Circular 43/2010/TT-BTC amending the regulations on securities registration, depository, clearing and settlement

|MINISTRY OF FINANCE |SOCIALIST REPUBLIC OF VIETNAM | |-------- |Independence - Freedom - Happiness | |No. 43 /2010/TT-BTC |------------ | | |Hanoi, March 25, 2010 |

CIRCULAR Amending and supplementing the Regulations on securities registration, depository, clearing and settlement issued together with Decision No. 87/2007/QD-BTC dated October 22, 2007 by the Minister of Finance

  Based on the Securities Law No. 70/2006/QH11 adopted by the National Assembly on June 29, 2006;
  Based on Government Decree No. 14/2007/ND-CP dated January 19, 2007 detailing the implementation of some articles of the Securities Law;
  Based on Government Decree No. 118/2008/ND-CP dated November 27, 2008 defining the functions, tasks, powers and organizational structure of the Ministry of Finance;
  The Ministry of Finance guides the amendment and supplementation of certain points in the Regulations on securities registration, depository, clearing and settlement issued together with Decision No. 87/2007/QD-BTC dated October 22, 2007 by the Minister of Finance (hereinafter referred to as Decision No. 87/2007/QD-BTC) as follows:

Article 1. Amend the name of the Securities Depository Center (abbreviated as TTLKCK) to Vietnam Securities Depository (abbreviated as VSD). Article 2. Amend Point d, supplement Point e, Clause 1, Article 7, Chapter III of Decision No. 87/2007/QD-BTC as follows: “d. Have business procedures for securities registration, depository, clearing and settlement that meet the requirements of VSD. e. The system has the ability to connect with VSD’s electronic communication gateway and the software for managing securities registration, depository, clearing and settlement activities that meet the requirements of VSD.” Article 3. Amend and supplement Clause 8, Article 12, Chapter III of Decision No. 87/2007/QD-BTC as follows: “8. Having its securities brokerage business withdrawn by the State Securities Commission (SSC) or having its Securities Depository Activity Registration Certificate revoked as specified in Clause 2, Article 51 of the Securities Law (for depository members).” Article 4. Amend and supplement Clause 1, Article 18, Chapter IV of Decision No. 87/2007/QD-BTC as follows: “1. The transfer of ownership of listed/listed-for-trading securities is implemented according to the following principles: a. The owner of securities who wishes to transfer ownership must deposit the securities into VSD through depository members to trade buy/sell securities through the Stock Exchange (SGDCK) or transfer ownership according to Clause b of this Article (except for cases of transfer of ownership due to inheritance or when the issuing organization buys back shares of employees upon termination of labor contracts). b. VSD only implements transfer of ownership of securities outside the securities trading system for transactions that are not of a buying/selling nature or cannot be implemented through the trading system at the Stock Exchange, in the following cases:

• Gifting, donating, bequeathing securities according to the provisions of the Civil Law.
• Odd-lot securities trading according to the provisions of securities law and the securities market.
• The issuing organization/Trade Union of the issuing organization buys back preferred shares of employees upon termination of labor contracts to become treasury shares or bonus shares for employees.
• The issuing organization uses treasury shares for bonuses/Trade Union of the issuing organization distributes bonus shares to employees.
• Transactions of founding shareholders during the restricted transfer period.
• The issuing organization changes strategic shareholders during the restricted transfer period.
• Other cases of transactions for securities registered at VSD and approved in principle by the Stock Exchange but not yet officially listed.
• Investors entrust the transfer of ownership of their securities to a fund management company in the case where the fund management company receives management of entrusted investment portfolios with assets.
• The fund management company transfers ownership of entrusted securities to the entrusting investor or another fund management company in the case of termination of the portfolio management contract or if the fund management company is dissolved, bankrupt, must return assets to the entrusting investor or transfer the asset portfolio to another fund management company for management.
• Cases of transfer of ownership according to the decision of the Court.
• Division, merger, consolidation, capital contribution by shares to establish a business enterprise or re-allocation of the financial management mechanism of the enterprise according to the provisions of the Civil Law, Enterprise Law and Securities Law.
• Other cases of transfer of ownership that are not of a buying/selling nature must be approved by the SSC.” Article 5. Amend and supplement Clause 1, Article 21, Chapter V of Decision No. 87/2007/QD-BTC as follows: “1. The depository of customers' securities at VSD is implemented according to the principle: customers deposit securities at depository members and depository members re-deposit customers' securities at VSD.” Article 6. Amend and supplement Clauses 3, 5, Article 24, Chapter V of Decision No. 87/2007/QD-BTC as follows: “3. The total balance in the securities depository accounts of customers opened at depository members must always match the balance of the depository accounts of depository members opened at VSD. The detailed balance in the securities depository account of each customer at the depository member must match the ownership data of that customer at VSD.

5. When detecting errors in the information in the securities depository account of a member or a customer of a member, VSD must notify the member immediately and the member is responsible for adjusting it to be appropriate.” Article 7. Supplement Point f, Clause 1, Article 26, Chapter V of Decision No. 87/2007/QD-BTC as follows: “f. Depository members are responsible for updating daily information on the opening and closing of investors' depository accounts executed on the same day at the depository member to VSD and performing reconciliation of the depository account balance of each customer with the securities ownership data of the customer at VSD based on the securities ownership data provided by VSD to the depository member. The procedure and formalities for updating account information and reconciling balances are implemented according to the regulations of VSD.” Article 8. Amend Clause 3, Article 27, Chapter V of Decision No. 87/2007/QD-BTC as follows: “3. The SSC guides specifically on the time limit for selling securities after the transaction, after being approved by the Ministry of Finance.” Article 9. Supplement Clauses 3, 4, Article 28, Chapter V of Decision No. 87/2007/QD-BTC as follows: “3. VSD implements the requirement to deposit securities for investors simultaneously with securities registration when there is a request from the Issuing Organization acting on behalf of shareholders. VSD regulates the dossier and procedures for depositing securities in this case.
6. In the case where the Issuing Organization manages securities in the form of book-entry in accounts and does not issue certificates, the deposit of securities by investors is implemented according to the guidance of VSD.” Article 10. Revoke Points a, f, g, h and amend and supplement Points i, k, Clause 1, Article 30, Chapter V of Decision No. 87/2007/QD-BTC as follows: “i. When the depository member where the customer has an account is revoked of member status, has its Depository Activity Registration Certificate revoked, has its securities brokerage business withdrawn, or is revoked of depository member status by VSD. k. Other cases of transfer of ownership as specified in Point b, Clause 1, Article 4 of this Circular.” Article 11. Revoke Clause 4 and amend and supplement Clause 3, Article 32, Chapter VI of Decision No. 87/2007/QD-BTC as follows: “3. For transactions of listed securities/listed-for-trading securities, VSD implements settlement based on the transaction results provided by the Stock Exchange.” Article 12. Amend and supplement Clauses 1, 2, Article 40, Chapter VI of Decision No. 87/2007/QD-BTC as follows: “1. VSD has the right to cancel transaction settlement in the following cases:

• The member loses the ability to settle transactions after applying measures according to regulations but cannot be remedied.
• The member/customer of the member sells short securities when there is no guidance from the Ministry of Finance.
• Information about the customer's trading account related is not updated according to VSD regulations at the time of executing the securities transaction settlement.

2. Depository members with transactions cancelled from settlement must bear full responsibility for losses arising for customers and related members due to the un-settled transaction. The compensation amount is agreed upon by the parties but must not exceed ten percent (10%) of the value of the cancelled transaction.” Article 13. Amend and supplement Clause 2, Article 41, Chapter VI of Decision No. 87/2007/QD-BTC as follows: “2. For transactions of unlisted public companies, when detecting that the member's account has insufficient funds, the member/customer's account lacks securities for settlement, or information about the customer's trading account related is not updated according to VSD regulations at the time of executing the securities transaction settlement, VSD handles these transactions according to the provisions in VSD’s business operation regulations.” Article 14. Amend Clause 2, supplement Clauses 7, 8, Article 42, Chapter VII of Decision No. 87/2007/QD-BTC as follows: “2. Have actual charter capital of over 5,000 billion VND.
3. Have at least 10 members of VSD committing to register to open securities trading settlement accounts after being approved as a Settlement Bank and must not refuse when VSD members request to use the Settlement Bank services.
4. The system has the ability to store transaction settlement data for at least 01 year and can provide it immediately to the SSC or VSD within 01 day upon request.” Article 15. Effectiveness:
5. This Circular takes effect 45 days from the date of signing. In the case where VSD's depository members have not yet met the conditions specified in Article 2 of this Circular, they must complete the system upgrade and amend business procedures no later than 3 months from the date this Circular takes effect.
6. During implementation, if there are difficulties, units are requested to report promptly to the Ministry of Finance for study and resolution./. |Where to receive: |KT. MINISTER | |- Government Office; |DEPUTY MINISTER | |- Central Committee and Party Departments Office; |(Signed) | |- National Assembly Office; | | |- Office of the President; | | |- Ministries, ministerial-level agencies, government-affiliated agencies; | | |- People's Councils, People's Committees of provinces and centrally-run cities; |Tran Xuan Ha | |- Office of the Central Steering Committee on Anti-Corruption; |  | |- People's Procuracy Supreme Court, People's Court Supreme Court; |  | |- State Audit Office; |  | |- Central agencies of mass organizations; |  | |- Official Gazette; | | |- Government Website; | | |- Document Inspection Agency - Ministry of Justice; | | |- Units under the Ministry of Finance; | | |- BTC Website; | | |- Store: VT, SSC. | |