Market Profiles

FII Market Entry Requirements for Vietnam

RBC IS operates a segregated account structure in this market.

Please refer to 'Market Account Opening Requirements' for information on the market requirements. Clients are requested to refer to the requirements for information purposes only.

For further information or support around accessing this market, please contact your RBC IS representative.

There are two official stock exchanges in Vietnam, the Ho Chi Minh Stock Exchange and the Hanoi Stock Exchange. Securities of unlisted public companies may be registered to be traded on the regulated OTC market (UPCOM) on the Hanoi Stock Exchange.

Ho Chi Minh City Stock Exchange (HOSE)
Vietnam's first Securities Trading Centre (STC), Ho Chi Minh City Securities Trading Centre (HOSTC) was inaugurated on July 20, 2000. On August 8, 2007 the HOSTC officially converted to the Ho Chi Minh Stock Exchange (HOSE). The HOSE operates as a one-member limited liability company, which is wholly owned by the state and operates with financial independence and its own legal status. Securities traded on the HOSE consist of ordinary shares and corporate bonds. The HOSE is the larger of the exchanges with higher listing requirements.

By December 31, 2022, all listed corporate bonds in HOSE will be transferred to HNX and HOSE will stop receiving new bond listing application.

From July 1, 2023, HOSE will receive and review all new equities listing application requests regardless of the company registered capital size. All existing listed company stocks in HNX will be transferred to HOSE during H2 2023 while all existing UPCOM stocks in HNX will be transferred to HOSE during H1 2025. By June 30, 2025, HOSE will serve as the Exchange for all listed stocks, covered warrants, fund certificates and UPCOM stocks.

Hanoi Stock Exchange (HNX)
Hanoi Securities Trading Centre (HASTC) came into operation in March 2005 and was officially converted into the Hanoi Stock Exchange (HNX) in June 24, 2009. The HNX was inaugurated as a State-owned single-member limited liability company . It complies with the Securities Law, Enterprise Law, HNX's charter and other applicable laws.

The HNX also acts as a trading floor for shares of small and medium size companies. The HNX executed its first trading session on July 14, 2005. 

Starting from June 2008, all newly issued government bonds were listed in HNX. There are only a few corporate bonds and municipal bonds listed on HNX. Effective 24 August 2012, Treasury bills are listed and traded on HNX. 
In addition to the listed equities market, HNX also runs an OTC market for unlisted public companies, called UPCOM market and a specialised Government Bond market. As part of the establishment of specialised government bonds market, government bonds traded on HOSE were transferred to HNX from 2 June 2008. The two stock exchanges will eventually be merged into a single stock exchange according to MOF’s plan.

The Government Bond Trading System is an independent system launched on 24 September 2009. The government bond trading system is linked directly with the custody, settlement and clearing system of the VSD.

Effective July 20, 2021, HNX will receive all new bond listing applications. Transfer of listed corporate bonds from HOSE to HNX will be completed by December 31, 2022. HNX will become the Exchange for government bonds, government guaranteed bonds, municipal bonds, corporate bonds, corporate bonds in private placements.

From July 1, 2023, HNX will stop receiving new stock listing application requests. By June 30, 2025, HNX will stop serving any equities.

The derivatives market went live on August 10, 2017. Only VN30-Index futures will be traded on the Hanoi Stock Exchange (HNX) at the launch. HNX30-Index futures and bond futures will be available for trading at a later stage.

Merger of Stock Exchanges

The Prime Minister of Vietnam has approved the plan to set up the Vietnam Stock Exchange (VSE) based on the consolidation of the HOSE and the HNX. The VSE will be a 100% state-owned one-member limited liability company. The VSE charter capital will be VND3,000 billion, consolidated from the HOSE and HNX. The VSE will be launched over two key phases, with implementation foreseen after 2023.

Local market administration organisations

The Vietnam Securities Depository (VSD), formed by the merger of the two functions of securities registration, depository, clearing and settlement functions from Hanoi Securities Trading Centre and Hochiminh Securities Trading Centre (currently two stock exchanges), was officially inaugurated in July 2006. VSD is responsible for securities registration, clearing and settlement of securities trades executed on the HOSE/HNX. On June 1, 2010, the VSD launched its new system which allows VSD to keep track of the securities holdings at investors' level. In addition, the new system supports linkages with depository members via an electronic gateway. Foreign brokers are allowed to establish joint ventures with local brokers establish subsidiary (ies) or open representative office(s) in Vietnam.

Clearing House / CCP
There is no central counterparty (CCP) for the cash market in Vietnam. VSD is responsible for the clearing of trades executed on HOSE / HNX. VSD plays the role of CCP in trading derivatives.

Registrars/Registration Office
The operations of the VSD include services of registration. Nevertheless, there are some securities companies that provide registration for unlisted securities.

Trading used to be screen-based where each licensed securities company has two or more trading stations from which its floor representatives can input bids and offers. Remote trading and subsequently online trading were introduced for all of the exchange members. All securities companies are members of both HOSE and HNX.

HOSE

ISIN (International Securities Identification Numbering): Yes, however the ISINs are not mandatory for trading and are used in conjunction with the local stock codes. ISIN is not assigned to a security until it is registered with the VSD. .The VSD issues both local and ISIN codes for securities and rights in Vietnam. ISINs are currently assigned for Rights in Vietnam but rights still remains untradeable on the Exchange.

Other: The SE uses a local stock code system, which has three alphabetical / numerical characters. As mentioned above, the local stock codes are used in conjunction with the ISINs.

State Bank of Vietnam (SBV): In Vietnam, the State Bank of Vietnam (SBV) acts as the central bank and is overall responsible for the regulation of all banks operating in the market. It operates under the Laws of the State Bank of Vietnam issued in June 2010 with effective from 1 January 2011. The State Bank of Vietnam is a Government's agency which performs the function of state administration of monetary operations, credit lines, foreign exchange in order to help stabilise currency and defend the value of national currency. It would be responsible for monitoring the activities of all the banking institutions in the country. 

State Securities Commission (SSC): The State Securities Commission is the statutory body responsible for the development and regulation of the securities markets in Vietnam. It was established by the government in November 1996, taking over from the Ad hoc Committee on Preparation of ordinances for Securities Market under the SBV. The SSC is under the control of the Ministry of Finance (MOF).. The SSC is entitled to propose that the Minister of Finance set up, suspend or disperse the Securities Trading Centre (STC), the stock exchange, the Vietnam Securities Depository (VSD) and other organisations related to securities activities and trading on its authorisation. 

The SSC is entitled to grant, suspend and revoke work permits of securities dealing companies, investment funds and securities issuing entities in compliance with the government's decree. 

For corporate bonds, the SSC is entitled to grand, suspend and revoke the registration for issuing corporate bonds under current regulations issued by MOF. 

The Ministry of Finance (MOF): The Ministry of Finance (MOF) is a Government's agency which has the function of implementing the State management in finance, State budget, tax, fees and other revenues of the State budget, national reserve, State financial funds, financial investment, corporate finance and financial services (generally called as financial-budgetary fields), customs, accounting, independent auditing, prices nation-wide and public services in the fields; conducting the ownership rights to the State's investment capital in enterprises according to regulations of the Law. 

One of MOF main tasks is to issue Government Bonds and Treasury Bills. The regulatory bodies that oversee the debt market include the State Bank of Vietnam, Ministry of Finance, and State Securities Commission.

Note: *Foreign currency-denominated bonds are restricted to resident investors only, hence, are not available to foreign investors.

Initial Public Offerings (IPOs) are arranged directly between the investor and the local broker. The IPO requires 10% of the total subscription amount to be paid upfront, with the balance payable after the auction result. The remaining payment is required to be made to the auction agent before the deadline (usually within 15 working days after auction result). The issuing company will then announce when the certificates are available for delivery in physical format, which may be 2 to 12 weeks after the auction date.

On November 20, 2008, the Ministry of Finance issued the regulation on OTC market (Unlisted Public Company Market - UPCOM) in which allows securities of public companies which can meet specific requirements are eligible to register for trading on HNX. The market commenced its operation on June 24, 2009 on HNX. 
Registration for Trading on UPCOM of Equitised State-Owned Enterprises (SOE)

Decree 126/2017/ND-CP and Circular 40/2018/TT-BTC and amended by Circular 21/2019/TT-BTC requires that the maximum timeline for the equitised SOEs to complete trading registration on the UPCOM is changed from 20 working days (as per the existing regulations) to (i) 90 calendar days from the payment deadline of the IPOs or (ii) 10 working days from the business registration date of the equitised enterprises whichever earlier. If the equitised SOEs are eligible for listing on the stock exchange (SE), they are mandatorily required to complete listing within 90 calendar days from the payment deadline of the IPOs.

Circular 40/2018/TT-BTC also stipulates that the issuance of physical certificates will be skipped in these IPOs. Securities registration, depository and listing/registration for trading on the UPCOM will be automatically processed by the issuers.

On 29 November 2010, online trading method has been officially implemented for the regulated OTC market (UPCOM).

Non-UPCOM unlisted Securities, except for those registered with Vietnam Securities Depository, entitlements are not communicated publicly. The issuing company/transfer agent advises their investors directly. Therefore, the subcustodian are not aware of any corporate actions, unless being informed by the client.

Listed / UPCOM securities and non-UPCOM unlisted registered with the VSD securities are immobilised at the Vietnam Securities Depository (VSD). Unlisted non-UPCOM securities not registered with VSD are in physical form and traded on the OTC market. Securities of public companies which meet specific requirements are eligible to register for trading on the regulated OTC market (UPCOM) on HNX.

Odd-lot trading

In August 2022, Vietnam Stock Exchange issued Decision 30/QD-HDTV to amend Decision 17/QD-HDTV about the procedure of listing and trading securities on Vietnam Stock Exchange. The unit of odd-lot trading is amended to be 1 share/fund certificate/covered warrants. HOSE implemented trading odd-lot on Sep 12, 2022.

Below are key highlights for trading odd-lot in HOSE:
• Trading band, price unit and settlement cycle are the same as the round lot.
• Only Limit Order is applied to odd-lot.
• Trading odd-lot is not matched with trading round lot.
• Trading odd-lot is not allowed on the first trading date of new listed securities.
• Odd-lot is traded in continuous matching session and in Put-through/Negotiation session

The price trading band for stocks, fund certificates, ETFs is ± 7% of the reference price on Ho Chi Minh Stock Exchange (HOSE) and ±10% of the reference price on the Hanoi Stock Exchange (HNX) and ±15% of the reference price on UPCOM.

UPCOM market:
Shares on UPCOM which have no trading activities since the registration the reference price as proposed by the issuing company and a trading band of ±40% will be applied. UPCOM shares with no trading activities in 25 consecutive trading days or above the reference price will be the weighted average of all prices executed via continuous order matching method of the most recent trading date with a trading band of ±40% of the reference price.

The T+2 settlement cycle for equities and fund certificates transactions on stock exchanges. 

UGX

UPCOM is the regulated OTC market for unlisted public companies at the Hanoi Stock Exchange (HNX). 

Securities registration:

• Public company will register its shares via asecurities company who is a member of the VSD.
• Upon securities registration,VSD will provide an unique securities code and an ISIN for a public company's stock. This securities /ISIN code will continue to be used when the public company goes listed.

Trading registration:

• After five working days from receipt of the full and valid application, the HNX will inform of the approval and input the securities into theUPCOM's trading system.

Account opening, custody and trading:

• Each investor is not restricted to the usage of the designated local broker(s) when trading in unlisted securities.
• Investor who bought unlisted securities, which then became listed will have to custodise the securities with a VSD's member, for ultimate re-deposit with the VSD before trading.
• Cash transactions by foreign investors in the UpCOM marketwill be settled via Foreign Indirect Investment Account (FIIA) - the same cash account used for trading listed securities. Starting from 28 April 2014, foreign investors will need to have only one cash account for trading listed and unlisted securities.

Trading:

• On UPCOM, the Board lot for Order matching trades is 100 units. For Negotiation/Put-through transactions, there is no board lot, however, minimumvolume per one transaction is 10 units.
• Full amount of securities must be available on the investor's account before conducting a sale.
• Pre-funding rate for cash is subject to agreement between the investor and their broker. It is market practice that the pre-funding rate for cash is 100%.
• Securities on UPCOM market can also be traded via the negotiation/put through method.
• Post-trade corrections are allowed for transactions in UPCOM securities with the same procedures as transactions in listed securities.
• Clearing method - multilateral nettingand bilateral netting.
• Aggregate payment obligations of a depository member in listed securities and UPCOM securities will be netted off for both the two exchanges.

Settlement Compensation Fund (SCF):

SCF will be used in case the defaulting amount of one depository member is less than VND25 billion or aggregate amount of all defaulting members is less than VND30 billion regarding trades in listed equities/fund certificates and corporate bonds. Beyond such threshold, compulsory borrowing from the designated settlement bank (i.e., Bank for Investment and Development of Vietnam  -BIDV) will be applied. Mandatory loans from the designated settlement bank BIDV is applied for shortfall for settlement of government bond trades or shortfall amount for settlement of equities/fund certificate/corporate bonds of a depository member above VND25 billion, or total shortfall amount of all members above VND30 billion, offered at its own interest rate. The SCF is only used to cover temporary shortfalls, but not in cases of default.

Further details can be found here.

Book-Entry: Brokers / custodian banks are required to confirm the availability of funds / securities prior to executing a trade. Pre-matching is completed between the custodians and brokers prior to the settlement of trades. The local custodian uses the trade confirmation report from the brokers and the VSD for pre-matching purposes as they are required to either affirm the trades or dispute any mismatch trade with the VSD by 17:00  on T+1 (for listed/UPCOM equities and fund certificates) and 8:30on T+1 (for listed bonds). After the deadline instructions are considered irrevocable and trades must settle on settlement date (i.e. on T+2 for listed/UPCOM securities and fund certificates and on T+1 for bonds).

If a trade is mismatched, the member has to report directly to the VSD for further investigation. All trading orders that have been matched on TD without disputes are forced to settle on SD.

The following are the matching criteria used by us during the pre-matching process at market level:

• Security name
• Securities code/ISIN
• Counterparty (broker's) name or BIC code
• Quantity of securities
• Settlement amount (gross and net)
• Trade date
• Settlement date

For non-UPCOM unlisted securities, these securities are in registered form, and are generally held in physical form. Registration is conducted by issuers or their designated registrars (being local brokers). There  is no standard procedure as the trade and settlement is negotiated by the buyer and the seller. On the agreed date, basing on the client instruction, the cash will be settled. The securities can be delivered later due to ownership transfer procedures. 

Equities, Fund certificates, Covered warrant and Fixed income: There is no true delivery versus payment in Vietnam. Trades in securities traded / listed on the HOSE/HNX and UPCOM are settled through the Vietnam Securities Depository (VSD) while the cash settlement is handled by the designated Settlement Bank (i.e., Bank for Investment and Development of Vietnam – BIDV) as per VSD's reports. 

Equities, fund certificates, covered warrants and fixed incomes transactions have different settlement cycles (i.e. T+2 for listed and UPCOM equities, fund certificates, covered warrants and on T+1 for bonds) but follow the same security and cash settlement procedure. 

The broker is required to obtain confirmation from the local custodian bank that funds and/or securities balance are sufficient prior to trade execution.
Trades will be pre-matched with the Vietnam Securities Depository (VSD) transactions report and the broker invoice, and then affirmed to the VSD by 08:30 on T+1 for listed bond trades, and 17:00  on T+1 for listed / UPCOM equity, fund unit trades and covered warrants. After this, it becomes obligatory to settle the trades. 

After brokers and custodians affirm trades to the VSD, the VSD conducts multilateral netting to determine each depository member's securities and cash deliverable and receivable positions. 

Between 14:00 and 14:30 on T+1 (listed bond trades) and between 15:30 and 16:00 on T+2 (listed/UPCOM equity, fund unit trades and covered warrants), the VSD transfers the securities balances in all depository members' clearing and settlement accounts at the depository, into the VSD settlement account. Simultaneously, between 11:00 and 14:00 on T+1 (for listed bond trades) and between 11:00 to14:30 on T+2 (for listed/UPCOM equity, fund unit trades and covered warrants), BIDV checks cash balances of all members' settlement accounts. Between 14:00 and 14:30 on T+1 (for listed bond trades) and between 15:30 and 16:00 on T+2 (for listed/UPCOM equity, fund unit trades and covered warrants), BIDV transfers the cash balances in all depository members' settlement accounts into the VSD's settlement account. After checking that all members have satisfied their obligations, the VSD and BIDV transfer securities and cash to the settlement accounts of members who have net receivable positions. Finally, the VSD and BIDV transfer securities and cash from the settlement accounts of members who have net receivable positions to the omnibus transaction account of members' clients and their own transaction accounts. 

After 14:30 on T+1 (bond trades) and 16:00  on T+2 (listed/UPCOM equity, fund unit trades and covered warrants), after settlement has been completed and clear funds are available in the local custodians account with the BIDV, the trades are settled and confirmation sent to the client. Cash proceeds are posted to clients' accounts upon receipt of the advice of credit from the settlement bank. 

Non-UPCOM unlisted securities settle physically, with the broker responsible for registration prior to making delivery. No DVP exists for these trades in the market.

Non- UPCOM unlisted securities are recorded with nominal value (instead of market value), therefore client reporting will be different between listed and unlisted securities.

Short selling is currently not allowed in the market.

Turn around trading is not allowed for foreign institutional investors in Vietnam.

The Vietnam Securities Depository (VSD) acts as the central depository and the clearing agency for all securities listed in the market. The securities settlement is handled by the VSD and the cash settlement for equities, fund certificates, covered warrants and corporate bonds is outsourced to the Bank for Investment and Development of Vietnam (BIDV) while the cash settlement for G-bonds and T-bills is made at the SBV.

The Vietnam Securities Depository (VSD) - The VSD was set up under Decision 189/2005/QD-TTg signed by the Prime Minister in July 2005. VSD operates under the control of SSC but with its own legal personality. VSD has been transformed into one-member limited liability company starting from January 1, 2009, which is wholly owned by state and is relatively independent from the State Securities Commission.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

BIS Model 3 is applied for trades of listed corporate bonds, stocks and fund certificates denominated in VND in Vietnam market - a system in which securities and funds are transferred on a net basis at the end of the processing cycle. BIS Model 1 is applied for VND-denominated government bonds, government guaranteed bonds, municipal bonds and treasury bills, the securities and funds are transferred on a gross basis.

There is no true delivery versus payment in Vietnam. Securities are settled via book transfer at the VSD. Cash movement is performed via bank transfer at the designated settlement bank, Bank for Investment and Development of Vietnam (BIDV). All depository members with a net payable position have to ensure that the funds are available in their account at the BIDV by 11:00 on T+2 for listed equities, listed fund units, covered warrants and UPCOM securities and by 11:00 on T+1 for listed bonds. The VSD checks with the BIDV to ensure that funds are available by 11:00 on T+2 for listed equities, listed fund units and UPCOM securities and by 11.00 on T+1 for listed bonds.

Book-Entry: Re-registration is not applicable for listed securities as they are settled via book-entry and registration takes place simultaneously with settlement. 

Physical: For unlisted securities which are in the physical form, there is no definite timeframe for the registration of the securities as there are currently no regulations in this market. It is up to the discretion of the company and securities company depending on the entity performing the role. 

Non-UPCOM unlisted Securities are held physically by the investors or in the local custodians vault, and there is no standard settlement process in place for these instruments. This means that delays may occur in the settlement of non-UPCOM unlisted securities.

Vietnam Securities Depository (VSD) acts as the registrar for all securities listed / traded on HOSE, HNX and UPCOM AND non-UPCOM unlisted securities (if they wish to). Non-UPCOM unlisted companies, not registered with VSD, may act as the registrar themselves or appoint a securities company to be the registrar.

After receiving a notice from VSD on the registration (redepositing) of a specific share, subcustodian will submit a shareholder list together with other supporting documents within the deadline specified by the VSD to the VSD. It takes one working day for the VSD to process.

Shareholdings may be required to be disclosed by the beneficial owner, particularly when holdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organisations for this market, within the timeframe required. If you have any questions regarding this issue, we encourage you to consult your legal counsel. 

MOF issued Circular 155 guiding on information disclosure in securities market, which replaces Circular 52 from January 1, 2016.

Failure to comply with reporting requirements may lead to penalties and/or other sanctions.

Major (substantial) shareholders are those holding equal to or more than 5% of the voting shares of a company. The 5% of the voting shares is calculated against both the listed and unlisted shares of an issuing organisation, in case the issuing organisation does not list all of its shares.

Substantial shareholders of a listed/UPCOM company are required to report  to the SSC, stock exchange (SE) and the issuing company when their ownership reaches 5%, within seven calendar days from the Settlement date. This substantial major shareholding report must cover the following points:

• For institutions: name, address, business type. For individual: name, age, nationality, resident address, occupation
• Number of shares and percentage of the total voting shares held

In the case of any change in the reported information and any change of more than ± 1% above the 5% threshold in the holdings, (i.e. when the holding ratio exceeds 6% or 7% or 8% etc) the substantial shareholder has to file a report on the change to the listed/UPCOM company, the SSC and the stock exchange within seven calendar days from the Settlement date.

In case the ownership proportion fall under 5%, the shareholder has to file report to the SSC, SE and the issuing company within seven calendar days from the completion of settlement. Disclosure reports are not required in case of ownership change due to the trading of treasury stocks or additional shares issuance by the issuing company. 

Reporting timeline with regard to changes in ownership is specified as below:
• For on-exchange trades, the reporting timeline will be counted from the end of the settlement cycle;
• For off-exchange transactions, the period will be counted from when the transaction is completed in the depository system;
• For rights issues or additional issuance of fund certificates, the timeline will start from the date the company or fund completes the share / fund certificates offering.

Foreign investors are required to fulfil the reporting on their securities holdings and information disclosure, or delegate a depository member / securities business organisation / its representative office (if any) / another institution or authorise an individual to fulfil the reporting and information disclosure.

Securities Trading Code (STC) holders belonging to "Group of affiliated investors" is required to report on the aggregate holdings/ movement of all investors belonging to the Group by the registered disclosure representative. STC holders belonging to "Group of Affiliates investors" as defined in Securities Law is also required to report on the aggregate holdings/ movement of all investors belonging to the Group. 

- A group of foreign investors and affiliates defined in Circular 123-2015-TT-BTC (replaced by Circular 51/2021/TT-BTC) includes the following:

• Funds managed by the same domestic or foreign investment managers
• Funds/sub-funds of a master fund or feeder fund
• Multiple investment manager fund (MIMF), multiple investment manager foreign institution
• Segregated investment portfolios of a foreign fund or foreign institution
• Funds having the same trading representative

- A group of investors and affiliates defined in Securities Law includes the following:

• Father, foster father, mother, foster mother, spouse, children, adopted children, siblings of an individual
• An organisation in which an individual being an employee or a (general) director, or owner holds more than 10 per cent of the voting shares
• Members of the Board of Management, or the Supervisory Board, the (General) Director, the Deputy (General) Director and other executives of such organisations
• Persons, who, in relation with the others, directly or indirectly control or are controlled by the latter, or together with the latter, subject to the same control
• Parent companies, subsidiary companies
• Contractual relationship in which one is representative of the other

A Group of Foreign Investors and Affiliates must appoint a disclosure representative to consolidate disclosure information and report to the relevant authorities and parties (SSC, stock exchange, issuing company) for the entire group. Groups of related foreign investors are responsible for delegating a depository member / securities business organisation/individual to file the relevant substantial shareholding reports on the aggregate holding or movement on behalf of the whole group. The notification on the appointment of the delegated institution or authorised individual to disclose information on behalf of the group of related foreign investors shall be submitted to SSC, the stock exchanges within 24 hours from the effective date of authorization. Any change in number of foreign investors in group of affiliated foreign investors must be reported by the information disclosure representative to SSC and the stock exchange within seven business days.

Foreign investors, and local business organisations with foreign ownership of 51% or more, are required to apply for Securities Trading Code before the conducting the following activities: 

• Purchase / sale of shares, bonds and other types of securities.
• Capital contribution, purchase, sale and swap of stocks under the regulations on securities and the securities market.
• Open-ended funds are not considered as foreign investors when having foreign ownership of 51% or more of the fund capital.

Internal and founding shareholders are required to register the trading plan in at least 3 working days prior the trade conduction and file report on completion/in-completion of the registered trading plan. Regarding the disclosure obligations of Group of foreign investors and affiliates (“the Group”): if one investor is the internal person of a public company/public fund, other investors in the Group will also need to comply with disclosure requirements applicable to the internal persons including registration of trading plan prior trade conduction and report after trade completion. Internal disclosure report in this case should be filed at individual investor level.

According to Law 62/2010/QH12 providing amendment to Securities Law and Decree 58/2012/ND-CP providing guidance for implementation of number of Articles of Securities Law and Amendment to Securities Law AND , (i) investors intending to acquire to 25% or more OR (ii) existing investors with 25% ownership intending to acquire 15% or more OR (iii) existing investors with 25% ownership intending to acquire from 5% to less than 15% of total voting shares of a public company are required to make a public offer, which must be approved by the SSC. The period for the public offer must be within 30 to 60 days from the date of the public announcement. The result must be reported by the bidder to the SSC within 05 days after completion of the public offer.

If disclosure regulations are breached, a fine of maximum VND150 million shall be imposed depending on the breach. Effective November 15, 2013 penalty levels applicable for violations in information disclosure (including information disclosure of substantial/founding/internal shareholders of public companies and founding members/related parties of public funds) have been increased significantly as promulgated in Decree 108/2013/ND-CP (Decree 108). The breach to regulation on public offer shall also be subject to a fine of maximum VND150 million following Decree 108.

Effective December 15, 2016, the government published Decree 145 amending and supplementing Decree 108 on administrative penalties for violations in the securities market:

Failure to provide complete/accurate information on the ownership proportion of major shareholders and affiliated persons in the disclosure reports: Fine from VND 10 to VND 30 million.

Reports of major shareholders and affiliated person(s) (holdings of 5% of voting shares of a public company) upon any change of +/-1% in ownership to the issuing company, SSC and the stock exchanges:

• Failure to timely report: Fine from VND 25 to 35 million
• Non-submission of the report: Fine from VND 50 to 70 million

Institutions / individuals and affiliated person(s) upon becoming major shareholders with holdings that reach the threshold of 5%, but failing to report / late to report to the issuing company, SSC and stock exchanges:

• Failure to make timely report: Fine from VND 50 to 75 million
• Non-submission of the report: Fine from VND 100 to 150 million

Institutions / individuals violating the foreign ownership limit and regulations on investment activities of foreign Investors, or violating the regulations on the ownership limit for share capital/contributed capital in securities companies and fund management companies, or violating the regulations on securities trading account or daily trading regulations:

• Fine from VND 50 to 70 million

Implement transactions to conceal the actual ownership in one security to evade the information disclosure obligations.

• Fine from VND100 to 150 million;

Confiscation and/or forced share transfer to reduce ownership levels within 60 days.

The State Securities Commission (SSC) has published Decree 156 which promulgates administrative penalties on violations in the securities market, replacing Decree 108 and Decree 145 in this regard. Effective January 1, 2021, Decree 156 raises the administrative penalties on violations related to shareholder disclosure, foreign ownership limits and insider trading.

There are no buy-in procedures in the Vietnam securities market. 

The stock exchange mitigates settlement risk by ensuring that brokers as well as custodians have sufficient securities or funds before trade execution. Brokers must confirm with custodians on Trade date (T) that sufficient balances are available in the investors' accounts. Due to the pre-funding requirement delays in the availability of securities and funds from sales can limit trading activity.

• Back to back trading is not permitted. 
• Free of payment trades are not permitted. However, securities registered with Vietnam Securities Depository (VSD) may be transferred off the exchanges in following cases:
  i. Donation, present, inheritance of securities:
  ii. Odd-lot securities sales:
  iii. An issuer changes its strategic partner(s) during the period of trading restriction: and
  iv. Other cases as stipulated in relevant regulations. Other non-commercial transfer of ownership is subject to the State Securities Commission's approval and VSD's guideline (if required)
• Short Selling is not permitted.

The VSD stipulates the application of two different methods of fail trade processing i.e. to utilise the Settlement Compensation Fund (SCF) as detailed below and to utilise the mandatory loan procedures at the designated settlement bank (i.e. BIDV). SCF will be used in case the defaulting amount of one depository member is less than VND25billion or aggregate amount of all defaulting members is less than VND30billion regarding trades in listed equities/fund certificates, covered warrants and corporate bonds. In case the defaulting amount of one depository member is above VND25billion or aggregate amount of all defaulting members is equal or above VND30 billion regarding trades in listed equities/fund certificates and corporate bonds, default depository member is required to borrow from the settlement bank BIDV at its own prevailing offered interest rate. Mandatory loans from the designated settlement bank BIDV is applied for shortfall for settlement of equities/fund certificate/ covered warrants/corporate bonds of a depository member above VND25 billion, or total shortfall amount of all members above VND30 billion, offered at its own interest rate. In order to ensure that all matched transactions can be settled on the SD, the VSD will request the BIDV to confirm and report the available balance on the omnibus cash account of the depository members at BIDV as well as their settlement obligations on a daily basis at 11:00 on T+2 for Listed/UPCOM equities, fund certificates and covered warrants and at 11:00 on T+1 for trades of Listed bonds. By this time, if the balance on the omnibus cash account of the depository member is not sufficient for settlement, the above settlement supporting process will be applied.

The Securities Borrowing and Lending (SBL) system of the VSD inaugurated on 04 September 2014 will enable defaulting depository members to borrow securities to fulfil their delivery obligation. This system also supports the conversion transactions in Exchange Traded Funds (ETFs) on the Stock Exchanges.

Securities Lending and Borrowing (SBL) has been implemented in Vietnam from 03 September 2014 following Decision 111/QD-VSD (Decision 111) of the VSD. According to Decision 111, SBL is permitted only for fail trade management and capital contribution/conversion transactions of ETFs by their authorised participants (APs).
1. In case depository member in short of securities due to post-trade correction or APs to conduct capital contribution/conversion in ETFs, the depository member/APs are allowed to participate in SBL to fulfil their delivery obligation.
2. Securities subject to SBL are listed and UPCOM securities except:
 Securities that have been put under warning, supervision or trading suspension status by the stock exchanges
 Securities that have been pledged, blocked or temporarily withheld at the VSD
 Securities in lock-in period in accordance with relevant regulations or the issuer's charter
 Convertible bonds
3. Collateral for loans to depository members for fail trade management must be in the form of cash while collateral for loans to APs of ETFs can be in the form of cash and/or eligible securities. During the lending period, cash will be held on the pledged account of the borrower with the Designated Settlement Bank while collateral assets to be held on pledged account of the borrower at the VSD. Securities that are provided as collateral should:
 be tradable government bonds (except treasury bills), government guaranteed bonds (except convertible bonds), listed equities or fund certificates (except ETF certificates)
 not be under warning, supervision or suspended from trading at the stock exchanges
 be included in the list of eligible collateral issued by the VSD
 be owned by the borrower and accepted by the lender as agreed in the SBL contract.
 Be freely transferable and deposited on securities account for trading at the VSD
4. Initial value of collateral must be 115% of loan value. The discount rates applied for valuing collateral securities are as below:
 5% for government bonds and government guaranteed bonds
 30% for component securities of VN30 index/HNX30 index
 40% for others.
The VSD may adjust the asset discount rate for each type of collateralized securities based on their liquidity and risks.
5. Interest rate of the loan is subject to negotiation between the buyer and seller but should not exceed 120% of the base interest rate stipulated by the State Bank of Vietnam.
6. Loans can be redeemed partially or fully by the borrower in securities at any time before the due date or in cash subject to written agreement with the lender.
7. Prior formalising the SBL transaction into system, the lender and the borrower must ensure the SBL agreement is executed. Borrowing and lending agreements shall take effect only when established on the SBL system at the VSD. Collateral assets are deposited/transferred to required account while lending assets are available on lender's account. There is no limitation on the volume of securities subject to lending/borrowing as long as it is within the amount of securities that the borrower is allowed to borrow. Tenor of SBL transactions should not exceed five business days for loans to depository members and thirty days for loans to APs of ETFs. SBL system opens from 9.00 am – 03.00 pm from Monday to Friday.
8. After SBL transaction is recognised, securities will be transferred from the lender’s trading account to its securities awaited for lending account (lending account) at the VSD. Depending on the purpose of the transaction, VSD will transfer securities from the lending account of the lender to the securities awaited for settlement of the borrower for fail trade manager OR to pledging account of the borrower for further transfer in case of ETFs trading.
9. The lender is not allowed to request payment during the lending period. The borrower can return a whole or part of borrowed securities at any time within the borrowing period unless otherwise agreed between parties.
10. Upon receipt of loan payment dossier, VSD will transfer the borrowed securities from the trading account of the borrower to trading account of the lender in case of loans to depository members or from pledging account of the borrower to the trading account of lender in case of ETFs trading AND release the collateral assets or inform the Designed Settlement Bank to release the cash.
11. The borrower shall be entitled to all rights derived from the collateral assets and interest income from the cash collaterals deposited on pledged account with the Designated Settlement Bank.
12. VSD will be the middle party to connect borrower and lender and provide services for SBL transactions which include:
 Operates the SBL system
 Arrange the transfer of securities between the lender and the borrower
 Evaluate and manage the collateral assets including mark to market
 Identify and calculate the rights attached to collateral assets and transfer the rights from the borrower to the lender as per agreement/request for parties.
Managing the use of securities loaned on the SBL system in accordance with current regulations and purpose.

The VSD has established a Settlement Compensation Fund (SCF) to settle trades for depository participants that temporarily fail to meet their payment obligations. This fund is under the control of the VSD and is held in an account in VSD's name being opened with the Settlement bank. 

The SCF is funded by contributions from depository members, i.e. custodians and brokers. It is used to meet the net payment obligations of any depository participant who is it temporarily unable to meet the cash settlement obligation. The fund is held at the Bank for Investment & Development of Vietnam (BIDV) and under VSD's control. 

All depository participants of the depository are required to contribute, as follows:
Initial contribution: VND120 million (approximately USD 6,000) for both brokers and custodians.

• Annual contribution: 0.01% of turnover from the transactions of each depository member and will not exceed VND2.5 billion. The maximum contribution of each depository member to the SCF is VND15 billion for commercial banks and securities companies performing brokerage business, and VND20 billion for Depository members with proprietary trading and brokerage business.
• In case the defaulting amount of one depository member is less than VND25 billion or aggregate amount of all defaulting members is less than VND30 billion regarding trades in listed equities/fund certificates and corporate bonds, the VSD will transfer funds from the SCF in the following order:

The share of contribution to the SCF of the defaulting depository member will be used first.

If the above is insufficient, the VSD will draw on the remainder of the SCF in the ratio of contribution of each depository member to the SCF. 

The interest rate will be applied for funds being borrowed from SCF is equal 0.03% for up to five days, and 0.0375% from the sixth day onwards. All penal interest will be credited into the SCF. 

In case the defaulting amount of one depository member is equal or above VND25 billion or aggregate amount of all defaulting members is equal or above VND30 billion regarding trades in listed equities/fund certificates and corporate bonds, default depository member is required to borrow from the clearing bank at its own prevailing offered interest rate. Shortfall in trades in government bonds is only supported by compulsory borrowing from the settlement bank. 

The contribution of depository members to the SCF will be refunded to them if they withdraw from membership of the depository.

In Vietnam, RBC Investor Services subcustodian is fully compliant with Decree74/2005/ND-CP on Anti Money Laundering. As further guidance on the AML rules, the SBV issued Decree No. 116/2013/ND-CP, which details the implementation of a number of articles of the Law on Anti-Money Laundering and amended by Decree 87/2019/ND-CP and Circular No. 35/2013/TT-NHNN guiding the implementation of some stipulations on Anti-Money Laundering (as amended by Circular 31/2014/TT-NHNN dated 11 November 2014) and Circular 20/2019/TT-NHNN.

This is an FII market. Please contact your RBC Investor Services' Client Manager before making portfolio investments.

Foreign investors' investment in some specific sectors is conditional (See Investment Restriction below). In addition, prior to investing a securities trading code from the VSD is required for trading in listed or unlisted securities which are used, inter-alia, to monitor FOLs. These codes are generally obtained at the underlying investor level. The transactions of both listed and unlisted are made via Foreign Indirect Investment Account (FIIA). Each foreign investor is required to open only one VND denominated indirect investment capital account (Foreign Indirect Investment Account - “FIIA” or also called the Indirect Investment Capital Account - "IICA") at a permitted commercial bank being licensed for foreign exchange trading and conversions to do any indirect investment activities. Offshore inflows shall be converted into VND before funding to the indirect investment capital account in the market.

Foreign investors can use multiple brokers in the market to execute the trading activities on listed / registered / unlisted securities (i.e. securities listed on HOSE, HNX and those registered on UPCOM). For trading on OTC market the investors can either execute the trade(s) by themselves or go through a local broker.

New STC applications

• Depository members shall review the application dossiers received from the investors and capture the information declared by the investors to the online STC system
• Within one working day upon receipt of full information in the online STC system, the electronic STC approval (e-approval) shall be granted by the VSD
• Within five working days subsequent to the e-approval, the depository member shall submit one original and one copy of STC application dossiers to the VSD. Upon receipt of VSD's notification of incomplete document submission or any mismatch with information captured in the online STC system (if any), the depository member is required to complete the application within five working days

Within five working days upon the receipt of completed application dossiers, the VSD shall grant the physical STC approval.

The Decree 60 has relaxed FOL in the Vietnamese securities market, with effect from September 1, 2015. The aggregate foreign ownership limit in certain public companies has been removed subject to the following conditions:

• Public company's charter stipulates FOL in the company;
• Public companies operating in sectors or industries under international conventions of which Vietnam is a member with specific provisions on FOL, the applicable clauses on FOL will apply;
• Public companies operating in investment and business industries, sectors in which investment laws, relating regulations have stipulations on FOL, the limit will be in accordance with these regulations. For public companies operating in investment, business industries and sectors subjected to conditions applicable to foreign investors but there are not detailed stipulations on foreign ownership, the maximum 49% FOL will apply. For public companies that operate in multiple industries/sectors that have differing FOLs, the lowest limit will apply;
• For public companies undertaking equitisation in the form of public offering, foreign ownership limit will be in accordance with legal regulations on equitisation.

Furthermore, foreign investors may invest without restriction in securities investment fund certificates, shares of securities investment companies, non-voting shares of public companies, depository receipts, except otherwise provided in the charter of the issuing organisations.

Eligible foreign institutional investors will be allowed to own up to 100 per cent of charter capital of local securities companies and fund managers or to set up 100 per cent foreign-owned securities companies and fund managers. Ineligible foreign institutional investors or individual investors will be allowed to own up to 51 per cent of charter capital of local securities companies and fund managers.

If the cumulative holding ratio by foreign investors in a public company has reached the applicable FOL i.e 49% and will exceed the  holding cap as a result of corporate events such as stock dividends, the foreign investors will be required to sell out their holding shares to keep their ownership ratio below the applicable cap.

Effective January 1 2023, foreign investors are allowed to own shares/contribute capital up to 100% charter capital of local insurers/reinsurers.

Foreign investors must obtain SBV approval prior to the purchase of 5% and more shares of a Vietnamese commercial bank either listed or unlisted. Aggregate FOL in Vietnamese commercial banks is 30% of charter capital with individual FOL as below:
• An individual foreign investor: 5% of charter capital;
• An institutional foreign investor: 15% of charter capital;
• A strategic foreign investor: 20% of charter capital;
• A foreign investor and their related parties: 20% of charter capital.

The executed buy volume of stocks of foreign investors will be immediately deducted from the current foreign investor level following execution of the buy order. The executed sell volume of stocks will be added to the remaining volume available to foreign investors upon settlement. A purchase order or partly unmatched purchase order executed by foreign investors will not be inputted into the system if the FOL has already been reached.

Foreign ownership limit (FOLs) of non-public companies established under different specialized regulations. In case different foreign ownership limits are stipulated in these regulations, the lowest limit will be applied. In case there is no provision on the FOL, foreign investors are permitted to make contribution of capital and purchase of shares from Vietnamese enterprises at no limit.

The new Law on Investment 2014 prescribes 267 sectors and trades subject to conditional business investment for foreign investors.

Other projects of investment prohibited as stipulated by laws

Foreign investors who purchase shares of equities SOEs on the primary market are not subject to any lock-in period. However, there could be lock-in requirements for Strategic investors who are domestic investors and foreign investors with financial and enterprise management capability; transfer new technology, supply raw materials, develop the product consumption market; and whose long-term interests are closely connected with the enterprise. For example, for state-owned companies undergoing equitisation, strategic shareholders are required to hold their shares for five years from the date that such companies are granted with Business registration certificate or as per Shareholder meeting's resolution investors who participate in the management of the invested companies or depending on the company's Charter. Investors who purchase shares on the Stock Exchanges (SEs) (secondary market transactions) are not subject to a lock-in period. Shares purchased through a private placement are subject to one-year lock-in period.

Foreign investors can buy government bonds and T-bills both on primary market and listed market on the stock exchange. These government bonds have maturities of one year or more. However, only residential individuals and organisations that are legally operating in Vietnam are eligible to purchase foreign currency-denominated (FCD) government bonds. Offshore investors who are not legally incorporated in Vietnam are not allowed to trade FCD bonds in the primary market or when such bonds are listed on the stock exchange.

Decree 108 additionally imposes penalties for violations in foreign ownership restriction and regulations on investment activities of foreign investors in Vietnam securities market.

Credit Institutions

SBV has issued Circular 46 providing guidance on the timeline and procedure for implementation of a stipulation promulgated in an amendment to the law on credit institutions in 2017. The key points of Circular 46 are as follows:

• A major shareholder (and their affiliates) of a credit institution are not allowed to own 5% or above of charter capital of another credit institution. A major shareholder (and its affiliates) of a credit institution that currently owns 5% or above of the charter capital of another credit institution must coordinate with the relevant credit institutions to conclude a remediation plan to reduce their ownership to below 5%. The credit institution in charge will be responsible for reporting the plan to the SBV by May 30, 2019.
• The remediation plan must be implemented to ensure full compliance with the stipulation by December 31, 2020. The completion of the remediation plan must be reported to the SBV by the credit institution in charge within 5 working days from the actual completion date.
• Effective March 1, 2019, these major shareholders and their affiliates will not be allowed to increase their ownership in the relevant credit institutions, except if
• they receive share bonus/stock dividend, or
• they additionally purchase shares when these credit institutions increase their charter capital, provided the new ownership is below 5% of the new charter capital.

Conversion from VND into foreign currency is permitted only if the VND can be linked to an earlier foreign currency/VND conversion or repatriation of sale proceeds/ income from securities investment. Foreign investors trading through the stock exchanges can buy VND to buy securities and sell VND to repatriate sale proceeds and income if taxes have been paid / withheld according to SBV forex control regulations on securities-related transactions and subject to amended tax regulations issued by the Ministry of Finance. Standing Instructions are the preferred route, allowing the FX against foreign currency from settlement date onwards.

There are no repatriation limits, as long as market liquidity is sufficient. Dividend income from equities can be freely repatriated from Payment date + 1 as there are no withholding taxes applicable on dividends. Dividend received from Fund certificates can be repatriated after payment of the 22% tax on the interest income received. Sales proceeds from equities and non-taxable bonds (after payment of 0.1% transaction tax) and divided income can be repatriated freely. Interest income received from taxable bonds, taxation income from redemption of T-bills can be repatriated after the tax on the interest income of 5% has been paid / withheld.

Vietnam Dong (VND) is not freely convertible and The State Bank of Vietnam (SBV) fixes the VND/USD on a daily basis. The interbank market is permitted to fluctuate within 5% per day band on either side of this rate. There is no exchange rate control for other foreign currencies vs. VND. VND cannot be traded offshore.

Circular 15 stipulates that offshore investors are allowed to conduct spot foreign currencies transactions only with licensed credit institutions.

For electronic clearing, the SBV has set up the Inter-Bank Payment System (IBPS), composed of the High-Value Transaction Settlement (HVTS), Low-Value Transaction Settlement (LVTS) and a current account handling component for the clearing and settlement of HVTS and LVTS, which provides an electronic delivery channel for member banks to communicate, deliver and receive each other's payment orders only in VND (instead of delivery and receipt via messengers and post mail). Transactions can be sent between members within less than few hours. This system is available in all 64 cities/provinces in the country.
Cash payment for transactions of equities, fund certificates, covered warrants and corporate bonds is facilitated by participants maintaining cash accounts with VSD's settlement bank, the Bank for Investment and Development of Vietnam (BIDV). On settlement date the BIDV will transfer the cash payable / receivable on a net basis from the participants cash settlement account to the VSD's cash settlement account and vice versa.

Cash settlement for transactions of government bonds and treasury bills (G-bonds) is processed through the RTGS system of the SBV.

Further, funds can be transferred through an unofficial clearing system via one of the four government-owned banks or the central bank's clearing system. The four government owned banks are:

• BIDV
• Vietcombank (Bank for Foreign Trades of Vietnam)
• Vietinbank (Vietnam Joint Stock Commercial Bank for Industry and Trade)
• Agribank (Bank for Agriculture of Vietnam)

Of the four, Vietcombank is considered the most important clearing house for US Dollars and almost all other banks and companies have USD accounts with Vietcombank. BIDV, Vietcombank and Vietinbank have been equitized; however, the largest holdings in these banks still belong to the Government.

Funds transfer is affected using payment orders. Cheques are not commonly used partly due to long clearing time which ranges from 3 to 7 days. For manual clearing, paper payment orders must be delivered to the clearing bank either by messengers or by mail. The clearing bank will make the necessary book transfer and then credit the beneficiary or credit another intermediary bank who subsequently credits the final beneficiary. Funds will be credited to the final beneficiary's account either the same day, one day or two days later depending on whether the final beneficiary holds accounts with the clearing bank or with a branch of it or with a third party bank, it also depends on whether the clearing bank and the third party bank will process payment orders on a timely manner or not.

Foreign investors' accounts are not permitted to go overdrawn in Vietnam as local commercial banks are not allowed to lend to offshore investors.

Listed Equities: Vietnam Securities Depository shall make a notice to each depository participant about the dividends paid based on the announcement of the issuing companies. At day-end of the Record date, depository participants fix the list of eligible shareholders and reconcile against entitlement holding on VSD's system via access to the VSD's electronic terminal. A correspondence will be sent to the VSD within 2 working days from Record date to confirm whether the entitlement on the VSD's system matches with depository members' record. Entitlements are based on settled positions on record date. Basing on this confirmation, dividends will be paid to the depository member for further distribution to the client's accounts. 

Payment date typically falls 15 – 30 days after the Record date. The cash dividend/interest is paid by the issuing company to the account of VSD at the Bank of Investment and Development of Vietnam (BIDV). The VSD will then credit the dividends/interest to the local custodian's account with the BIDV.

Any market claims on listed securities must be dealt with directly between the depository participants and VSD or BIDV. The concept of market claims does not exist in the Vietnamese market. Should this arise, custodians usually assist clients on a best-effort basis.

Unlisted Equities: Corporate actions for unlisted securities are not covered under standard scope of custody service. The issuing companies shall contact directly shareholders and make payment to the FIIA account.

Joint Stock companies are required to hold the AGMs within 4 months since the end of the financial year (ending 31 December). Thus, the dividend payment (as approved by the AGM) will follow within two months' time, i.e. during April - July. Another peak dividend season is during October – November as most companies pay dividends twice a year.

Interest payment can be made monthly, quarterly or semi-annually depending on the credit organisation that pays.

Government bonds with tenor from one year to 15 years: 4.07% - 7.8%

Companies should announce corporate actions to the VSD at least 10 working days prior to the Record date. Entitlements are based on settled position and pending DVP position on record date.

As registration is automatically done by the VSD, all rights related to corporate actions are protected. Vietnam is a Record date driven market where the investor's entitlement is based on the investor's holdings as at the event's Record date. All securities with 'Available' (AVL) or "Segregated' (SEG) status and 'Held for delivery' (HLD) status are eligible for the entitlement. As the stocks are settled on TD+2, Therefore, the investor who holds the securities as at the ex-date will be eligible to receive the entitlement in full.

Partial/Split voting is not allowed in Vietnam. Each shareholder shall have one vote and the vote is weighted based on the settled position as of record date. There are no specific restrictions on proxy voting. Regulations relating to voting rights of shareholders are contained in the Circular 05/2015/TT-BTC on Securities registration, depository, settlement and clearing activities dated 15 January 2015  of the Ministry of Finance and the VSD's Guideline for Corporate Actions and Depository issued with the Decision No 23 /QD-VSD 13 March 2015 . 

Foreign investors holding ordinary shares are normally able to vote unless there is some restriction specified by the issuing company's charter.

At day-end of the Record date, depository participants issue the list of clients who are entitled to the event and subsequently reconcile it against entitlement holding on VSD's system via access to the VSD's electronic terminal. A correspondence will be sent to the VSD within 2 working days from Record date to confirm whether the entitlement on the VSD's system matches with depository members' record. Based on the confirmation from members, the VSD will send the final list of entitled investors to the issuer within 4 working days from the Record date.

Shares are not blocked for proxy voting.

Meeting Notices: Notification of upcoming meetings, agenda items and voting deadlines must be provided to the VSD in the Notice of Corporate action by issuing company at least 10 working days before the Record date. However, the meeting's Agenda may be available after the Record Date, generally occurs on RD+30. The same will be notified to RBC Investor Services/ clients via MT564/MT568. 

Meeting Agendas: Meeting agendas are generally provided in Vietnamese and sent directly via courier to the investors based on the address registered with the VSD. Local custodians will translate the agendas once available and send out to clients.

Within 10 working days after the completion of meeting, issuers shall send the copy of the resolution of General Shareholders' Meetings to VSD (in both hard and soft copies). The results will also be available in issuing company's website and subsequently informed to the investors by subcustodian. For proxy voting, local custodian would notify RBC Investor Services/ clients on the meeting outcome within3 working days upon the information is published .

Companies listed on the exchanges are required to disclose information as stipulated by relevant regulation. The financials are also required to be published.

A Power of Attorney (POA) is required for proxy voting. Each issuing company may have a specific POA template and this POA template must be signed by the Beneficiary owner who is also the STC holder (registered entity in Vietnam). The standard POA format issued to RBC Investor Services' subcustodian (with clause on voting) is normally accepted by most companies. Where companies do not accept the format the investor will have to execute a specific POA as requested by the issuing company. The POA is required to be translated into Vietnamese if it is executed in foreign language. Some issuing companies can accept in English.

Proxy voting has become more common in Vietnam. Thus, besides the self- presentation in the meeting, the investors can also authorise subcustodian or a third party to participate in the meeting by providing the POA as required by the issuing company. The new Law on Enterprises (2014) accepts votes to be casted via original letter, fax, or email, electronic method (e-voting), online conference besides physical attendance. However, it will be subject to each issuing company to accept this new practice.

E-Voting

The VSD has an e-voting service called V-vote, a web-based system for voting in annual general meetings, extraordinary shareholder meetings and postal ballots. The issuing companies are required to issue the regulations on e-voting which are approved by the General Meetings of Shareholders and the provision of e-voting service shall be carried out on the basis of e-voting service contracts signed between VSD and the issuing companies.

Foreign investors are able to cast their votes through the V-vote system via their appointed representatives, being depository members of VSD. The authorisation letter to representative can be made in writing or in the form of a SWIFT message which will subsequently be submitted to the VSD before the e-voting time.

Dividend from Equities: 0%
Dividend from Fund certificates: 20% on taxation amount. The distributed income that has been deducted as income tax at the previous stages (i.e. dividends) and interests from non-taxable bonds as per current regulations are excluded from the taxation amount.

5%

Interest income received on taxable bonds, and taxation income upon T-bills redemption is currently subject to a flat tax of 5%. For example, if the principal amount of the bond held by an investor is VND 1,000,000,000 and it has an interest rate of 8% payable annually, then the tax amount applicable on each interest payment would be calculated as follows:

Total value of interest received: VND1,000,000,000 * 8% = VND80,000,000

The tax payable would be: 5% of VND80,000,000 = VND4,000,000

Foreign investors may claim the tax benefit under the Double Tax Agreement (DTA) signed between the Vietnam government and their country of domicile. Foreign investors who wish to apply for tax reclamation following DTAs is required to submit an application to the local tax authority in order to claim the tax benefit. Investors may consult a local tax advisor for support with the application.

Income tax applied to foreign institutional investors 
Foreign non-resident institutional investors are subject to a business income tax (BIT) of 0.1% on sale proceeds of listed fund certificates, shares of public companies, covered warrants (CWs) and listed bonds, fixed income instruments except non-taxable bonds and 20% on taxation income upon transfer of shares of non-public joint stock companies. For exercising of CWs, income tax is calculated as: 0.1% x (quantity/conversion ratio) x price of the underlying asset (as announced by the stock exchange at the time of CW exercising).

Income tax applied to foreign individual investors 
Foreign individuals investing in securities are subject to 5% on taxation incomes from capital investment. Income from Capital Investment which consists of:

1. Dividend/Interest income received from capital contribution
2. Increase portion of the value of the of the capital contribution of the share capital contribution due to dissolution or merger of an enterprise or withdrawal of capital (excluding the receipt of the original contribution)
3. Income receivable on interest on bonds, debentures and other valuable papers issued by domestic organizations (excluding interest on bonds issued by Government of Vietnam and interest income from money deposited at a bank or credit institution)
4. Stock Dividend/Bonus shares

For item 4 - Stock dividend and bonus shares, tax is not paid at time of receipt. However, when the shares are sold, the seller shall be subject to two types of taxes:
- tax on income from capital Investment (5%): and 
- tax on income from capital transfer (0.1% on sale proceeds). In case the transfer price is lower than the nominal value, taxable income from capital investment is calculated as the actual value of the transfer (equals to actual price multiplied by the quantity)

In addition to the above, when transferring the granted shares, individuals shall pay tax on securities transfer activities of which tax is calculated at 0.1% of sale proceeds.

Method of collection the flat-rate tax applied to Institutional Investors
For listed securities
Subcustodian to withhold 0.1% tax on the sales proceeds on settlement date and credit the net amount to client's account. The tax amount is transferred to the broker's designated account and local brokers will help to make tax payment to tax authority on behalf of investors. 

- For unlisted non-public companies:
The buyer is responsible for calculating, declaring and paying tax on behalf of a seller who is a non-resident investor. If the buyer is also a non-resident investor, it is the responsibility of the issuing company. The Subcustodian is unable to calculate the taxable income, declare and pay the tax on client’s behalf. Sale proceed will only be available for repatriation after the tax fulfillment is evidenced.

- For dividend/interest:
For Dividend on fund certificates: The withholding and payment obligations in respect of this tax rest with the funds management companies.
For Interest from Bonds/Certificates of Deposit/T-bills redemption: Subcustodian would withhold the tax or require tax payment evidence before allowing the fund to be repatriated.

- Income from T-bill redemption:
The regulation is silent on the responsible party to pay tax on client’s behalf. The Subcustodian will withhold the taxes payable and deposit the amount to local tax authorities by the following month-end.

Vietnam has double taxation agreements (DTAs) with the below list of countries. However, it should be noted that the rates provided in the DTAs are applicable for foreign direct investment. It is unknown to the market that how these rates will be applied in the context of portfolio investment due to the lack of regulations and guidance from the regulators. Foreign investors wish to apply for tax reclamation following DTAs should consult a local tax advisor.

Not applicable

Withholding tax
Interest income earned on Certificate of deposit is subject to 5% on taxation income. Cash balance of foreign institutional investors is subject to 5% withholding tax. Commercial banks that issue Certificate of Deposit and pay interest on cash balance are responsible to withhold and finalise the tax on behalf of investors. 

Value-added tax (VAT) 
Business activities on the securities industry are exempted from the VAT as follows:

• Brokerage
• Trading for own account
• Portfolio management
• Securities underwriting and issuing agency
• Consultancy for securities investment and finance
• Securities investment fund management
• Securities investment fund supervision
• Custody services
• Representative for the bondholders
• Other activities of securities investment fund

Vietnam Holiday Calendar

• Ministry of Finance mof.gov.vn
• State Bank of Vietnam sbv.gov.vn
• State Securities Commission ssc.gov.vn
• Hanoi Stock Exchange hnx.vn
• Ho Chi Minh Stock Exchange hsx.vn
• Vietnam Securities Depository vsd.vn