Offshore investment in securities, valuable papers is allowed.

Vietnamese Government promulgated Decree No.135/2015/ND-CP dated 31 December 2015 on offshore indirect investment (“Decree.135”). This Decree No. 135 took effect. This Decree details offshore investment in the forms of purchase and sale of securities, other valuable papers or making investments via overseas securities investment funds or other intermediary financial institutions and go in force on 15 February 2016.

Offshore investment in securities, valuable papers is allowed

1.Investors:

1.1 Individual Investors.

Individual investors being residents are allowed to do offshore indirect investment in bonus by shares in accodance with the Ordinance on Foreign Exchange if it is done in compliance with the guidelines as provided by the State Bank of Vietnam. However, so far, the SBV has yet to issue any regulation regarding this matter. Therefore, Individual investors being residents are allowed to do offshore indirect investment in securities, valuable papers or other intermediary financial institutions as approved by the SBV on a case by case basis.

1.2 Investors being entities

The offshore indirect investment of entities in securities, valuable papers or other intermediary financial institutions will be performed by 02 methods, namely, (i) proprietary trading of offshore indirect investment and

               (ii) entrusted offshore indirect investment.

Proprietary trading entities and entrusted entities can perform offshore indirect investment in the following forms:
+ Direct purchase and sale of securities and other valuable papers offshore.
+ Investment through sale and purchase of certificates of securities investment funds offshore, and entrusting investment to other intermediary financial institutions offshore.

2 Proprietary Trading

Only six following entities are allowed to perform proprietary offshore indirect investment in securities, valuable papers or other intermediary financial institutions:
(1) Security companies and fund management companies;
(2) Securities investment funds through fund management companies, securities investment companies;
(3) Insurance business companies;
(4) Commercial banks;
(5) Finance companies; and
(6) State Capital Investment Corporation

3. Conditions to get approval on proprietary trading offshore indirect investment

In order to perform offshore indirect investment in securities, valuable papers or other intermediary financial institutions, proprietary trading entities must obtain an Offshore Indirect Investment Registration Certificate (“OIIRC”) issued by Vietnam Ministry of Finance for securities companies, fund management companies, insurance business enterprises; or the OIIRC issued by the State Bank of Vietnam for commercial banks and  finance companies; or the Approval Letter issued by Vietnam Ministry of Finance for securities investment funds and securities investment companies.

4. Entrusted investment, receiving entrustment of offshore indirect investment.
Company may only perform offshore indirect investment through entrusted investment organization allowed to receive entrusted investments includes:
(i) fund management companies and
(ii) (ii) commercial banks.

5. Conditions to get an entrusted Offshore Indirect Investment Registration Certificate.

In order to receive entrustment of offshore indirect investment, entrusted entities must obtain an Entrusted Offshore Indirect Investment Registration Certificate issued by the MOF for fund management  companies or a similar certificate issued by the SBV for commercial banks.

6. Investment tools

The State Bank of Vietnam will detail the types of and criteria for selection of investment  tools in foreign countries in each period. Investors may only make offshore indirect investment via the investment tools specified by the State Bank of Vietnam. Proprietary trading entities and entrusted entities being commercial banks and finance companies can only perform proprietary trading, receive investment entrustment of bonds and other tools on the monetary market guidelined by State Bank of Vietnam.

7. Currency sources for offshore indirect investment

Proprietary trading entities (except for commercial banks and general finance companies) can use their own foreign currency in accounts and foreign currency purchased from credit institutions or  foreign bank branches permitted to provide foreign exchange services in Vietnam to perform offshore indirect investment.
Entrusting entities (except for commercial banks and finance companies) can only use their own foreign currency in accounts for performance of offshore indirect investment in the form of entrustment to entrusted entities.

Commercial banks and finance companies balance their foreign currency sources to perform offshore indirect investment on the basis
of ensuring compliance with provisions on foreign currency status, and prudential ratios and limits in banking activities.

Investors are not permitted to use loans in any form for offshore indirect  investment.

However, the above requirements will not apply to the offshore indirect investment of companies of which the State owns at least 65% of charter capital and indirect investment projects with a value of VND800 billion or more, which  will be subject to guidelines issued by the Prime Minister.

8. Open an account for proprietary offshore indirect  investment and receving entrusted offshore indirect investment.

 Proprietary trading entities and entrusting entities must open 01 (one) account offshore indirect investment in foreign currency in local and foreign country to carry out transactions revenue and expenditure related to offshore indirect investment activities under the guidance of the State Bank of Vietnam and foreign country regulations.

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