Law No. 62/2010/QH12 Amending and Supplementing a Number of Articles of the Securities Law

LAW
AMENDING AND SUPPLEMENTING A NUMBER OF ARTICLES OF THE SECURITIES LAW

Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam, which was amended and supplemented with a number of articles according to Resolution No. 51/2001/QH10; The National Assembly promulgates the Law amending and supplementing a number of articles of the Securities Law No. 70/2006/QH11.
Article 1
Amends and supplements a number of articles of the Securities Law.

1. Article 1 is amended and supplemented as follows:
   “Article 1. Scope of regulation
   This Law regulates activities of securities offering, listing, trading, business, investment, securities services, and the securities market.”
2. Clause 1, Article 3 is amended and supplemented as follows:
   “1. Activities of securities offering, listing, trading, business, investment, securities services, and the securities market shall comply with the provisions of this Law and other relevant legal provisions.”
3. Clauses 1, 5, 13, 20, 22, 23, and 26 are amended and supplemented; clauses 8a, 12a, and 27a of Article 6 are supplemented as follows:
   “1. Securities are evidence confirming the legitimate rights and interests of the owner over assets or capital portions of the issuing organization. Securities are expressed in the form of certificates, book entries, or electronic data, including the following types:
   a) Stocks, bonds, fund certificates; b) Share purchase rights, warrants, call options, put options, futures contracts, groups of securities or securities indices; c) Investment capital contribution contracts; d) Other types of securities as prescribed by the Ministry of Finance.” “5. Share purchase rights are a type of security issued by a joint-stock company to grant existing shareholders the right to purchase new shares under specified conditions.” “8a. Investment capital contribution contract is a contract for capital contribution in cash or assets between investors and the contract issuing organization for profit purposes and is allowed to be converted into other securities.” “12a. Private placement of securities is the offering of securities by an organization to fewer than one hundred investors, excluding professional securities investors, and without using mass media or the Internet.” “13. Issuing organization is an organization that conducts securities offerings.” “20. Securities brokerage is the act of intermediating the buying and selling of securities for clients.” “22. Securities underwriting is the commitment to the issuing organization to carry out procedures before offering securities, to purchase a part or all of the issuing organization's securities for resale, or to purchase the remaining undistributed securities of the issuing organization, or to assist the issuing organization in distributing securities to the public.” “23. Securities investment advisory is the provision to investors of analysis results, publication of analysis reports, and recommendations related to securities.” “26. Securities portfolio management is the management, under the entrustment of individual investors, of the buying, selling, and holding of securities and other assets.” “27a. Real estate investment fund is a securities investment fund primarily invested in real estate.”
4. Clause 5 of Article 9 is supplemented as follows:
   “5. Conducting securities business operations without a license or approval from the State Securities Commission.”
5. The title of Chapter II is amended as follows:
   “Chapter II
   SECURITIES OFFERING”
6. Article 10a is supplemented after Article 10 as follows:
   “Article 10a. Private placement of securities
7. Private placement of securities by an issuing organization that is not a public company shall comply with the provisions of the Enterprise Law and other relevant legal provisions.
8. Conditions for private placement of securities by a public company include:
   a) Having a resolution from the General Meeting of Shareholders or the Board of Directors approving the offering plan and the use of proceeds from the offering; clearly identifying the target investors and the number of investors; b) The transfer of privately offered shares or convertible bonds is restricted for at least one year from the date of completion of the offering, except for private offerings under an employee stock option program, transfer of offered securities by individuals to professional securities investors, transfer of securities between professional securities investors, by court decision, or by inheritance as prescribed by law; c) Private offerings of shares or convertible bonds must be at least six months apart.
9. The Government shall specify the dossier and procedures for private placement of securities.”
10. Point d, Clause 1, Article 12 is supplemented as follows:
    “d) A public company registering for a public offering of securities must commit to listing the securities for trading on an organized market within one year from the date of completion of the offering approved by the General Meeting of Shareholders.”
11. Point d, Clause 1, Article 14 is amended and supplemented as follows:
    “d) Resolution of the General Meeting of Shareholders approving the issuance plan, the plan for using the raised capital, and a commitment to list the securities for trading on an organized securities trading market;”
12. Clause 1, Article 24 is amended and supplemented as follows:
    “1. An issuing organization that has completed a public offering of shares becomes a public company and must fulfill the obligations of a public company as stipulated in Clause 2, Article 27 of this Law. The public offering registration dossier is considered a public company dossier, and the issuing organization is not required to submit a public company dossier as stipulated in Clause 1, Article 26 of this Law to the State Securities Commission. A public company that is an issuing organization must fulfill its commitment to list the offered securities for trading on an organized securities trading market as stipulated in Point d, Clause 1, Article 12 of this Law.”
13. Article 28 is amended and supplemented as follows:
    “Article 28. Public Company Governance
14. The governance of a public company must comply with the provisions of this Law, the Enterprise Law, and other relevant legal provisions.
15. Principles of public company governance include:
    a) Ensuring a reasonable governance structure; ensuring the effective operation of the Board of Directors and the Supervisory Board; b) Ensuring the rights and interests of shareholders and related persons; c) Ensuring fair treatment among shareholders; d) Transparency in all company operations.
16. The Ministry of Finance shall specify the details of this Article.”
17. Article 32 is amended and supplemented as follows:
    “Article 32. Public Tender Offer
18. The following cases require a public tender offer:
    a) A tender offer for voting shares, closed-end fund certificates leading to ownership of twenty-five percent or more of the outstanding shares, fund certificates of a public company, closed-end fund; b) An organization, individual, and related persons holding twenty-five percent or more of the voting shares, fund certificates of a public company, closed-end fund, acquiring an additional ten percent or more of the outstanding voting shares, fund certificates of the public company, closed-end fund; c) An organization, individual, and related persons holding twenty-five percent or more of the voting shares, fund certificates of a public company, closed-end fund, acquiring an additional five to less than ten percent of the voting shares of the public company, closed-end fund within a period of less than one year from the date of completion of the previous public tender offer.
19. The following cases do not require a public tender offer:
    a) Acquisition of newly issued shares, fund certificates leading to ownership of twenty-five percent or more of the voting shares, fund certificates of a public company, closed-end fund according to the issuance plan approved by the General Meeting of Shareholders of the public company, the Board of Representatives of the closed-end fund; b) Receipt of transfer of voting shares, fund certificates leading to ownership of twenty-five percent or more of the voting shares, fund certificates of a public company, closed-end fund approved by the General Meeting of Shareholders of the public company, the Board of Representatives of the closed-end fund; c) Transfer of shares between companies within an enterprise organized under a parent company-subsidiary model; d) Gifts, donations, inheritance of shares; e) Capital transfer by court decision; f) Other cases decided by the Ministry of Finance.
20. The Government shall specify the public tender offer for shares of public companies and closed-end fund certificates.”
21. Clause 1 is amended and supplemented, and Clause 4 of Article 33 is supplemented as follows:
    “1. The Stock Exchange organizes the securities trading market for securities eligible for listing on the Stock Exchange; the organization of trading markets for other types of securities shall comply with government regulations.” “4. The Stock Exchange may establish links with stock exchanges of other countries as decided by the Prime Minister.”
22. Clause 3, Article 40 is amended and supplemented as follows:
    “3. The Government shall specify the conditions, dossiers, and procedures for listing securities of Vietnamese issuing organizations and foreign issuing organizations on the Stock Exchange, Securities Trading Center of Vietnam; and specify the conditions, dossiers, and procedures for listing securities of Vietnamese issuing organizations on foreign stock exchanges.”
23. Clause 3, Article 60 is amended and supplemented as follows:
    “3. In addition to the securities business operations stipulated in Clause 1 of this Article, securities companies may accept entrusted management of individual investors' securities trading accounts, provide financial advisory services, and other financial services as prescribed by the Ministry of Finance.”
24. Clause 1, Article 61 is amended and supplemented as follows:
    “1. Fund management companies may conduct the following business operations:
    a) Securities investment fund management; b) Securities portfolio management; c) Securities investment advisory.”
25. Article 74 is amended and supplemented as follows:
    “Article 74. Regulations on Financial Safety and Warning Securities companies and fund management companies must ensure financial safety ratios as prescribed by the Ministry of Finance; in cases where financial safety ratios are not met, they shall be placed under warning or subject to safety assurance measures.”
26. Point d, Clause 1, Article 92 is amended and supplemented as follows:
    “d) Investing more than ten percent of the total asset value of a closed-end fund in real estate, except for real estate investment funds; investing open-end fund capital in real estate;”
27. Clause 1 and Clause 3 of Article 100 are amended and supplemented as follows:
    “1. Issuing organizations, public companies, securities companies, fund management companies, securities investment companies, Stock Exchanges, Securities Trading Centers, Securities Depository Centers, and related persons have the obligation to disclose information fully, accurately, and promptly.” “3. Information disclosure must be carried out by the legal representative or authorized person and related persons.”
28. Article 101 is amended and supplemented as follows:
    “Article 101. Information Disclosure by Public Companies
29. Public companies must periodically disclose information on one or more of the following contents:
    a) Audited annual financial statements, semi-annual financial statements reviewed by an independent auditing firm or an approved auditing organization, quarterly financial statements; b) Resolution of the Annual General Meeting of Shareholders.
30. Public companies must disclose extraordinary information when one of the following cases occurs:
    a) The company's bank account is frozen or the account is allowed to resume operations after being frozen; b) Temporary suspension of business; revocation of the Business Registration Certificate or Establishment and Operation License or Operation License; c) Approval of a resolution by the General Meeting of Shareholders as stipulated by the Enterprise Law; d) Resolution of the Board of Directors regarding the repurchase or resale of company shares; the exercise date of share purchase rights by bondholders with share purchase rights or the conversion date of convertible bonds into shares and decisions related to offerings as stipulated in Clause 2, Article 108 of the Enterprise Law; the company's medium-term development strategy and plan and annual business plan; establishment of subsidiaries, associated companies; closing or opening of branches, representative offices; change of company name, principal office address; capital contribution with a value of ten percent or more of the company's total assets to another organization; capital contribution with a value of fifty percent or more of the total contributed capital of the recipient company; e) Decision to change the applied accounting method; qualified opinion or disclaimer of opinion by the auditing organization on financial statements, change of auditing firm; f) Change of members of the Board of Directors, Supervisory Board, General Director, Deputy General Director or Director, Deputy Director, Chief Accountant; decision to prosecute a member of the Board of Directors, General Director, Deputy General Director or Director, Deputy Director, Chief Accountant of the company; court judgments or decisions related to the company's operations; conclusions by tax authorities regarding the company's violation of tax laws; g) Purchase or sale of assets with a value greater than fifteen percent of the company's total assets calculated according to the most recent audited balance sheet; h) Decision to borrow or issue bonds with a value of thirty percent or more of equity at the most recent reporting period; i) The company receives notification from the Court accepting a petition to initiate enterprise bankruptcy procedures; k) Asset loss with a value of ten percent or more of equity; l) An event significantly affecting the production and business operations or governance situation of the listed organization; m) When one of the events seriously affecting the legitimate interests of investors, continuous increase or decrease in securities prices for a certain period, and the sustainable development of the securities market occurs, as required by the State Securities Commission.
31. The Ministry of Finance shall specify the content and timing of information disclosure for each type of public company.”
32. Clause 3, Article 104 is amended and supplemented as follows:
    “3. Securities companies must disclose information at their head office and branches regarding changes related to the address of the head office, branches; contents related to trading methods, order placement, margin, settlement time, transaction fees, services provided, and the list of securities practitioners of the company.”
33. Article 136 is amended and supplemented as follows:
    “Article 136. Detailed Regulations and Implementation Guidelines The Government shall specify details and guide the implementation of the articles and clauses assigned in the Law; and guide other necessary contents of this Law to meet state management requirements.”
    Article 2
    Repeals Article 103 and Clause 2, Article 106 of the Securities Law No. 70/2006/QH11.
    Article 3
    This Law shall take effect from July 01, 2011.
    __________________________________________________________________ This Law was adopted by the XII National Assembly of the Socialist Republic of Vietnam at its 8th session on November 24, 2010.

CHAIRMAN OF THE NATIONAL ASSEMBLY

(signed)
Nguyen Phu Trong