference shares shall be in accordance with the conditions applied separately to each type of preference share.
2. Dividends paid to ordinary shares shall be determined on the basis of the net profit performed and payment for dividends shall be sourced from profits retained by the company. A shareholding company may only pay dividends to shareholders when the company has fulfilled its tax obligations and other financial obligations in accordance with law; has appropriated all funds of the company and fully covered previous losses in accordance with law and the company Charter; and upon payment of all intended dividends, the company is still able to satisfy its debts and other property obligations which become due.
Dividends may be paid in cash, by shares of the company or by other assets stipulated in the company Charter. Where payment is made in cash, it must be made in Vietnamese dong and may be made by cheque or money order posted to the permanent address of shareholders.
Dividends may be paid by bank transfer where the company has sufficient bank details of a shareholder to directly transfer [dividends] to such shareholder’s bank account. If the company has made a bank transfer based on the exact banking details as informed by a shareholder, the company shall not be liable for any loss arising from such transfer.
3. The Board of Management shall prepare a list of shareholders to be paid dividends and determine the rate of dividend paid for each share and the time-limit and method of payment no later than thirty (30) days prior to each payment of dividends. The notice on payment of dividends must be sent by a method guaranteed to reach the registered addresses of all shareholders no later than fifteen (15) days prior to the actual payment of dividends. The notice must specify the name of the company; full name, permanent address, nationality, number of people’s identity card, passport or other lawful personal identification in respect of a shareholder being an individual; name, permanent address, nationality, number of decision on establishment or number of business registration in respect of a shareholder being an organization; the number of shares of each class held by such shareholder, the dividend rate for each share and the total dividends to be paid to such shareholder, and the time and method for payment of dividends; full name and signature of the chairman of the Board of Management and the legal representative of the company
4. Where shares are assigned between the completion of the list of shareholders and the time of payment of dividends, the assignor shall receive the dividends from the company.
Article 24. Recovery of money paid for redeemed shares or paid as dividends
Where the Company pays shareholders for redeemed shares not in accordance with clause 1 of article 12 or pays dividends not in accordance with article 23 of this Charter, all shareholders must surrender to the company the amount of money or other assets they received otherwise they shall be jointly liable with members of the Board of Management for all debts or other property obligations of the company within the scope of the money and assets paid to them.
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LIMITED LIABILITY COMPANY WITH TWO OR MORE MEMBERS:
[Articles 25 to 31 are applicable to a Limited Liability Company with Two or More Members:]
Article 25. Members of the company
1. The Company is established by the following members:
(a) (Here list the) full name, permanent address, nationality, number of people’s identity card in respect of an individual; permanent address; amount of contribution:
……….
……….
……….
(b) (Here list the) name of company, head office address, nationality, number of establishment decision or number of business registration; and full name, permanent address, nationality, number of people’s identity card of the authorized representative; amount of contribution:
……….
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2. A founding member means a capital contributor participating in the formulation, passing and signing of the initial company Charter.
3. A founding member must undertake to contribute …% charter capital in ….VND, (founding members must register to contribute at least twenty per cent of the charter capital of the Company).
4. Right to assign shares:
Founding members shall not be permitted to assign their capital contribution within 3 years from the date of issuance of the licence for establishment and operation, except where it is assigned to other founding members of the Company.
Article 26. Paying in capital contribution and issuance of capital contribution certificates
1. Members must contribute capital in full and on time as undertaken.
2. Upon full payment of the capital contribution portion, a member shall be issued with a capital contribution certificate by the company. A capital contribution certificate shall contain the following main particulars:
(a) Name, address of the head office of the company;
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(c) Charter capital of the company;
(d) Full name, permanent address, nationality, number of people’s identity card, passport or other lawful personal identification in respect of a member being an individual; name, permanent address, nationality, number of establishment decision or number of business registration in respect of a member being an organization;
(dd) Capital contribution portion of the member and its value;
(e) Number and date of issuance of the capital contribution certificate;
(g) Full name and signature of the legal representative of the company.
3. Where a capital contribution certificate is lost, torn, burnt or otherwise destroyed, the member shall be re-issued by the company with a capital contribution certificate.
Article 27. Register of members
1. The company must establish a register of members immediately after issuance of its licence for establishment and operation. The register of members must contain the following main particulars:
(a) Name, address of the head office of the company;
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(c) Value of portion of capital contribution at the time of contribution and capital contribution of each member and time it is paid in;
(d) Signatures of members being individuals or of legal representatives of members being organizations;
(dd) Number and date of issuance of capital contribution certificates of each member.
2. The register of members shall be retained at the head office of the company.
Article 28. Rights and obligations of members
1. A member of the company shall have the following rights:
(a) To attend meetings of the Members’ Council; to discuss, make recommendations and vote on the matters within the authority of the Members’ Council;
(b) To have the number of votes in proportion to its capital contribution portion;
(c) To examine, sight, look up, copy or make an extract of the register of members, transaction monitoring records, books of account, annual financial statements, minutes of meetings of the Members’ Council and other papers and documents of the company;
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(dd) To be distributed with the remainder of the value of assets of the company in proportion to its capital contribution in the company upon dissolution or bankruptcy of the company;
(e) To be given priority in making additional capital contributions to the company upon any increase of charter capital of the company; to be entitled to assign a part or all of its capital contribution in accordance with this Charter;
(g) To make a complaint or commence a court action against the director or general director in the event that the director or general director fails to perform fully his or her obligations and causes loss to the interests of such member or of the company as stipulated by law;
(h) To dispose of its capital contribution by way of assignment, inheritance, donation or other methods in accordance with law and this Charter;
(i) Other rights stipulated in this Charter.
2. A member or a group of members holding more than twenty five (25) per cent of the charter capital or a smaller percentage as stipulated in this Charter, except as stipulated in clause 3 of this article, shall have the right to request that a meeting of the Members’ Council be convened to deal with issues within its authority.
3. Where a member of the company holds more than 75% of the charter capital and the Charter does not stipulate a smaller percentage pursuant to clause 2 of this article, the minority members joining together shall automatically have the right stipulated in clause 2 of this article.
4. Obligations of members:
(a) To contribute in full and on time the amount of capital as undertaken and to be liable for the debts and other property obligations of the company within the amount of capital they undertake to contribute to the company; not to withdraw the contributed capital from the company in any form, except in the cases provided in articles 8, 29, 30 and 31 of this Charter.
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(c) To observe decisions of the Members’ Council.
(d) To bear personal responsibility when performing the following acts in the name of the company:
(i) Breaching the law;
(ii) Conducting business or other transactions not for the interest of the company and [thereby] causing loss to other persons;
(iii) Paying debts prematurely before the company is likely to be in financial danger.
Article 29. Redemption of capital contribution portion
1. A member may demand the company redeem its capital contribution if such member votes against a decision of the Members’ Council on the following issues:
(a) Amendment of or addition to the provisions of the company Charter relating to the rights and obligations of members and of the Members’ Council;
(b) Re-organization of the company;
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The demand for redemption of shares of capital contribution must be made in writing and sent to the company within fifteen (15) days from the date on which a decision is passed on an issue stipulated in sub-clauses (a), (b) and (c) of this clause.
2. Where a member makes a demand as stipulated in clause 1 of this article and a price cannot be agreed, the company must redeem the capital contribution of such member at the market price or at the price calculated in accordance with the provisions of the company Charter within fifteen (15) days from the date of receipt of such demand. Payment may only be made if, after the full payment for such redeemed capital contribution, the company is still able to meet all debts and other property obligations.
3. Where the company does not redeem the share of capital contribution as stipulated in clause 2 of this article, such member shall have the right to assign its capital contribution to another member or a non-member.
Article 30. Assignment of capital contribution portion
Except for the case stipulated in clause 6 of article 31 of this Charter, a member of the company shall have the right to assign a part or all of its share of capital contribution to other persons in accordance with the following provisions:
1. [A member wishing to assign a part or all of its share of capital contribution] must offer to sell such share of capital contribution to all other members in proportion to their capital contribution in the company on the same terms;
2. Assignment to non-members shall only be permitted where the other members of the company do not purchase or do not purchase in full within thirty (30) days from the offering date.
Article 31. Dealing with capital contribution portion in other cases
1. In the case of a member being an individual who dies or who is declared dead by a court, his or her heir by will or by law shall be a member of the company.
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3. The capital contribution of a member shall be redeemed by the company or assigned in accordance with articles 29 and 30 of this Charter in the following cases:
(a) An heir does not wish to become a member;
(b) A donee as stipulated in article 5 of this clause is not approved by the Members’ Council to become a member;
(c) A member being an organization is dissolved or becomes bankrupt.
4. Where a member being an individual dies intestate or where his or her heir disclaims the inheritance or the right to inherit is deprived, such capital contribution shall be dealt with in accordance with civil law.
5. A member may donate a part or all of its share of capital contribution in the company to other persons.
Where the donee is a blood relation of such member up to the third generation, the donee shall automatically become a member of the company. In other cases, the donee shall only become a member of the company upon approval of the Members’ Council.
6. Where a member uses its share of capital contribution to pay a debt, the payee may use such share of capital contribution in either of the two following manners:
(a) To become a member of the company upon approval of the Members’ Council;
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A ONE MEMBER LIMITED LIABILITY COMPANY:
[Articles 32 to 34 are applicable to a One Member Limited Liability Company:]
Article 32. Rights of company owner
1. A company owner being an organization shall have the following rights:
(a) To make decisions on the contents of the company Charter, and on amendments of and additions to the company Charter;
(b) To make decisions on strategies for development and annual business plans of the company;
(c) To make decisions on the organizational and management structure of the company, to appoint, remove or dismiss managerial positions of the company;
(d) To make decisions on investment projects valued at fifty (50) or more per cent of the total asset value recorded in the most recent financial statements of the company or a smaller percentage as stipulated in the company Charter;
(dd) To make decisions on plans for market development, marketing and technology;
(e) To approve loan agreements and other contracts, as stipulated in the company Charter, valued at fifty (50) or more per cent of the total asset value recorded in the most recent financial statement of the company or a smaller percentage as stipulated in the company Charter;
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(h) To make decisions on increase in the charter capital of the company; on assignment of all or part of the charter capital of the company to other organizations or individuals;
(i) To make decisions on establishment of subsidiary companies or on capital contribution to other companies;
(k) To organize supervision and assessment of the business operation of the company;
(l) To make decisions on the use of profits after discharge of tax obligations and other financial obligations of the company;
(m) To make decisions on re-organization or dissolution and to petition for bankruptcy of the company;
(n) To recover all of the value of assets of the company after the company completes dissolution or bankruptcy [procedures];
(o) Other rights stipulated in this company Charter.
2. A company owner being an individual shall have the following rights:
(a) To make decisions on the contents of the company Charter, and on amendments of and additions to the company Charter;
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(c) To assign all or part of the charter capital of the company to other organizations or individuals;
(d) To make decisions on the use of profits after discharge of tax obligations and other financial obligations of the company;
(dd) To make decisions on re-organization or dissolution and to petition for bankruptcy of the company;
(e) To recover all of the value of assets of the company after the company completes dissolution or bankruptcy [procedures];
(g) Other rights stipulated in this company Charter.
Article 33. Obligations of company owner:
1. To contribute capital in full and on time as undertaken.
2. To comply with the company Charter.
3. To identify and separate assets of the company owner from assets of the company.
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4. To comply with the law on contract and relevant law with respect to any purchase, sale, borrowing, lending, lease or rent and other transactions between the company and the company owner.
5. To perform other obligations in accordance with this Law and the charter of the company.
Article 34. Restrictions on rights of company owner
1. A company owner may only withdraw capital by way of assignment of a part or all of the charter capital to other organizations and individuals; in the case of withdrawal of all or part of its contributed capital from the company in another form, [the company owner] shall be jointly liable for debts and other property obligations of the company.
In the case of assignment of part of the charter capital to other organizations or individuals, the company must register for conversion into a limited liability company with two or more members within a period of fifteen (15) days from the date of assignment.
2. The company owner may not withdraw profit of the company when the company has not paid in full all debts and other property obligations which become due.
Chapter III
STRUCTURE OF ORGANIZATION AND MANAGEMENT OF THE COMPANY
Article 35. Structure of organization and management of the company
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Article 36. Director or General Director
The director or general director is the person who manages the day-to-day business operation of the company, and shall be liable before the law and to the Members’ Council/chairman of the company/Board of Management for implementation of his or her rights and duties.
Article 37. Rights and duties of Director or General Director:
(a) To organize implementation of decisions of the Members’ Council/Board of Management or of the chairman of the company;
(b) To make decisions on all matters relating to the day-to-day business operation of the company;
(c) To organize the implementation of the business plan and investment plan of the company;
(d) To issue the rules on internal management of the company;
(dd) To appoint, remove or dismiss persons to managerial positions in the company, except for the positions falling within the authority of the Members’ Council/Board of Management or of the chairman of the company;
(e) To sign contracts in the name of the company, except for cases falling within the authority of the chairman of the Members’ Council or of the chairman of the company;
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(h) To submit the final annual financial statements to the Members’ Council or the chairman of the company;
(i) To recommend the plan for use of profits or for dealing with losses in business;
(k) To recruit employees;
(l) Other rights stipulated in the company Charter and in the labour contract which the director or general director enters into with the chairman of the company or the chairman of the Members’ Council.
Article 38. Criteria and conditions for being Director or General Director
1. A director or general director must meet the following criteria and conditions:
(a) To have full capacity for civil acts and not to be prohibited from management of enterprises as stipulated in the Law on Enterprises;
(b) As an individual owns at least ten per cent of the charter capital of the company or satisfies other conditions stipulated in this Charter;
(b) Not to be an affiliated person of a member of the Members’ Council or of the chairman of the company, of the person authorized to directly appoint the authorized representative or the chairman of the company;
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2. A director or general director of a subsidiary of a company in which the State owns more than fifty per cent of the charter capital must not be the spouse, parent, adoptive parent, child, adopted child or sibling of any managerial person or of a person with the power to appoint such managerial person.
Article 39. Remuneration, wages and bonuses of managers of the company
1. The Company may pay remuneration, salary and bonuses to members of the Members’ Council, the chairman of the company, members of the Board of Management, the director or general director and other managerial personnel in accordance with business results and efficiency.
2. Remuneration and salary paid to the abovenamed shall be included in business expenses in accordance with provisions of the law on corporate income tax and other relevant law, and be recorded as a separate item in annual financial statements of the company.
Article 40. Internal control
1. A company shall have an internal control department at its head office. Staff of the internal control department must satisfy requirements in accordance with the law on securities and the securities market. Staff working in the internal control department may concurrently work in other departments of the company, except for activities being the management of funds and of investment portfolios of investors.
2. The internal control department shall be responsible to supervise activities of the company, to ensure the operation of the company and its officials and staff comply with law and the professional rules of the company. Specific rights and liabilities of the internal control department shall be stipulated in the internal control rules of the company.
A. A LIMITED LIABILITY COMPANY
A LIMITED LIABILITY COMPANY WITH TWO OR MORE MEMBERS:
[Articles 41 to 50 are applicable to a Limited Liability Company with Two or More Members:]
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1. The Members’ Council shall comprise all members and shall be the highest decision-making authority of the company. Where a member is an organization, such member shall appoint its authorized representative to be on the Members’ Council. The Members’ Council shall meet at least once a year (on the ………).
2. The Members’ Council shall have the following rights and duties:
(a) To make decisions on annual business plans and development strategies of the company;
(b) To make decisions on the increase or reduction of the charter capital and on the timing and method of raising additional capital;
(c) To make decisions on the form of investment and investment projects valued at more than fifty (50) per cent of the total value of assets recorded in the most recently publicized financial statements of the company (or a smaller percentage as stipulated in this Charter);
(d) To make decisions on solutions for market development, marketing and technology transfer; to approve loan agreements and contracts for sale of assets valued at fifty (50) per cent or more of the value of assets recorded in the most recently publicized financial statements of the company (or a smaller percentage as stipulated in this Charter);
(dd) To elect, remove or discharge the chairman of the Members’ Council; to make decisions on the appointment, removal, dismissal, signing and termination of contracts of the director or general director, chief accountant (and other managerial personnel as stipulated in this Charter);
(e) To make decisions on salary, bonus and other benefits for the chairman of the Members’ Council, the director or general director, chief accountant (and other managerial personnel as stipulated in this Charter);
(g) To approve annual financial statements, plans for use and distribution of profit or plans for dealing with losses of the company;
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(i) To make decisions on the establishment of subsidiary companies, branches and representative offices
(k) To make amendments of or additions to this Charter;
(l) To make decisions on restructuring of the company;
(m) To make decisions on dissolution or to request bankruptcy of the company.
Article 42. Authorized representatives
1. The appointment of an authorized representative must be in writing, and must contain the following main contents:
(a) Name, address of the head office, nationality, number and ate of the decision on establishment or the business registration;
(b) The ratio of capital contribution, number and date of the capital contribution certificate;
(c) Full name, permanent address, nationality, number of people’s identity card, passport or other lawful personal identification of the appointed authorized representative;
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(dd) Full name and signature of the legal representative of the member and of the authorized representative of the member.
The replacement of an authorized representative must be notified in writing to the company and the SSC within seven working days from the date of the decision and shall take effect from the date the company is notified.
2. An authorized representative must meet the following criteria and conditions:
(a) Have full capacity for civil acts;
(b) Not be a person prohibited from establishing and managing enterprises;
(c) Have professional qualifications and experience in business management or in the main lines of business of the company;
(d) In the case of a subsidiary company where the State share of capital contribution or State owned capital accounts for over 50% of the charter capital, the spouse, father, adoptive father, mother, adoptive mother, children, adopted children and siblings of the managers and of the person authorized to appoint the managers of the parent company may not be appointed as authorized representative of the subsidiary company.
3. An authorized representative shall perform the rights and obligations of a member of the Members’ Council in the name of such member in accordance with this Charter. All restrictions of a member on its authorized representative in the performance of the rights of members through the Members’ Council shall have no legal validity in respect of a third party.
4. An authorized representative shall be obliged to attend all meetings of the Members’ Council; to perform the rights and obligations of a member of the Members’ Council in an honest and diligent manner and to his or her best ability for maximum protection of the legitimate interests of the member and the company.
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Article 43. Chairman of Members’ Council
1. The Members’ Council shall elect a member to be its chairman. The chairman of the Members’ Council may concurrently work as the director or general director of the company.
2. The chairman of the Members’ Council shall have the following rights and duties:
(a) To prepare or to organize the preparation of working programs and plans of the Members’ Council;
(b) To prepare or to organize the preparation of programs, agenda and documents for meetings of the Members’ Council or for collecting opinions of members;
(c) To convene and chair meetings of the Members’ Council or to organize the collection of opinions of members;
(d) To supervise or to organize the supervision of the implementation of decisions of the Members’ Council;
(dd) To sign decisions of the Members’ Council on behalf of the Members’ Council;
(e) Other rights and duties stipulated in this Charter.
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4. In his or her absence, the chairman of the Members’ Council shall authorize a member in writing to perform the rights and obligations of the chairman of the Members’ Council. Where no member is authorized or the chairman of the Members’ Council is unable to work, all other members shall elect one person from the members to temporarily perform the rights and obligations of the chairman of the Members’ Council on the principle of simple majority.
Article 44. Convening meetings of the Members’ Council
1. A meeting of the Members’ Council may be convened at any time upon request by the chairman of the Members’ Council or request by a member or a group of members as stipulated in clauses 2 and 3 of article 28 of this Charter. A meeting of the Members’ Council must be held at the head office of the company (except where this Charter otherwise stipulates).
The chairman of the Members’ Council shall prepare or organize the preparation of programs, agenda and documents and convene meetings of the Members’ Council. A member shall have the right to make written recommendation on the agenda. A recommendation must contain the following main particulars:
(a) Full name, permanent address, nationality, number of people’s identity card, passport or other lawful personal identification in respect of a member being an individual; name, permanent address, nationality, number of establishment decision or number of business registration in respect of a member being an organization; signatures of the member or authorized representative;
(b) The ratio of capital contribution, number and date of issuance of capital contribution certificate;
(c) Items recommended for inclusion in the agenda;
(d) Reason for the recommendation.
The chairman of the Members’ Council must approve a recommendation and include it in the agenda of a meeting of the Members’ Council if such recommendation contains all the stipulated particulars and is sent to the head office of the company at least one working day before the date of the meeting of the Members’ Council; where a recommendation is submitted immediately prior to a meeting, it shall be approved if the majority of the attending members so agree.
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The agenda and documents for a meeting must be sent to members of the company prior to the opening day of the meeting. Documents to be used in a meeting relating to decisions on amendments of or addition to this Charter, approval of the developmental direction of the company, approval of annual financial statements, restructuring or dissolution of the company must be sent to members no later than two working days prior to the date of the meeting. The period for sending other documents shall be stipulated by the company.
3. Where the chairman of the Members’ Council does not convene a meeting of the Members’ Council upon the request of a member or group of members as stipulated in clauses 2 and 3 of article 28 of this Charter within fifteen (15) days from the date of receipt of such request, such member or group of members shall convene a meeting of the Members’ Council; in this case, if considered necessary, they may request the SSC to supervise the organization and convening of the meeting of the Members’ Council; and at the same time, shall have the right to take legal action in their name or in the name of the company against the chairman of the Members’ Council for not performing management obligations, causing loss to their legitimate interests.
4. Where it is not stipulated in this Charter, the request to convene a meeting of the Members’ Council as provided in clause 3 of this article must be in writing and contain the following main particulars:
(a) Full name, permanent address, nationality, number of people’s identity card, passport or other lawful personal identification in respect of a member being an individual; name, permanent address, nationality, number of establishment decision or number of business registration in respect of a member being an organization; ratio of capital contribution and number and date of issuance of capital contribution certificate of each requesting member;
(b) Reason for the request to convene a meeting of the Members’ Council and the issues to be dealt with;
(c) Full name and signature of each requesting member or its authorized representative.
5. Where a request to convene a meeting of the Members’ Council does not contain all the items stipulated in clause 4 of this article, the chairman of the Members’ Council must notify the member or groups of members concerned in writing within seven working days from the date of receipt of the request.
In other cases, the chairman of the Members’ Council must convene a meeting of the Members’ Council within fifteen (15) working days from the date of receipt of the request.
Where the chairman of the Members’ Council does not convene a meeting of the Members’ Council as stipulated, he or she must bear personal responsibility before the law for any loss arising to the company and the relevant members of the company. In this case, the requesting member or group of members have the right to convene a meeting of the Members’ Council. The reasonable expenses for convening and conducting a meeting of the Members’ Council shall be reimbursed by the company.
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1. A meeting of the Members’ Council shall be conducted where the attending members represent at least seventy five (75) per cent of the charter capital (or another specific percentage as stipulated in this Charter).
2. Where a meeting does not take place because the condition stipulated in clause 1 of this article is not satisfied, the meeting may be convened for a second time within fifteen (15) days from the date on which the first meeting was intended to be opened. A meeting of the Members’ Council which is convened for a second time shall be conducted where the attending members represent at least fifty (50) per cent of the charter capital (or another specific percentage as stipulated in this Charter).
3. Where a meeting which has been convened for a second time does not take place because the condition stipulated in clause 2 of this article is not satisfied, it may be convened for a third time within ten (10) working days from the date on which the second meeting was intended to be opened.
In this case, the meeting of the Members’ Council shall be conducted irrespective of the number of attending members and of the amount of charter capital represented by attending members.
4. A member or an authorized representative of a member must attend and vote at meetings of the Members’ Council.
Article 46. Decisions of the Members’ Council
1. The Members’ Council shall pass decisions within its authority by way of voting at meetings, collecting written opinions or other forms as stipulated by the company.
Where it is not otherwise stipulated by the company, the following issues must be passed by way of voting at meetings of the Members’ Council:
(a) Amendments of or addition to the charter of the company;
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(c) Election, discharge, removal of the chairman of the Members’ Council; appointment, dismissal or removal of the director or general director;
(d) Approval of annual financial statements;
(dd) Restructuring or dissolution of the company
2. A decision of the Members’ Council shall be passed in a meeting in the following cases:
(a) It is approved by the number of votes representing at least sixty five (65) per cent of the aggregate capital of the attending members (or another specific percentage as stipulated in this Charter);
(b) In respect of decisions relating to the sale of assets valued at fifty (50) (or smaller as stipulated in this Charter) per cent or more of the total asset value recorded in the most recent financial statements of the company, the restructuring or dissolution of the company, the approval by a number of votes representing at least seventy five (75) per cent of the capital of the attending members shall be required (or a smaller percentage as stipulated in this Charter).
3. A decision of the Members’ Council shall be passed by way of collection of written opinions if it is approved by members representing at least seventy five (75) per cent of the charter capital (or a smaller percentage as stipulated in this Charter).
Article 47. Minutes of meetings of the Members’ Council
1. All meetings of the Members’ Council must be recorded in the book of minutes of the company.
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(a) Time and venue of the meeting; purpose and program of the meeting;
(b) Full name, ratio of capital contribution, number and date of issuance of capital contribution certificate of members and authorized representatives attending the meeting; full name, ratio of capital contribution, number and date of issuance of capital contribution certificate of members and authorized representatives not attending the meeting;
(c) Matters discussed and voted upon; summary of opinions of members on each of the matter discussed;
(d) Total number of votes for, against or abstentions on each matter voted upon;
(dd) Decisions passed;
(e) Full names and signatures of members and authorized representatives attending the meeting.
Article 48. Procedures for approving decisions of Members’ Council by obtaining written opinions
Where it is not otherwise stipulated by the company, the authority and procedures for collection of written opinions of members to pass a decision shall be carried out as follows:
1. The chairman of the Members’ Council makes a decision in writing on collection of written opinions of members of the Members’ Council to pass decisions within his authority;
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An opinion form must contain the following main particulars:
(a) Name, address of head office, number and date of the business registration certificate, registered business location of the company;
(b) Full name, address, nationality, number of people’s identity card, passport or other lawful personal identification, and ratio of capital contribution represented by the member of the Members’ Council;
(c) Matters on which opinions are collected and corresponding responses in the order of for, against and no opinion.
(d) Time-limit for sending the opinion form to the company;
(dd) Full names and signatures of the chairman and members of the Members’ Council.
An opinion form which contains full and accurate particulars and is sent by a member to the company within the stipulated time-limit shall be deemed valid.
3. The chairman of the Members’ Council shall organize the counting of opinion forms, prepare a report thereon and notify the results thereof and the passed resolution to members within seven working days from the time-limit for opinion forms to be sent to the company by members. The report on results of form counting must contain the main particulars stipulated in clause 2 of article 47 of this Charter.
Article 49. Obligations of members of Members’ Council, Director or General Director
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(a) To exercise the delegated rights and perform the delegated duties honestly and diligently and to his or her best ability to assure the best lawful interests of the company and the company owner;
(b) To be loyal to the interest of the company and the company owner; not to use information, know-how or business opportunities of the company; not to abuse his or her position and power nor to use assets of the company for the personal benefit of himself or herself or other organizations or individuals;
(c) To notify the company in a prompt, complete and accurate manner of any enterprises of which he or she or any affiliated person is the owner or holds shares or a controlling capital contribution. This notice shall be displayed at the head office and branches of the company;
(d) To perform other obligations stipulated by law and by the company.
2. The director or general director shall not be entitled to any pay rise or bonus when the company is unable to pay all of its due debts.
Article 50. Contracts and transactions which must be approved by the Members’ Council
1. A contract or transaction between the company and the following persons must be approved by the Members’ Council:
(a) A member, the authorized representative of a member, the director or general director (or the legal representative of the company);
(b) An affiliated person of the persons stipulated in sub-clause (a) of this clause;
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(d) An affiliated person of the persons stipulated in sub-clause (c) above; (The legal representative of the company) must send to the members of the Members’ Council, and at the same time display at the head office and branches of the company the draft of such contract or the main contents of the transaction it is intended to conduct. The Members’ Council must make a decision on approval of the contract or transaction within fifteen (15) days from the date of display; in this case, the contract or transaction shall be approved where it is so agreed by the members representing at least seventy (75) per cent of the total number of shares with voting rights. The members concerned in such contracts or transactions may not vote.
2. A contract or transaction shall be void and be dealt with in accordance with law where it is not executed in accordance with the provisions in clause 1 of this article. (The legal representative of the company), the member concerned and the affiliated persons of such member must compensate for any loss arising and return to the company any benefits gained from the performance of such contract or transaction.
A ONE MEMBER LIMITED LIABILITY COMPANY:
[Articles 51 to 55 are applicable to a One Member Limited Liability Company:]
Article 51. Members’ Council
(This article only applies when the company owner is an organization appointing two or more authorized representatives):
1. The Members’ Council shall, in the name of the company owner, organize the implementation of rights and obligations of the company owner; shall have the right to implement rights and obligations of the company in the name of the company; shall be responsible before the law and to the company owner for the implementation of delegated rights and obligations in accordance with this Charter and relevant laws.
2. The company owner shall appoint the chairman of the Members’ Council. The term of office, powers and duties of the chairman of the Members’ Council shall be as stipulated in article 43 of this Charter.
4. A meeting of the Members’ Council shall be conducted where there are at least two thirds of the members attending. Where it is not stipulated in the Charter, each member shall have an equal vote. The Members’ Council may pass a decision by way of collection of written opinions.
5. A decision of the Members’ Council shall be passed when approved by over a half of the attending members. Any amendment of, addition to the charter of the company, re-organization of the company, assignment of a part or all of the charter capital of the company must be approved by at least three quarters of the attending members.
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6. All meetings of the Members’ Council must be recorded in the book of minutes. The content of minutes of meetings of the Members’ Council shall be as stipulated in article 47 of this Charter.
Article 52. Chairman of the company
1. The chairman of the company shall, in the name of the company owner, organize the implementation of rights and obligations of the company owner; shall have the right to implement rights and obligations of the company in the name of the company; shall be responsible before the law and to the company owner for the implementation of delegated rights and obligations in accordance with this Charter and relevant laws.
2. A decision of the chairman of the company on the implementation of rights and obligations of the company owner shall take legal effect from the date of approval by the company owner (except where otherwise stipulated in this Charter).
Article 53. Inspectors
1. The company owner appoints one to three inspectors for a term not exceeding three years. Inspectors shall be responsible before the law and to the company owner for the implementation of their rights and duties.
2. Inspectors shall have the following duties:
(a) To check the lawfulness, honesty and care of the Members’ Council, the chairman of the company and the director or general director in organizing the implementation of ownership rights and in managing the business of the company;
(b) To evaluate financial statements, reports on business situations, reports on assessment of management and other reports before submitting them to the company owner or relevant State bodies; to submit evaluation reports to the company owner;
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(d) Other duties as requested or decided by the company owner.
3. An inspector shall have the right to sight any document or paper of the company at the head office or a branch or representative office of the company. Members of the Members’ Council, the chairman of the company, the director or general director and other managers shall be obliged to provide in full and on time information on the implementation of ownership rights and on management, administration and the business of the company at the request of an inspector.
4. Inspectors must meet the following criteria and conditions:
(a) To have full capacity for civil acts and not to be prohibited from management of enterprises as stipulated in the Law on Enterprises;
(b) Not to be affiliated to a member of the Members’ Council, the chairman of the company, the director or general director or the person authorized to directly appoint an inspector;
(c) To have professional qualifications or work experience in accounting and auditing or professional qualifications and practical experience in the main lines of business of the company or other criteria or conditions as stipulated by the company.
Article 54. Obligations of members of Members’ Council, Chairman of the company, Director or General Director and Inspectors
1. Members of the Members’ Council, the chairman of the company, the director or general director and inspectors shall have the following obligations:
(a) To comply with the law, this Charter and decisions of the company owner in the implementation of delegated rights and duties;
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(c) To be loyal to the interests of the company and the company owner; Not to use information, know-how, business opportunities of the company, or to abuse his or her position and power nor to use assets of the company for the personal benefit of himself or herself or other organizations or individuals;
(d) To notify the company in a prompt, complete and accurate manner of the enterprises of which he or she or any affiliated person is the owner or holds shares or a controlling capital contribution. This notice shall be displayed at the head office and branches of the company;
(dd) Other obligations stipulated by the company.
2. The director or general director shall not be entitled to any pay rise or bonus when the company is unable to pay all of its due debts.
Article 55. Contracts and transactions of the company with affiliated persons
1. Contracts and transactions between a one member limited liability company being an organization with the following subjects must be considered and voted upon by the Members’ Council or the chairman of the company, director or general director and inspectors on the principle of majority with one vote for each person:
(a) The company owner and a person affiliated to the company owner;
(b) The authorized representative, the director or general director and inspectors;
(c) An affiliated person of the persons stipulated in sub-clause (b) of this clause;
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(dd) An affiliated person of the persons stipulated in sub-clause (d) of this clause;
(The legal representative of the company) must send to the Members’ Council or the chairman of the company, director or general director and inspectors; and at the same time, display at the head office and branches of the company, the draft of such contract or contents of such transaction.
2. The contracts and transactions stipulated in clause 1 of this article may only be approved upon satisfaction of the following conditions:
(a) The parties executing a contract or performing a transaction are independent legal entities with separate rights, obligations, assets and interests;
(b) The price used in a contract or transaction is the market price at the time the contract is executed or the transaction is performed;
(c) The company owner complies with the obligations stipulated in clause 4 of article 33 of this Charter.
3. A contract or transaction shall be void and be dealt with in accordance with law if its execution or performance does not comply with clause 1 of this article. The legal representative of the company and the parties to the contract must compensate for any loss arising and return to the company any benefits gained from the implementation of such contract or transaction.
4. A contract or transaction between a one member limited liability company being an individual with the company owner or an affiliated person of the company owner must be recorded and retained as separate files of the company.
B. A SHAREHOLDING COMPANY
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GENERAL MEETING OF SHAREHOLDERS
Article 56. General provisions
The General Meeting of Shareholders shall include all shareholders which may vote and shall be the highest decision-making authority of the shareholding company.
Article 57. Powers and duties of General Meeting of Shareholders
1. The General Meeting of Shareholders shall have the following rights and duties:
(a) To pass the developmental direction of the company;
(b) To make decisions on the classes of shares and total number of shares of each class which may be offered for sale; to make decisions on the rate of annual dividend for each class of shares, unless the company Charter otherwise provides;
(c) To elect, remove or discharge members of the Board of Management and members of the
Inspection Committee;
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(dd) To make decisions on amendments of and additions to the company Charter, except for adjusting the charter capital as a result of sale of new shares within the number of shares which may be offered as stated in the company Charter;
(e) To approve annual financial statements;
(g) To make decisions on redemption of more than ten (10) per cent of the total number of shares of each class already sold;
(h) To consider and deal with breaches by the Board of Management and the Inspection Committee which cause loss to the company and its shareholders;
(i) To make decisions on re-organization and dissolution of the company;
(k) Other rights and duties stipulated by the company.
2. Shareholders which are organizations shall have the right to appoint one or more authorized representatives to exercise their shareholders rights in accordance with law; in a case where more than one authorized representative is appointed, then the specific number of shares and the specific number of votes of each representative must be specified. The appointment, termination or change of an authorized representative must be notified in writing to the company at the earliest possible time. The notification must contain the following basic particulars:
(a) Name, permanent address, nationality, number and date of establishment decision or business registration of the shareholder;
(b) Number of shares, classes of shares and date of registration as a shareholder with the company;
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(d) Number of shares for which a representative has been appointed;
(dd) Term of authorized representation;
(e) Full name and signature of the authorized representative and of the legal representative of the shareholder.
The company must send the notification about the authorized representative stipulated in this clause to the SSC within a time-limit of five working days from the date the company receives the notification.
Article 58. Authority to convene the General Meeting of Shareholders and cases in which the General Meeting of Shareholders must be convened
1. The General Meeting of Shareholders shall take place on an annual or ad-hoc basis, and there shall be a General Meeting of Shareholders at least once per year. The location of a meeting of the General Meeting of Shareholders must be within the territory of Vietnam.
2. The General Meeting of Shareholders must hold an annual meeting within a time-limit of four months from the end of the financial year. At the request of the Board of Management, the SSC may extend that time-limit, but not beyond six (6) months as from the end of the financial year.
A regular meeting of the General Meeting of Shareholders shall debate and pass the following issues:
(a) Annual financial statements;
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(c) Report of the Inspection Committee regarding company management by the Board of Management, the director or general director;
(d) Amount of dividend payable on each class of share;
(dd) Other matters within its authority.
3. The Board of Management must convene an ad-hoc meeting of the General Meeting of Shareholders in the following cases;
(a) The Board of Management considers it necessary to do so in the interests of the company;
(b) The number of the remaining members of the Board of Management is less than the number of members required by law;
(c) Upon request by a shareholder or a group of shareholders as stipulated in clause 2 of article 18 of this Charter;
(d) Upon request by the Inspection Committee;
(dd) In other cases stipulated by law and the regulations of the company.
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If the Board of Management fails to convene a General Meeting of Shareholders as stipulated, the chairman of the Board of Management must be responsible before the law and must compensate for any loss arising to the company.
5. Where the Board of Management fails to convene a meeting of the General Meeting of Shareholders as stipulated in clause 4 of this article, then within the following thirty (30) days the Inspection Committee shall replace the Board of Management in convening the General Meeting of Shareholders in accordance with this Charter.
If the Inspection Committee fails to convene a meeting as stipulated, then the head of the Inspection Committee must be responsible before the law and must pay compensation for any loss arising to the company.
6. Where the Inspection Committee fails to convene a meeting as stipulated in clause 5 of this article, the requesting shareholder or group of shareholders stipulated in clause 2 of article 18 of this Charter shall have the right to replace the Board of Management and the Inspection Committee in convening the General Meeting of Shareholders in accordance with this Charter.
In this case, the shareholder or group of shareholders convening the General Meeting of Shareholders may request the SSC to supervise the convening and conduct of the meeting if they consider it necessary.
7. The convenor must prepare a list of shareholders entitled to attend the General Meeting of Shareholders, provide information and resolve complaints relating to the list of shareholders, prepare the program and agenda of the meeting, prepare documents, determine the time and venue of the meeting, and send an invitation to the meeting to each shareholder entitled to attend the meeting in accordance with this Charter.
8. The expenses for convening and conducting a meeting of the General Meeting of Shareholders as stipulated in clauses 4, 5 and 6 of this article shall be reimbursed by the company.
Article 59. Convening the General Meeting of Shareholders
1. The convenor of the General Meeting of Shareholders shall send a written invitation to all shareholders entitled to attend the meeting no later than seven working days prior to the date of opening, if this Charter does not stipulate the time-limit. The written invitation must be sent by a method guaranteed to reach the permanent address of each shareholder.
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2. The invitation shall be accompanied by a sample form of appointment of an authorized representative to attend the meeting, the agenda, voting slip, and discussion documents as the basis for passing decisions, and draft resolutions on each of the items in the agenda.
If the company has a website, then the invitation to attend the meeting together with all accompanying documents must be announced on the website at the same time it is forwarded to the shareholders.
Article 60. List of shareholders who have the right to attend the General Meeting of Shareholders
1. The list of shareholders entitled to attend the General Meeting of Shareholders shall be prepared based on the register of shareholders of the company. When a decision to convene a meeting is made, the list of shareholders entitled to attend the General Meeting of Shareholders must be prepared and completed no later than thirty (30) days prior to the opening date of the General Meeting of Shareholders unless the company Charter stipulates a shorter time.
2. The list of shareholders entitled to attend the General Meeting of Shareholders shall include the full name and permanent address, nationality and number of people’s identity card, passport or other lawful personal identification in respect of shareholders being individuals, and the name and permanent address, nationality, number of establishment decision or number of business registration in respect of shareholders being organizations; and the number of shares of each class, and the number and date of registration of each shareholder.
3. Shareholders shall have the right to inspect, sight, make an extract of and copy the list of shareholders entitled to attend the General Meeting of Shareholders; and to request correction of wrong information or addition of necessary information about themselves in the list of shareholders entitled to attend the General Meeting of Shareholders.
Article 61. Right to attend and authority to appoint a proxy to attend the General Meeting of Shareholders
1. Shareholders being individuals or authorized representatives of shareholders which are organizations may attend the General Meeting of Shareholders in person or authorize another person in writing to do so. A shareholder being an organization which does not have an authorized representative pursuant to the provisions in clause 3 of article 57 of this Charter shall authorize another person to attend the General Meeting of Shareholders.
2. The authorization for a representative to attend the General Meeting of Shareholders must be made in writing on the form stipulated by the company and must bear signatures in accordance with the following provision:
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(b) Authorization on behalf of a shareholder being an organization which is the principal must bear the signatures of the authorized representative, of the legal representative of the shareholder and of the person authorized to attend the meeting;
(c) In other cases the authorization must bear the signatures of the legal representative of the shareholder and of the person authorized to attend the meeting.
Any person authorized to attend a General Meeting of Shareholders must submit his written authorization prior to entering the meeting room.
3. In the cases stipulated in clause 4 of this article, the voting slip of the person authorized to attend a meeting within the scope of his authorization shall remain effective in either of the following cases:
(a) The principal dies, or his capacity for civil acts is lost or is restricted;
(b) The principal terminates the authorization.
4. The provision in clause 2 of this article shall not apply if the company receives written notification about one of the circumstances stipulated in clause 3 of this article no later than twenty four (24) hours prior to the time of opening of the General Meeting of Shareholders.
5. Where shares are assigned between the date of completion of the list of shareholders and the opening date of the General Meeting of Shareholders, the assignee shall be entitled to attend the General Meeting of Shareholders in place of the assignor in respect of the assigned shares.
Article 62. Change of program and agenda of a meeting of the General Meeting of Shareholders
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2. The convenor of the General Meeting of Shareholders may only refuse the recommendation stipulated in clause 1 of this article in one of the following cases:
(a) The recommendation is not sent on time, is insufficient, or is in relation to an irrelevant matter;
(b) The item recommended does not fall within the decision-making authority of the General Meeting of Shareholders;
Other cases stipulated in the company Charter.
3. The convenor of the General Meeting of Shareholders must accept and include the recommendations stipulated in clause 1 of this article into the draft program and agenda for the meeting, except in the cases stipulated in clause 2 of this article; the recommendation shall be officially added to the program and agenda for the meeting if the General Meeting of Shareholders so agrees.
Article 63. Conditions for conducting the General Meeting of Shareholders
1. The General Meeting of Shareholders shall be conducted when the number of attending shareholders represents at least sixty five (65) per cent of the voting shares. The specific percentage shall be stipulated in the company Charter.
2. Where the first meeting cannot take place because the condition stipulated in clause 1 of this article is not satisfied, the meeting may be convened for a second time within thirty (30) days of the intended opening of the first meeting. The General Meeting of Shareholders which is convened for a second time shall be conducted where the number of attending shareholders represents at least fifty one (51) per cent of the voting shares. The specific percentage shall be stipulated in the company Charter.
3. Where a meeting convened for a second time cannot take place because the condition stipulated in clause 2 of this article is not satisfied, it may be convened for a third time within twenty (20) days from the date of the intended opening of the second meeting. In this case, the General Meeting of Shareholders shall be convened irrespective of the number of attending shareholders, and irrespective of the percentage of shares with voting rights of shareholders attending the meeting.
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Article 64. Procedures for conducting the General Meeting of Shareholders
Unless otherwise provided by the company Charter, the procedures for conducting and voting at the General Meeting of Shareholders shall be conducted in accordance with the following provisions:
1. Prior to the opening date of a meeting, procedures shall be carried out for registration for attendance at the General Meeting of Shareholders until there is registration of a sufficient number of shareholders with the right to attend the meeting. A person registered to attend the meeting shall be issued with voting cards corresponding to the number of items in the program for the meeting which require a vote.
2. The chairman, secretary and vote counting committee of the General Meeting of Shareholders shall be regulated as follows:
(a) The chairman of the Board of Management shall act as chairman of all meetings which are convened by the Board of Management; in a case where the chairman is absent or is temporarily unable to work, then the remaining members of the Board of Management shall elect one of them to act as the chairman of the meeting; in a case where there is no one who is able to act as chairman, the member of the Board of Management with the highest position shall arrange for the General Meeting of Shareholders to elect the chairman of the meeting from amongst the people attending the meeting and the person with the highest number of votes shall act as chairman of the meeting.
(b) In other cases, the person who signed the document convening the General Meeting of Shareholders shall arrange for the General Meeting of Shareholders to elect a chairman of the meeting and the person with the highest number of votes shall act as chairman of the meeting.
(c) The chairman shall elect someone to act as secretary to prepare minutes of the General Meeting of Shareholders.
(d) The General Meeting of Shareholders shall elect a vote counting committee to be comprised of not more than three people on the proposal of the chairman of the meeting.
3. The program and agenda of the meeting must be passed by the General Meeting of Shareholders in the opening session. The program must specify in detail the time applicable to each issue in the agenda for the meeting.
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5. The General Meeting of Shareholders shall discuss and vote on each issue in the agenda for the meeting. Voting shall be conducted by collecting voting cards agreeing with the resolution, thereafter collecting voting cards which do not agree, and finally checking the overall numbers of votes which agree, which do not agree, and abstentions. The chairman shall announce the results of the voting counts immediately prior to the closing of the meeting.
6. Any shareholder or person authorized to attend the meeting who arrives after the opening of the meeting shall be registered and shall have the right to participate in voting immediately after registration. The chairman shall not delay the meeting so that late attendees may register; in such a case, the effectiveness of any voting which has already been conducted shall not be affected.
7. The convenor of the General Meeting of Shareholders shall have the following rights:
(a) To require all people attending the meeting to be checked or subject to other security measures;
(b) To request a competent body to maintain order during the meeting; to expel from the General Meeting of Shareholders anyone who fails to comply with the chairman's right to control the meeting, who intentionally disrupts or prevents normal progress of the meeting or who fails to comply with a request to undergo a security check.
8. The chairman shall have the right to adjourn the General Meeting of Shareholders for which sufficient attendees have registered as required by the regulations to another time or to change the location of the meeting in the following cases:
(a) The location for the meeting does not have sufficient and suitable seating for all the attendees;
(b) There is an attendee who obstructs the meeting or disrupts order, and there is a danger that the meeting might not be conducted fairly and legally.
The maximum time for any adjournment of a meeting shall be three days as from the date of the proposed opening of the meeting.
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Article 65. Minutes of the General Meeting of Shareholders
1. The General Meeting of Shareholders shall be recorded in the minute book of the company. Minutes must be prepared in Vietnamese and may also be in a foreign language, and must contain the following main particulars:
(a) Name, head office address, number and date of issuance of the business registration certificate, place of business registration of the company, and number and date of issuance of the licence for establishment and operation;
(b) Time and location of the General Meeting of Shareholders;
(c) Program and agenda of the meeting;
(d) Chairman and secretary;
(dd) Summary of developments at the meeting and of opinions expressed at the General Meeting of Shareholders on each matter set out in the program and agenda of the meeting;
(g) Number of shareholders and total number of votes of attending shareholders, with an appendix listing registered shareholders and representatives of shareholders attending the meeting with the total number of their shares and the corresponding total number of votes;
(h) Total number of votes for each issue voted on, specifying the number of votes for, against, and abstentions; and the corresponding percentage on the total number of votes of shareholders attending the meeting;
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(k) Full names and signatures of the chairman and secretary.
Minutes which are prepared in Vietnamese and minutes which are prepared in a foreign language shall be of equal legal validity.
2. The minutes of the General Meeting of Shareholders must be completed and approved prior to the closing of the meeting.
3. The chairman and secretary of the meeting shall be jointly liable for the truthfulness and accuracy of the contents of the minutes.
The minutes of the General Meeting of Shareholders must be sent to all shareholders within a time- limit of fifteen (15) days as from the date of the closing of the meeting.
The minutes of the General Meeting of Shareholders, the appendix listing the shareholders registered to attend the meeting, the full text of resolutions passed and other relevant documents sent together with the notice of invitation to attend the meeting must be archived at the head office of the company.
Article 66. Passing of decisions by the General Meeting of Shareholders
1. The General Meeting of Shareholders shall pass decisions which fall within its power by way of voting in the meeting or collecting written opinions.
2. If not regulated by the company Charter, then a decision of the General Meeting of Shareholders on the following matters must be passed by way of voting at the General Meeting of Shareholders:
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(b) Approval of the developmental direction of the company;
(c) Decision on classes of shares and the total number of shares of each class which may be offered for sale;
(d) Appointment, discharge or removal of members of the Board of Management and Inspection Committee;
(dd) Decisions on investments or the sale of assets valued at equal to or more than fifty (50) per cent of the total asset value recorded in the most recent financial statements of the company, if the company Charter does not stipulate another percentage;
(e) Approval of the annual financial statements;
(g) Reorganization or dissolution of the company.
3. A decision of the General Meeting of Shareholders shall be passed in a meeting when all the following conditions are satisfied:
(a) It is approved by a number of shareholders representing at least sixty five (65) per cent of the total voting shares of all attending shareholders; the specific percentage shall be stipulated in the company Charter.
(b) In respect of decisions on classes of shares and total number of shares of each class which may be offered; on amendments of and additions to the company Charter; on re-organization or dissolution of the company; in respect of investments or sale of assets equal to or more than fifty (50) per cent of the total asset value recorded in the most recent financial statements of the company, unless otherwise provided by the company Charter the approval by a number of shareholders representing at least seventy five (75) per cent of the total voting shares of all attending shareholders shall be required; the specific percentage shall be stipulated in the company Charter.
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4. Decisions passed by the General Meeting of Shareholders with the number of shareholders directly or by authorized persons participating which represents one hundred (100) per cent of the total number of voting shares shall be legal and shall be immediately effective even if the order and procedures for convening the meeting, the program and agenda of the meeting and the procedures for conducting the meeting were not implemented correctly as stipulated.
5. Where a decision is passed by collecting written opinions, the decision of the General Meeting of Shareholders shall be passed when it is approved by a number of shareholders representing at least seventy five (75) per cent of the total voting shares. The specific percentage shall be stipulated in the company Charter.
6. Decisions of the General Meeting of Shareholders must be notified to shareholders entitled to attend the General Meeting of Shareholders within fifteen (15) days from the date the decision was passed.
Article 67. Authority and procedures for obtaining written opinions of shareholders for approval of decisions of the General Meeting of Shareholders
Unless otherwise provided by this Charter, the authority and procedures for collecting written opinions in order to pass a decision of the General Meeting of Shareholders shall be implemented in accordance with the following provisions:
1. The Board of Management shall have the right to collect written opinions in order to pass a decision of the General Meeting of Shareholders at any time if considered necessary in the interests of the company.
2. The Board of Management must prepare written opinion forms, a draft of the resolution of the General Meeting of Shareholders and other documents explaining the draft resolution. The written opinion form together with the draft resolution and documents explaining it must be sent by a means which is guaranteed to reach the permanent address of each shareholder.
3. The written opinion form must contain the following basic particulars:
(a) Name, head office address, number, date of issuance of the business registration certificate; place of business registration of the company;
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(c) Full name, permanent address, nationality, and the number of people’s identity card, of the passport or other lawful personal identification in respect of a shareholder being an individual; name, permanent address, nationality, number of establishment decision or number of business registration of a shareholder or authorized representative in respect of a shareholder being an organisation; number of shares of each class and number of votes of the shareholder;
(d) Issue on which it is necessary to obtain opinions in order to pass a decision;
(dd) Voting options comprising agreement, non agreement, or no opinion;
(e) Time-limit within which the completed written opinion form must be returned to the company;
(g) Full name and signature of the chairman of the Board of Management and of the legal representative of the company.
4. Any completed written opinion form must bear the signature of a shareholder being an individual, and of the authorized representative or of the legal representative of a shareholder being an organization.
Written opinion forms which are returned to the company must be in a sealed envelope and no one shall be permitted to open envelopes prior to counting of the votes. Any completed written form which is returned to the company after the expiry of the time-limit stipulated in the written opinion form or any form which has been opened shall be invalid.
5. The Board of Management shall conduct counting of the votes and shall prepare minutes of the counting of the votes in the presence of the Inspection Committee or of a shareholder who does not hold a managerial position in the company.
The minutes of counting of votes shall contain the following basic particulars:
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(b) Purpose of collection of written opinions and issues on which it is necessary to obtain written opinions in order to pass a decision.
(c) Number of shareholders with total numbers of votes who have participated in the vote, classifying the votes into valid and invalid, and including an appendix being a list of the shareholders who participated in the vote;
(d) Total number of votes for, against and abstentions on each matter voted upon;
(dd) Decisions which have been passed;
(e) Full name and signature of the chairman of the Board of Management, of the legal representative of the company and of the person who supervised the counting of votes.
The members of the Board of Management and the person who supervised the counting of votes shall be jointly liable for the truthfulness and accuracy of the minutes of counting of votes, and shall be jointly liable for any loss arising from a decision which is passed due to an untruthful or inaccurate counting of votes.
6. The minutes of results of counting of votes must be sent to shareholders within a time-limit of fifteen (15) days as from the date the counting of votes ended.
7. Written opinion forms which were returned, the minutes of counting of votes, the full text of the resolution which was passed and related documents sent with all of the written opinion forms must be archived at the head office of the company.
8. A decision which is passed by the form of collecting written opinions of shareholders shall have the same validity as a decision passed by the General Meeting of Shareholders.
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Within ninety (90) days from the date the minutes of the General Meeting of Shareholders are received or the minutes of the results of counting of votes being written opinions from the General Meeting of Shareholders are received, shareholders, members of the Board of Management, the director (or general director) and the Inspection Committee shall have the right to request a court or an arbitrator to consider and cancel a decision of the General Meeting of Shareholders in the following cases:
1. The order and procedures for convening the General Meeting of Shareholders did not comply with the law and the company Charter;
2. The order and procedures for issuing a resolution and the content of the resolution breach the law or the charter of the company.
THE BOARD OF MANAGEMENT
Article 69. Members and terms of the Board of Management
1. The Board of Management shall have at least three members, and not more than eleven (11) members, unless otherwise provided by this Charter. The number of members of the Board of Management who must reside permanently in Vietnam shall be as stipulated in this Charter. The term of the Board of Management shall be five years. The term of office of members of the Board of Management shall not exceed five years; members of the Board of Management may be re-elected for an unlimited number of terms.
2. The Board of Management of a term which has recently expired shall continue to operate until a new Board of Management is elected and takes over the management work.
3. In a case where an additional member is appointed or a member is appointed to replace a member who was removed or dismissed during a term of office, then the term of office of such new member shall be the residual period of the term of office of the Board of Management.
4. A member of the Board of Management need not necessarily also be a shareholder of the company.
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1. The Board of Management is the body managing the company and shall have full authority to make decisions in the name of the company and to exercise the rights and discharge the obligations of the company which do not fall within the authority of the General Meeting of Shareholders.
2. The Board of Management shall have the following rights and duties:
(a) To make decisions on medium term development strategies, and plans, and on annual business plans of the company;
(b) To recommend the classes of shares and total number of shares of each class which may be offered;
(c) To make decisions on offering new shares within the number of shares of each class which may be offered for sale; to make decisions on raising additional fund in other forms;
(d) To make decisions on the price of shares and bonds of the company offered for sale;
(dd) To make decisions on redemption of shares in accordance with the provisions in clause 1 of article 11 of this Charter;
(e) To make decisions on investment plans and investment projects within the authority and limits stipulated in the Law on Enterprises or this Charter;
(g) To make decisions on solutions for market expansion, marketing and technology; to approve contracts for purchase, sale, borrowing, lending and other contracts valued at fifty (50) or more per cent of the total asset value recorded in the most recent financial statements of the company, or a smaller percentage as stipulated in this Charter, except for contracts and transactions stipulated in clauses 1 and 3 of article 79 of this Charter;
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(i) To supervise and direct the director or general director and other management personnel in their work of conducting the daily business of the company.
(k) To make decisions on the organizational structure and internal management rules of the company, to make decisions on the establishment of subsidiary companies, the establishment of branches and representative offices and the capital contribution to or purchase of shares of other enterprises;
(l) To approve the agenda and contents of documents for the General Meeting of Shareholders; to convene the General Meeting of Shareholders or to obtain written opinions in order for the General Meeting of Shareholders to pass resolutions;
(m) To submit annual final financial reports to the General Meeting of Shareholders;
(n) To recommend the dividend rates to be paid, to make decisions on the time-limit and procedures for payment of dividends or for dealing with losses incurred in the business operation;
(o) To recommend re-organization or dissolution of the company, or to request bankruptcy of the company;
(p) Other rights and duties stipulated in the Law on Enterprises and this Charter.
3. The Board of Management shall pass decisions by way of voting at meetings, obtaining written opinions, or otherwise as stipulated in this Charter. Each member of the Board of Management shall have one vote.
4. When implementing its functions and performing its duties, the Board of Management shall strictly comply with the provisions of law, this Charter and decisions of the General Meeting of Shareholders. If the Board of Management passes a decision which is contrary to law or contrary to provisions of this Charter causing loss to the company, then the members who agreed to pass such decision shall be personally jointly liable for that decision and they must compensate the company for the loss; any member who opposed the passing of such decision shall be exempt from liability. In such a case, a shareholder owning shares in a company for a minimum consecutive period of at least one year shall have the right to request the Board of Management to suspend implementation of a resolution as mentioned above.
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1. The Board of Management shall have at least three members, and not more than eleven (11) members, unless otherwise provided by the company Charter. The number of members of the Board of Management who must reside permanently in Vietnam shall be as stipulated in the company Charter. The term of the Board of Management shall be five years. The term of office of members of the Board of Management shall not exceed five years; members of the Board of Management may be re-elected for an unlimited number of terms.
2. The Board of Management of a term which has recently expired shall continue to operate until a new Board of Management is elected and takes over the managerial work.
3. In a case where an additional member is appointed or a member is appointed to replace a member who was removed or dismissed during a term of office, then the term of office of such new member shall be the residual period of the term of office of the Board of Management.
4. A member of the Board of Management need not necessarily also be a shareholder of the company.
Article 72. Members of the Board of Management
1. Members of the Board of Management must satisfy the following standards and conditions:
(a) Have full capacity for civil acts, and not belong to the category of persons prohibited from managing an enterprise pursuant to the Law on Enterprises;
(b) Be an individual shareholder who owns at least five per cent of the total number of ordinary shares or be another person owns not holding such percentage of shares but with professional expertise and experience in business management or in the line of business which is the main business of the company or satisfy other standards and conditions as stipulated in this Charter.
2. In the case of a subsidiary company which is a company in which the State owns a total number of shares worth more than fifty (50) per cent of the charter capital, a member of the Board of Management may not be a person affiliated to a manager or a person with the authority to appoint managers of the parent company.
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1. A member of the Board of Management shall be removed and dismissed in the following cases:
(a) Not satisfying the criteria and conditions stipulated in article 72 of this Charter;
(b) Not participating in activities of the Board of Management for (6) consecutive months, except for force majeure cases;
(c) Written resignation notices;
(d) Other cases stipulated in this Charter.
2. In addition to cases stipulated in clause 1 of this article, members of the Board of Management may be dismissed at any time pursuant to a resolution of the General Meeting of Shareholders.
3. Where the number of members of the Board of Management is reduced by more than one third (1/3) of the number stipulated in the company Charter, the Board of Management must convene a General Meeting of Shareholders within sixty (60) days from the date the number of members is reduced by more than one third (1/3), to elect additional members of the Board of Management.
In other cases, the next General Meeting of Shareholders shall elect new members of the Board of Management to replace members of the Board of Management who have been removed or dismissed.
Article 74. Meetings of the Board of Management
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2. Meetings of the Board of Management may be held on a regular basis or extraordinary meetings may be held. The Board of Management may meet at the head office of the company or at some other location.
3. The chairman may convene a regular meeting of the Board of Management at any time considered necessary, but there must be at least one meeting every quarter.
4. The chairman of the Board of Management must convene a meeting of the Board of Management when one of the following circumstances occurs:
(a) On the request of the Inspection Committee;
(b) On the request of the director or general director or on the request of at least five (5) other managerial personnel;
(c) On the request of at least two members of the Board of Management;
(d) In other circumstances stipulated in the company Charter.
The request must be made in writing and must specify the objective and issues which need to be discussed, and resolutions within the authority of the Board of Management.
5. The chairman must convene a meeting of the Board of Management within a time-limit of fifteen (15) days from the date of receipt of a request stipulated in clause 4 of this article. If the chairman fails to convene a meeting of the Board of Management pursuant to a request, the chairman shall be liable for loss caused to the company; and the person making the request shall have the right to replace the Board of Management in convening a meeting of the Board of Management.
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The notice of invitation shall be sent by post, fax, electronic mail or other means, but they must ensure arrival at the address of each member of the Board of Management as registered with the company.
7. The chairman of the Board of Management or the convenor must also send the notice of invitation to attend the meeting together with the attached documents to all the members of the Inspection Committee, and the director or general director in the same manner as to the members of the Board of Management.
The members of the Inspection Committee and the director or general director who are not concurrently members of the Board of Management shall have the right to attend meetings of the Board of Management, and to discuss issues but not to vote.
8. A meeting of the Board of Management shall be conducted where there are three quarters (3/4) or more of the total members attending. Members not directly attending a meeting shall have the right to vote by sending a written vote. The written vote must be enclosed in a sealed envelope and delivered to the chairman of the Board of Management at least one hour prior to the opening of the meeting. Written votes shall only be opened in the presence of all the people attending the meeting.
A decision of the Board of Management shall only be passed when it is approved by the majority of the attending members; in the case of a tied vote, the final decision shall be made in favour of the vote of the chairman of the Board of Management.
9. Members must fully participate in all meetings of the Board of Management. A member may authorize another person to attend a meeting if the majority of members of the Board of Management agree.
Article 75. Minutes of the meetings of the Board of Management
1. All meetings of the Board of Management must be recorded in the minute book. Minutes must be prepared in Vietnamese and may also be in a foreign language and shall include the following main contents:
(a) Name, address of the head office, number and date of issuance of the business registration certificate, place of business registration;
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(c) Time and location of meeting;
(d) Full names of each member attending the meeting or the person authorised to attend the meeting; name of members not attending the meeting and reasons for not attending;
(dd) Issues discussed and voted in the meeting;
(e) Summary of opinions of each member attending the meeting during the process of the meeting;
(g) Result of voting indicating members who agree, who do not agree and members who abstain from voting.
(h) Decisions passed.
(i) Full names and signatures of all members or representatives authorised to attend the meeting.
The chairman and secretary shall be jointly liable for the accuracy and truthfulness of the minutes of meetings of the Board of Management.
2. Minutes of meetings of the Board of Management and documents used in the meetings must be archived in the head office of the company.
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Article 76. Rescission of decisions of the Board of Management
Within ninety (90) days from the date a decision is passed, shareholders, members of the Board of Management, the director (or general director) and the Inspection Committee shall have the right to request a court or an arbitrator to consider and cancel a decision of the Board of Management in the following cases:
1. The order and procedures for passing the decision did not comply with the law and this Charter;
2. The content of the decision breached the law or this Charter.
Article 77. Public disclosure of relevant interests
1. Members of the Board of Management, members of the Inspection Committee, the general or general director and other managers of the company must declare their relevant interests with the company, including:
(a) Name, address of the head office, field of business, number and date of the issuance of the business registration certificate, place of business registration of an enterprise in which they own contributed capital or shares; ratio and time of such ownership of contributed capital or shares;
(b) Name, address of the head office, field of business, number and date of the issuance of business registration certificate, place of business registration of an enterprise in which their affiliated persons jointly or separately own shares or distributed capital of more than thirty five (35) per cent of charter capital.
2. The declaration stipulated in clause 1 of this article must be conducted within seven working days from the date the relevant interest arises; any amendment and addition shall be declared to the company within seven working days from the date of amendment and addition.
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4. Members of the Board of Management, the director or general director performing all forms of work on behalf of themselves or on behalf of others within the scope of operation of the company must report the nature and content of that work to the Board of Management [and] Inspection Committee and shall only be permitted to perform [this work] if the majority of the remaining members of the Board of Management agree; if they perform the work without reporting or without approval from the Board of Management, all the income originated from that activity shall belong to the company.
Article 78. Obligations of managers of companies
1. Members of the Board of Management, the director or general director and other managers shall have the following obligations:
(a) To exercise their delegated powers and perform their delegated duties strictly in accordance with the relevant law, the company Charter and decisions of the General Meeting of Shareholders;
(b) To exercise their delegated powers and perform their delegated duties honestly and diligently to their best ability in the best lawful interests of the company and of the shareholders of the company;
(c) To be loyal to the interests of the company and shareholders of the company; not to use information, secrets, business opportunities of the company, not to abuse their position and powers and assets of the company for their own personal benefit or for the benefit of other organizations or individuals;
(d) To promptly, fully and accurately notify the company of enterprises which they or their affiliated persons own or have contributed capital or controlling shares; this notice shall be displayed at the head office and branches of the company.
2. In addition to obligations stipulated in clause 1 of this article, the Board of Management and director or general director may not increase salary and pay bonuses where the company has not paid in full all the debts due and payable.
3. Other obligations in accordance with rules of the Company.
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1. Contracts and transactions between the company and the following parties must be approved by the General Meeting of Shareholders or the Board of Management:
(a) Shareholders and authorised representative of shareholders holding more than thirty five (35) per cent of the ordinary shares of the company and their affiliated persons;
(b) Members of the Board of Management; director or general director;
(c) Enterprises stipulated in clause 1(a) and clause 1(b) of article 77 of this company Charter and affiliated persons of members of the Board of Management, director or general director.
2. Any contract and transaction valued at less than fifty (50) per cent of the total asset value recorded in the most recent financial statements of the company or a smaller percentage stipulated in the company Charter shall be approved by the Board of Management. In this case the legal representative shall send to members of the Board of Management and display at the head office and branches of the company the draft of the contract or give notice of the main content of the transaction. The Board of Management shall make a decision on approval of the contract or transaction within fifty (15) days from the date of the display; the members with the affiliated interest shall not have the right to vote.
3. Other contracts and transactions except for circumstances stipulated in clause 2 of this article shall be approved by the General Meeting of Shareholders. The Board of Management shall submit the draft contract or explain the main content of the transactions at the General Meeting of Shareholders or collect written opinions from shareholders. In this case, the affiliated shareholders shall not have voting rights; contracts and transactions shall be approved where shareholders representing sixty five (65) percent of the total remaining votes agree.
4. Any contracts or transactions which have been signed or performed without the approval stipulated in clause 2 and clause 3 of this article shall be invalid and dealt with in accordance with law. The legal representative of the company, shareholders, members of the Board of Management or director or general director concerned shall be liable to compensate for loss caused and must return to the company any benefit gained from the performance of such contract and transaction.
THE INSPECTION COMMITTEE
Article 80. Members and term of the Inspection Committee
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2. The members of the Inspection Committee shall elect one of them to be the head of the Inspection Committee. More than half of the members of the Inspection Committee must permanently reside in Vietnam and at least one member from them must be an accountant or auditor.
3. Upon the expiration of the term of the Inspection Committee, if the new Inspection Committee has not been elected, the Inspection Committee whose term has expired shall continue its rights and obligations until the new Inspection Committee is elected and takes over the duties.
Article 81. Rights and obligations of the Inspection Committee
1. An Inspection Committee shall supervise the Board of Management, director or general director in the management and administration of the company; and shall be responsible to the General Meeting of Shareholders for the performance of its assigned duties.
2. To inspect the reasonableness, legality, truthfulness and level of prudence in management and administration of business activities, in organization of statistics and accounting work and preparation of financial statements.
3. To evaluate reports on business, semi-annual or annual financial statements and reports on evaluation of the management of the Board of Management.
To submit reports on evaluation of the business reports, semi-annual or annual financial statements of the company and reports on evaluation of the management of the Board of Management to the General Meeting of Shareholders at the annual meeting.
4. To review books of accounts and other documents of the company, the management and administration of the activities of the company at any time deemed necessary or pursuant to a resolution of the General Meeting of Shareholders or as requested by a shareholder or group of shareholders as stipulated in clause 2 of article 18 of this Charter.
5. Upon a request by a shareholder or a group of shareholders as stipulated in clause 2 of article 18 of this Charter, the Inspection Committee shall carry out an inspection within a period of seven working days from the date of receipt of the request. The Inspection Committee must submit a report on results of the inspection of the issues required to be inspected to the Board of Management and the requesting shareholder or the group of shareholders within a period of fifteen (15) days from the date of completion of the inspection.
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6. To recommend to the Board of Management or the General Meeting of Shareholders the changes and improvements of the organizational structure, management and administration of the business operations of the company;
7. Upon discovery of a member of the Board of Management, director or general director who is in breach of the obligations of a manager of the company stipulated in article 78 of this Charter, to give immediate written notice to the Board of Management and request the person in breach to cease the breach and take measures to remedy any consequences.
8. To exercise other rights and perform other duties as stipulated by law, this Charter and decisions of the General Meeting of Shareholders.
9. The Inspection Committee may use an independent consultant to perform the assigned duties.
The Inspection Committee may consult the Board of Management prior to submission of reports, conclusions and recommendations to the General Meeting of Shareholders.
Article 82. Members and Head of the Inspection Committee
1. Members of the Inspection Committee must meet the following criteria and conditions:
(a) Being at least of twenty one (21) years of age, with full capacity for civil acts and not falling within the scope of subjects not permitted to establish and manage companies in accordance with the Law on Enterprises;
(b) Not being the wife or husband, father, adoptive father, mother, adoptive mother, child, adopted child, sibling of any member of the Board of Management, the director or general director of other managers.
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1. To comply with the law, this Charter, decisions of the General Meeting of Shareholders and professional ethics in the exercise of delegated rights and duties.
2. To exercise delegated rights and perform delegated duties honestly, diligently and to the best of their ability in the maximum lawful interest of the company and shareholders of the company.
3. To be loyal to the interests of the company and of shareholders of the company; not to use information, secrets, business opportunities of the company, or to abuse his or her position and powers and assets of the company for their personal benefit or for the benefit of other organizations or individuals.
4. Other obligations stipulated in this Charter.
5. In the case of breaching the obligations stipulated in clauses 1, 2, 3 and 4 of this article causing loss to the company or to other people, members of the Inspection Committee must bear personal or joint responsibility for compensating for such loss.
All income and other benefits which a member of the Inspection Committee gains directly or indirectly from a breach of the obligations stipulated in clause 3 of this article shall belong to the company.
6. Where it is discovered that a member of the Inspection Committee breaches an obligation during the exercise of delegated rights and duties, the Board of Management must notify the Inspection Committee in writing; requesting the person in breach to cease the breach and take measures to remedy any consequences.
Dismissal and removal of the Inspection Committee:
1. A member of the Inspection Committee shall be dismissed or removed in the following cases:
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(b) Not exercising his or her rights and duties in six consecutive months, except in force majeure;
(c) Written resignation notice;
(d) Other cases as stipulated by the company.
2. In addition to the cases stipulated in clause 1 of this article, a member of the Inspection Committee may be dismissed at any time in accordance with a resolution of the General Meeting of Shareholders.
3. Where the Inspection Committee seriously breaches its obligations, threatening to cause loss to the company, the Board of Management shall convene the General Meeting of Shareholders to consider dismissal of the incumbent Inspection Committee and election of a new Inspection Committee to replace it.
Rights and duties of the Inspection Committee:
1. To prepare the operational program and plans of the Inspection Committee.
2. To prepare the program, agenda and data for meetings of, and to convene and chair meetings of the Inspection Committee.
3. Other rights and duties as stipulated by the company.
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Article 83. Rights of the Inspection Committee to be provided with information
1. The invitation notices to a meeting, written opinion form to obtain opinion from members of the Board of Management and enclosed documents must be sent to members of the Inspection Committee at the same time and in the same manner as for members of the Board of Management.
2. Reports of the director or general director for submission to the Board of Management or other documents issued by the company shall be sent to members of the Inspection Committee at the same time and in the same manner as for members of the Board of Management.
3. Members of the Inspection Committee shall have the right to access files and documents of the company retained in the head office, branches and other locations; and have the right to access locations where managers and employees of the company work.
4. The Board of Management, members of the Board of Management, the director or general director and other managers must provide in full, accurately and on time all information and documents relating to the management, administration and business operation of the company upon demand by the Inspection Committee.
Article 84. Remuneration and interests of members of the Inspection Committee
If not stipulated by the company, remuneration and other benefits of members of the Inspection Committee shall be implemented in accordance with the following provisions:
1. Members of the Inspection Committee shall be paid remuneration according to their work and be entitled to other benefits as decided by the General Meeting of Shareholders. The General Meeting of Shareholders shall decide on the total remuneration and annual operating budget of the Inspection Committee based on the estimated number of working days, quantity and nature of work and average daily rate of remuneration of members.
2. Members of the Inspection Committee shall be reimbursed for expenses for meals, accommodation, travel and for use of independent consultancy services at reasonable rates. The total amount of such remuneration and expenses shall not exceed the total annual operating budget of the Inspection Committee approved by the General Meeting of Shareholders, except where otherwise decided by the General Meeting of Shareholders.
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Chapter IV
RESPONSIBILITIES, OBLIGATIONS AND RESTRICTIONS DURING OPERATION OF THE COMPANY
Article 85. Regulations on responsibilities and obligations of fund management companies
1. Fund management companies are permitted to conduct the following business activities:
- Management of securities investment funds and securities investment companies;
- Management of investment portfolios.
2. A fund management company shall, as the representative of the interests of an investor, shareholder or client entrusting investment as stipulated in the charter of a Fund or in the charter of a securities investment company or in an investment management contract, vote at the General Meeting of Shareholders or at meetings of the Board of Management of an issuing organization in which the fund, securities investment company or client entrusting investment is a shareholder; or vote at meetings of the members' council of an enterprise in which the fund, securities investment company or client entrusting investment is a capital contributor.
3. When a fund management company manages a closed investment Fund, an investment portfolio or a securities investment company, it shall be entitled to fees and bonuses in accordance with law and in accordance with the provisions in the charter of the Fund, the charter of the securities investment company or the investment management contract. If such charter or contract provides for bonuses on the basis of investment results, then the Company shall only be entitled to a bonus if the growth rate of the net asset value of the Fund or securities investment company or the growth rate of the value of the portfolio which the Company manages is higher than a reference rate approved by the investor. The amount and payment of bonuses to a fund management company managing a closed public Fund or a public securities investment company shall be determined as follows:
(a) The amount of a bonus shall be calculated on the basis of that part of the profit which exceeds the market growth rate (growth rate of market indicators) adjusted according to the investment portfolio structure of the Fund or securities investment company. The amount of a bonus must be stipulated in the charter of the Fund, the charter of the securities investment company and the prospectus, and must be approved by investors.
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(c) A bonus shall only be payable after payment of other payable disbursements, and shall be calculated on the basis of the audited annual financial statements.
4. A fund management company must comply with the law of Vietnam, the charters of Funds and of securities investment companies and investment management contracts.
5. A fund management company must act voluntarily, fairly and honestly and in the best interests of Funds, securities investment companies, investors and investors entrusting investment.
6. A fund management company must sign contracts with a depository bank and custodian bank containing specific clauses on the rights and obligations of the parties during management of assets of Funds and of securities investment companies and entrusted assets.
7. A fund management company must sign contracts with investors entrusting investment and with securities investment companies when providing services being management of investment portfolios or assets of securities investment companies.
8. A fund management company must invest assets of Funds and of securities investment companies and entrusted assets correctly in accordance with law, and in accordance with the charter of the relevant Fund or securities investment company or the relevant investment management contract.
9. A fund management company must compensate for loss to any Fund, any securities investment company, any investor in a Fund or securities investment company, or to any investor entrusting investment caused as a result of the fund management company or its staff failing to correctly discharge their obligations in accordance with law or breaching the law on securities and securities market. The amount of compensation must be approved by investors, including investors who previously held fund certificates or share certificates in the securities investment company and investors entrusting investment who have terminated their portfolio management contract with the fund management company.
10. A fund management company must ensure separate and independent management of assets of each Fund, assets of each securities investment company, assets of each investor, and assets of the Company itself.
11. A fund management company must have rules on distribution of traded assets which are uniform, reasonable and fair when conducting trading for Funds, for securities investment companies, for each investor entrusting investment and for the Company itself. These rules must be approved by investors entrusting investment, by the board of trustees of a Fund, by the Board of Management of a securities investment company, and by the custodian bank and depository bank. When the fund management company purchases or sells the same type of asset simultaneously for a Fund or a securities investment company which it manages and for the Company itself, traded assets shall be distributed in the following priority order:
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(b) Distribution to the company itself only after satisfying the requirement in sub-clause (a) above.
12. A fund management company must ensure liability of third parties to which it delegates authority during management of Funds and investment portfolios, and must ensure that changes to the organizational and managerial structure of the fund management company do not adversely affect the interests of investors in Funds and in securities investment companies or the interests of investors entrusting investment. The above-mentioned relationship must ensure:
(a) The authorized party is a financial institution licensed to conduct the delegated task;
(b) Basic information about the authorized party is provided to the board of trustees of a Fund, the Board of Management of a securities investment company, and to investors entrusting investment;
(c) Such delegation of authority must be approved by the board of trustees of a Fund, the Board of Management of a securities investment company, and by investors entrusting investment;
(d) When a fund management company delegates authority it must report to the SSC enclosing the written approval referred to in sub-clause (c) above.
13. A fund management company which delegates authority as referred to in clause 12 above shall be responsible to supervise and ensure delegated tasks are implemented quickly and in compliance with law, with the charter of the Fund or the securities investment company or in compliance with the investment management contract; and it shall bear full liability for losses arising from the delegation of authority and caused to a Fund, securities investment company or investors entrusting investment.
14. A fund management company must conduct valuations of the net asset value of a Fund and of a securities investment company; the net asset value of one fund certificate unit or share certificate in a securities investment company; the value of an investment portfolio and other activities in accordance with law and in accordance with the charter of the relevant Fund or securities investment company and the relevant investment management contract. All the above-mentioned valuations may be provided by a custodian bank on the basis of a contract between such bank and the fund management company, and the fund management company must supervise that any such net asset valuation conducted by the custodian bank complies with current regulations.
15. A fund management company shall be responsible to keep, store and update in a prompt, complete and accurate manner a register of investors and a register of shareholders; and all the above- mentioned work may be performed by a department of the custodian bank or by a Securities Depository Centre on the basis of a contract between such bank or Centre with the fund management company; and the fund management company must supervise that the keeping, storing and updating of the register of investors and register of shareholders by the custodian bank or Securities Depository Centre complies with current regulations. The contents of the register of investors and of the register of shareholders shall comply with regulations of the Ministry of Finance on establishment and management of securities investment Funds and securities investment companies.
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17. A fund management company must promptly provide complete essential information on a Fund, securities investment company and entrusted assets to the custodian bank or depository bank to enable the latter to exercise rights and discharge obligations in respect of such Fund, securities investment company and entrusted assets in accordance with law. At least once per month the fund management company must verify with the custodian bank or depository bank the assets of each Fund, securities investment company and investor.
18. In a case where the custodian bank discovers that a transaction involving assets of a Fund or of a securities investment company is inconsistent with law or with the charter of the Fund or the charter of the securities investment company, or discovers that a transaction exceeds the authority of the fund management company and this has already been notified to the fund management company, then the fund management company must rescind such transaction or undertake to purchase or sell the assets of the Fund or of the securities investment company in order to restore the status quo as soon as possible. Such remedying of the consequences must take place within 3 months from the date of discovery of the unlawful transaction. All expenses arising in relation to this transaction and any loss to the Fund or to the securities investment company shall be borne by the fund management company, and shall not be included in fund management expenses.
19. A fund management company must purchase professional indemnity insurance for fund practitioners managing Funds in accordance with law or it must establish a risks reserve in order to pay compensation for loss to investors as a result of breakdowns or as a result of errors by fund management practitioners during the course of professional activities.
20. A fund management company must formulate and issue professional rules applicable to each working position within the company, professional rules on internal control and professional ethics applicable to staff working at the company, aimed at preventing conflicts of interest which may arise within the company, between the company and Funds, between the company and securities investment companies which the company manages, between the company and clients entrusting investments, between clients of the company, and during transactions with affiliated persons. A provision requiring compliance with professional ethics shall be mandatory in the labour contracts signed by the company with its employees.
21. Each year, a fund management company must hold training courses to raise the professional skills of its staff, ensuring that their professional skills and knowledge of the law is updated and is appropriate for the working tasks assigned to them. Information about annual training activities conducted by the company must be sent to the SSC at the same time as the company submits its annual report on operational status.
22. A fund management company shall be responsible to prepare, issue and report to the SSC policies and professional rules on risk management which are in compliance with law, aimed at promptly analyzing, assessing and monitoring management of risks during investment activities conducted for Funds, for securities investment companies, and with entrusted assets.
23. A fund management company must comply with the regimes stipulated by law on accounting, auditing and statistics, discharge of financial obligations, and reporting and disclosure of information.
24. A fund management company must archive complete vouchers and accounts which reflect in detail, accurately and promptly all daily trading orders of each Fund and of each securities investment company, all daily trading orders for investment portfolios and for the company itself as well as for staff of the company, including the chronological order in which trading orders were submitted and the order in which transactions were implemented. The above-mentioned vouchers shall include:
(a) Distribution contracts;
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(c) Vouchers relating to offers to sell fund certificates and securities investment company shares;
(d) Other data and vouchers stipulated by law.
25. The vouchers stipulated in clause 24 above must be archived for a minimum duration of 15 years, and they must be supplied to the SSC on request.
26. A fund management company shall be responsible to ensure, while managing investment portfolios and member funds which have foreign participation, that investment of assets by foreign investors complies with the law on restriction on the ratio of ownership, either direct or indirect, of foreigners in Vietnamese enterprises.
27. A fund management company must clearly write on the cover of a prospectus of a Fund and must include in data advertising investment, the following specific warning on risks:
"The investment Fund (here name the fund) described in this Prospectus is a securities investment Fund established pursuant to the Law on Securities passed by the National Assembly on 29 June 2006 and its implementing guidelines. This prospectus has been registered with the SSC on (here give the date).
The fact that the SSC has issued a certificate for a public offer of fund certificates only means that registration was implemented correctly in accordance with current regulations, and does not carry any implication guaranteeing the contents of this Prospectus or the investment objectives and strategies of the Fund.
The value of Fund certificates, the possibility of gaining profit and the level of risks stipulated in this data is purely for reference purposes only and may change at any time depending on the market status. Investment in this Fund does not carry any assurance that investors will make a profit. Investors should themselves carefully balance the risks and the level of those risks before they make any decision to invest in this Fund."
28. The use of entrusted assets which are mobilized in Vietnam in order to invest in securities issued by a foreign institution, in securities issued by an issuing organization which is regulated by foreign law, or in securities issued offshore must be approved by the general meeting of investors of a public Fund, by the general meeting of investors of a member fund, by the general meeting of shareholders of a securities investment company, or by the client entrusting investment. Any offshore investment must comply with the law on offshore investments and with the law on foreign exchange control, and there must be written approval from the competent body.
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1. A fund management company shall not be permitted to raise capital and manage a member fund which has from 31 or more members contributing capital.
2. A fund management company must not be an affiliated person or the owner of the custodian bank or the depository bank of a Fund or a securities investment company which is managed by such fund management company. A member of the Board of Management, a member of the Members' Council, the Chairman, Director or Deputy Director, General Director or Deputy General Director or a fund management practitioner of the fund management company shall not be permitted to concurrently work for the custodian bank or the depository bank of a Fund or a securities investment company which is currently managed by the company, and vice versa.
3. An affiliated person of the fund management company, a fund management practitioner or a person working in the fund management company shall only be permitted to purchase or sell certificates in a public fund or shares in a public securities investment company which is managed by the company through the trading system by the method of matching orders at the Stock Exchange or a Securities Trading Centre and when permitted by the Fund Charter or the Charter of the securities investment company.
4. Except in the case of sale and purchase transactions as stipulated in clause 3 of this article, an affiliated person of the fund management company, a fund management practitioner or a person working in the fund management company must not be a partner to other transactions with a public fund or Public securities investment company which is managed by the fund management company.
5. A fund management company, a person affiliated to such company, and a fund management practitioner at the company shall not be permitted to be a party to a transaction of the purchase or sale of investment assets in a portfolio which the company manages, unless such transaction is conducted through the trading system by the method of matching orders at the Stock Exchange or a Securities Trading Centre and is specifically provided for in the investment management contract and is agreed to in writing by the client entrusting investment.
6. All securities transactions conducted by a member of the Board of Management, a member of the Members' Council, the Chairman, the Director or Deputy Director, General Director or Deputy General Director, a member of the Inspection Committee, an Inspector, a fund management practitioner or staff of the Fund Management Company must be reported to the internal control department prior to and immediately after such transactions and must be centrally managed at the Company under the supervision of the internal control department. Information about the above- mentioned transactions shall comprise classes of securities, price of securities, trading time, trading methods and the total value of transactions, and shall be archived for fifteen (15) years and shall be provided to the SSC where required.
7. When the Fund Management Company conducts the trading of assets of the Fund, of the securities investment company and entrusted assets, members of the Board of Management, members of the Members' Council, the Chairman, the Director or Deputy Director, the General Director or Deputy General Director, fund management practitioners and all staff of the Fund Management Company shall not be permitted to request, require or receive, in the name of any individual or of the Fund Management Company, any remuneration, profit or benefit derived from the implementation of transactions of the Fund’s assets, assets of the securities investment company or transactions of assets entrusted by a third party except for fees and bonuses specified in the Fund’s Charter, the Charter of the securities investment company or in the Investment Management Contract. This provision applies to all types of member funds, public funds and securities investment companies.
8. A fund management company shall not be permitted:
(a) To use assets of a Fund or of a securities investment company which it manages in order to invest in the same Fund or the same securities investment company;
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(c) To use the assets of a public Fund or of a public securities investment company in order to invest in another investment Fund or another securities investment company which it manages;
(d) To use assets of the company, or entrusted assets belonging to an investment portfolio which it manages in order to invest in public Funds or in public securities investment companies which were established in Vietnam and which it manages.
9. A fund management company shall only be permitted to use capital of the company, entrusted assets belonging to an investment portfolio, assets of a member Fund, or privately placed shares of a securities investment company in order to invest in member Funds, privately placed shares of securities investment companies established pursuant to the law of Vietnam which such fund management company manages in cases where the charter of the relevant Fund, the relevant investment management contract, or the relevant minutes of agreement on contribution so permit the fund management company to make these investments; and in this case the company shall only be entitled to the level of management fees approved by the investors.
10. A fund management company shall not be permitted to use assets of a public Fund or of a public securities investment company to make joint venture capital or associated capital contributions or to invest in such fund management company, in an economic organization being an affiliated person of the fund management company or in an economic organization being an affiliated person of a member of the Board of Management, a member of the Members' Council, the Chairman, the General Director or Deputy Director, the General Director or Deputy General Director of the fund management company or a fund management practitioner. The fund management company may use capital of the Member Fund or assets of entrusting investors to implement such investment activities in the case where provisions in the Fund’s Charter, the investment management contract or the minutes of a capital contribution agreement permit the fund management company to make such investments with an appropriate level of fees for management approved by investors.
11. A fund management company shall not be permitted to use assets of a Fund or of a securities investment company or entrusted assets in order to provide a loan or to guarantee any loan of the company or of persons affiliated to the company, or to make payment of any debt of the company or of any persons affiliated to the company or to pay the debt of any other person or entity at all.
12. A fund management company must control and ensure that fees for trading assets of public Funds and of public securities investment companies are at an appropriate level and are not higher than the average level of such fees on the market.
13. A fund management company shall only be permitted to manage investment capital of public securities investment companies and of public Funds when the company satisfies the following conditions:
(a) It has at least two fund management practitioners managing the Fund with experience in managing funds and investment portfolios and have such work experience for at least two years;
(b) The fund management practitioners stipulated in sub-clause (a) above have not been subject to an administrative penalty in the securities and securities market sector during the course of their managing funds and investment portfolios.
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Chapter V
FINANCE – ACCOUNTING, DISTRIBUTION OF PROFIT, REGIME ON REPORTING AND DISCLOSURE OF INFORMATION BY THE COMPANY
Article 87. Financial year
1. The financial year of the Company shall commence on 1 January and end on 31 December each year.
2. The first financial year of the Company shall commence on the date of issuance of the licence for establishment and operation and end on 31 December of that year.
Article 88. Accounting, auditing and tax
1. The Company shall organize statistics and accounting work and pay tax in accordance with current regulations.
2. Annual financial statements of the Company and of funds and of securities investment companies which are managed by such fund management company must be audited by an independent auditor approved by the SSC before submission for consideration and passing by the General Meeting of Shareholders/Members’ Council/Company owner and by the General Meeting of Investors/Members’ Council of the securities investment fund or by the General Meeting of Shareholders of the securities investment company.
Article 89. Distribution of profit
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2. The Company may only pay dividends or distribute profit to its members when it generates profit and has fulfilled its tax obligations and other financial obligations in accordance with law; and at the same time must ensure that debts and other property obligations may be paid in full after distribution of profit.
Article 90. Regime on disclosure of information and reporting obligations
1. A fund management company shall be responsible to implement in accordance with law the regime on disclosure of information and on reporting the operation of the company and of Funds and securities investment companies which the fund management company manages.
2. A fund management company shall be responsible to provide information to investors in accordance with law and in accordance with this Charter. The company must ensure that the following information is available at its head office or any branch or representative office, at any office of its distribution agent, and also on the website of the company in order for investors to be able to access the information:
(a) Charters of Funds, charters of securities investment companies, and prospectuses;
(b) Annual reports and reports for the most recent month of Funds and of securities investment companies, at least for the last 5 years;
(c) The most recent reports assessing net asset value and net asset value of one fund certificate and of one share in a securities investment company as stipulated by law;
(d) All the data, reports and contracts referred to in a prospectus;
(e) In the case of clients entrusting investment, investment management contracts with the mandatory information which such contracts must possess.
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Chapter VI
DISSOLUTION, BANKRUPTCY, RESTRUCTURING OF THE COMPANY
Article 91. Dissolution of the company
1. The Company shall be dissolved in the following cases:
(a) The duration of operation stated in the Charter expires and there is no decision to extend;
(b) As decided by the General Meeting of Shareholders/Members’ Council/Company owner;
(c) The company's licence for establishment and operation is revoked;
(d) The company is merged or consolidated with another fund management company.
2. Procedures for dissolution:
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(b) Within seven working days after being passed, the resolution on dissolution must be sent to the SSC and to all creditors, persons having related rights, obligations or interests, and employees in the company and must be publicly posted at the head office and at branches of the enterprise. The resolution on dissolution must be sent to creditors together with a notice of the settlement of the debt.
(c) The SSC must consent to the dissolution.
(d) Liquidation of assets and payment of debts shall be conducted.
(e) Within a time-limit of seven working days after all debts of the company are fully paid, the legal representative of the enterprise must submit documents relating to the dissolution to the SSC.
(f) Where the company's licence for establishment and operation is revoked, the company must be dissolved immediately.
Article 92. Bankruptcy of the company
Bankruptcy of the company shall be implemented in accordance with current regulations.
Article 93. Restructuring of the company
Restructuring of the company shall be as decided by the General Meeting of Shareholders/Members’ Council/Company owner and shall be implemented in accordance with current regulations.
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IMPLEMENTING PROVISIONS
Article 94. Validity of the charter
This Charter shall be of full force and effect as from the date of issuance by the SSC of a licence for establishment and operation to the Company.
Article 95. Amendment of and addition to the charter
Amendment of and addition to this Charter shall be as decided by the General Meeting of Shareholders/Members’ Council/Company owner and must be reported to the SSC.
Article 96. Registration of the Charter and signing
1. This Charter comprises … chapters and ….articles and is made in ….copies each of equal legal validity.
2. Signatures of founding shareholders/founding members.
- 1Decree of Government No.14/2007/ND-CP of January 19, 2007 detailing the implementation of a number of articles of The Law On Securities
- 2Law No.70/2006/QH11 of June 29, 2006 on securities
- 3Law no. 60/2005/QH11 of November 29, 2005 on enterprises
- 4Decree No. 77/2003/ND-CP of July 01st, 2003, defining the functions, tasks, powers and organizational structure of the Finance Ministry.
Decision No. 35/2007/QD-BTC of May 15, 2007, issuing regulations on organization and operation of fund management companies.
- Số hiệu: 35/2007/QD-BTC
- Loại văn bản: Quyết định
- Ngày ban hành: 15/05/2007
- Nơi ban hành: Bộ Tài chính
- Người ký: Trần Xuân Hà
- Ngày công báo: Đang cập nhật
- Số công báo: Đang cập nhật
- Ngày hiệu lực: Kiểm tra
- Tình trạng hiệu lực: Kiểm tra