In December 2012, the Ministry of Finance (MOF) issued Circular 213/2012 on activities of foreign investors on Vietnamese securities market (Circular 213/2012). Circular 213/2012 will take effect from 15 February 2013 replacing Decision 121/2008 of the MOF on the same subject. The salient points of Circular 213/2012 include:
- Not applicable to non-public companies: Circular 213/2012 does not apply to (1) direct investment by way of share purchase or capital contribution and merger and acquisition, (2) trading of shares by non-public companies, and (3) trading of capital contribution in limited liability companies. On the other hand, Decision 121/2008 applies to, among other things, (1) purchase unlisted shares which may include shares of non-public companies and (2) making capital contribution in Vietnamese companies which may include capital contribution of limited liability company. The reduced scope of application of Circular 213 may allow a foreign investor investing an a non-public company without having to obtain a securities trading code from the Vietnam Security Depository Center (VSD);
- Member funds established in Vietnam with more than 49% foreign capital is regarded as a “foreign investor”. Under Decision 121/2008, only member funds with more than 100% foreign capital is regarded as a “foreign investor”;
- Disclosure obligation for “related foreign investors”: A group of related foreign investors include (1) a group of foreign funds managed by the same fund manager, (2) sub-funds of the same master fund, (3) multiple investment managers fund, and (4) funds having the same trading representative in Vietnam. A group of related foreign investors must designate the single contact point to make public disclosures about its trading activities in Vietnam. In addition, a group of related foreign investors is prohibited from manipulating trading activities; and
- Issuance of Securities Trading Code before submission of legalized copies: Many foreign investors have complained that the requirement to have legalized copies of documents submitted to the VSD is cumbersome and takes time. Responding to the complaint, Circular 213/2012 now allows certain foreign investors to be issued a Securities Trading Code before submitting the required legalized copies of documents.