A securities investment fund which is not organized as a joint stock company (Investment Fund) is an economic organisation but may not have legal person status (tư cách pháp nhân) under Vietnamese law.  

On the first point, an Investment Fund can be considered as an organization under the Securities Law for the following reasons:

• Article 2 of the Securities Law 2006 provides that the Securities Law 2006 applies to organisations and individuals. “Securities investment fund” is defined as a fund established from capital contributions of investors in order to make a profit from investment in securities or other property including real estate. Given an Investment Fund is not an individual, and it is subject to regulations of the Securities Law, it should be considered as an organisation.
• Article 22.3 of the Investment Law 2014 provides that a foreign investor may own unlimited number of shares and capital contribution in an economic organisation except that investment in Investment Fund will be subject to the foreign ownership limit under securities regulations. This provision suggests that an Investment Fund is an economic organisation.

Regarding legal person status, according to the Civil Code 2015,

• an organization will be considered as a legal person if it, besides satisfying other conditions, enters independently into legal relations in its own name. It is not clear whether an Investment Fund could satisfy such criterion because the Investment Fund does not have an individual legal representative (like a normal company) to enter into in transactions on behalf of the Investment Fund. Instead, all activities of the Investment Fund are conducted through its fund management company which could be considered as the authorized representative of the fund.
• In addition under Annex 09 of Circular 212/2012, the Ministry of Finance (MOF) indicates that funds should be categorized into two groups: one with legal person status (including public securities investment companies, private securities investment companies and real estate securities investment companies); and one without legal person status (including close-ended funds, open-ended funds, real estate investment funds, ETF funds and member funds).

Though the intention of Vietnamese law may still be an ambiguous issue, an Investment Fund should be recognized as a legal person status because:

• An Investment Fund has separate assets and its own charter;
• The investors of the Investment Fund owns the fund through fund certificates and are entitled to the fund’s profit in corresponding to their contributed capital; and
• In practice, an Investment Fund is eligible to enter into various transactions in its name via various professional activities of its “authorised person” – the relevant fund management company.

This post is contributed by Ngoc Nguyen, an associate at Venture North Law.