Establish a branch of a foreign securities company in Vietnam

Today, as the stock market becomes more and more vibrant, in addition to the activities of securities companies, branches of foreign securities companies in Vietnam are increasingly expanding and developing. In the following article, Viet An Law will analyze the establishment of a branch of a foreign securities company in Vietnam according to legal regulations.

Legal basis

• Law on Securities 2019;
• Decree 155/2020/ND-CP detailing the implementation of several articles of the Securities Law;
• Circular 97/2020/ND-CP guiding the operations of representative offices, branches of securities companies, and foreign fund management companies in Vietnam.

What is a foreign securities company in Vietnam?

According to Clause 3, Article 2 of Circular 97/2020/ND-CP, branches of foreign securities companies in Vietnam are dependent units of securities companies without legal status, established according to the provisions of Vietnamese law and the parent company is responsible before Vietnamese law for all its activities in Vietnam.

If a securities company is allowed to perform securities brokerage, securities trading, securities underwriting, or securities investment consulting, the branch of a foreign securities company in Vietnam can only conduct the security investment consulting profession.

The activities of a foreign securities company branch in Vietnam include providing analysis results, analysis reports, and making recommendations to clients with or without fees in the following cases:

• Provide reports on results of analysis of trading situations on the stock market and make investment recommendations;
• Providing reports on analysis results of public companies, listed companies, and other businesses and making investment recommendations;
• Sign a securities investment consulting contract with clients.

Conditions of establishment

According to Article 76 of the Securities Law 2019, a foreign securities company is allowed to establish a branch in Vietnam when it meets the following conditions:

Conditions for capital contribution

Foreign organizations participating in contributing capital to establish, purchasing shares, or contributing capital to own 100% of the charter capital of a securities company must meet the following conditions:

• Be licensed and have continuously operated in the fields of banking, securities, and insurance for 02 years immediately preceding the year of contributing capital to establish, purchasing shares, or contributing capital;
• The licensing agency of the home country and the State Securities Commission have signed a bilateral or multilateral cooperation agreement on information exchange, management cooperation, inspection, and supervision of securities activities;
• Profitable business activities for 02 consecutive years preceding the year of capital contribution for the establishment, purchase of shares, capital contribution, and the most recent year’s financial statements must be audited with full approval.

In addition, the branch must not have established or contributed capital to a securities company or securities investment fund management company in Vietnam with a foreign securities company owning more than 49% of charter capital.

Capital conditions

According to Clause 2, Article 175 of Decree 155/2020/ND-CP, the minimum capital granted to branches of foreign securities companies in Vietnam is 10 billion VND.

Facilities conditions

• Have a secure workplace for securities business activities;
• There are sufficient facilities, techniques, equipment, office equipment, and technology systems for the professional process of securities business activities.

Personnel conditions

There is a General Director (Director), at least 03 employees with securities investment consulting practice certificates, and at least 01 compliance control employee. The General Director (Director) must meet the standards according to Clause 5, Article 74 of the Securities Law 2019.

Conditions of headquarters

The headquarters of a branch of a foreign securities company in Vietnam is located in the territory of Vietnam, is the contact address of the branch of a foreign securities company, has a determined address, and has a telephone number and phone number. fax, email (if any), and following the provisions of Vietnamese law on security, order, occupational safety and health, and relevant legal regulations.

Note, according to Article 3 of Circular 97/2020/ND-CP, branches of foreign securities companies in Vietnam are not allowed to lend or sublease their headquarters.

Name conditions

According to Article 4 of Circular 97/2020/ND-CP, the name of a branch of a foreign securities company in Vietnam must meet the following conditions:

• Must be written with letters in the Vietnamese alphabet, letters F, J, Z, W, numbers, and symbols.
• The branch name must include the name of the foreign securities company.
• Branch names are placed in the order “Branch – the name of foreign securities company – in Vietnam”.
• The branch name must be attached to the representative office or branch headquarters.

Establishment procedures

Step 1: Apply for a License to Establish a branch of a foreign securities company in Vietnam

The State Securities Commission has the authority to grant licenses for the establishment and securities business operations to branches of foreign securities companies in Vietnam. The dossier to request an establishment and operation license is specified in 177 of Decree 155/2020/ND-CP, including the following documents:

• Application for establishment and securities business operations for branches of foreign securities companies;
• Decision of the competent authority according to the company charter on the establishment of a branch in Vietnam; Appointing directors and providing capital to branches of foreign securities companies in Vietnam.
• The list of personnel, personal information sheet, and criminal record of the branch director shall be issued no more than 06 months from the date of application submission.
• Charter of foreign securities trading organization.
• Written approval of the competent agency or organization of the foreign country where the securities business organization is headquartered (if any).
• License for establishment and operation of a foreign securities business organization or equivalent documents issued by the competent authority of the home country.
• The most recent annual financial statements of the foreign securities trading organization are audited. Foreign securities trading organizations that are parent companies must supplement their audited consolidated financial statements.
• Head office lease contract, documents proving ownership of the head office, right to use the head office; Explanation of facilities.
• Decisions of competent authorities promulgating professional processes, internal control processes, and risk management processes.
• Documents related to funds investing in Vietnam (if any);
• Power of Attorney for Viet An Law.

Step 2: The State Securities Commission receives and processes the application.

• Within 20 days from the date of receiving complete and valid documents, the State Securities Commission shall issue a written request to complete facilities, freeze capital contributions, and prepare adequate personnel. Shareholders, capital contributing members, and company owners can use contributed capital to invest in facilities. The remaining capital contribution must be frozen on an account opened at a payment bank and can only be released after being granted a License to establish and operate a securities business.
• After 03 months from the date of receiving notice from the State Securities Commission, if the shareholders, capital contributing members, or owners do not complete the facilities, blockade the remaining charter capital, and standardize fully staffed, the State Securities Commission has the right to refuse licensing.
• Within 05 working days from the date of receiving the capital freeze confirmation, facilities inspection record, and other valid documents, the State Securities Commission shall issue the License for establishment and business operations of securities business; In case of refusal, a written response must clearly state the reason.

Note, if there is a change in branch name, branch address, or parent company name, approval from the State Securities Commission is required before the change.

Step 3: Proceed with business registration

According to Article 70 of the Securities Law 2019, after being granted a License to establish and operate a securities business, branches of foreign securities companies in Vietnam must register their business at the Business Registration Authority.

Step 4: Announce information and announce activities

Branches of foreign securities companies in Vietnam must publish operational information on the information disclosure media of the State Securities Commission and 01 electronic or printed newspaper for 03 consecutive issues for at least 30 days before the expected date of official operation. Information includes:

• License to establish and operate securities business issued by the State Securities Commission;
• Official day of operation. The official date of operation is decided by the branch but it must ensure official operation within 12 months from the date of license and must not conduct securities trading activities before the official date of operation.

A branch of a foreign securities company in Vietnam can officially operate when it meets the following conditions:

• Registered business at the Business Registration Agency.
• Have operating procedures, risk management, and internal control.

Note about the obligation to notify conditions

Licensed branches of foreign securities companies in Vietnam must notify the State Securities Commission of meeting the above conditions at least 15 days before the official date of operation.

Services for establishing branches of foreign securities companies of Viet An Law

• Legal advice on conditions, documents, procedures, and licenses to establish a branch of a foreign securities company in Vietnam;
• Draft documents, records, and papers for clients as requested;
• Representing clients, conducting procedures at competent state agencies, and responding to feedback;
• Regular legal advice for the branch after its establishment.

Clients have related questions or need legal support regarding the establishment of branches of foreign securities companies in Vietnam, please contact Viet An Law for the best support.