Taking effect in mid-August to replace Circular 123/2015/TT-BTC (“Circular 123”), Circular 51/2021/TT-BTC (“Circular 51”) will inherit and amend a number of regulations guiding foreign investment activities in the Vietnamese stock market. The promulgation of Circular 51 has created a legal documents system that is synchronous with the Securities Law 2019, Decree 155/2020/ND-CP and in line with the market practice.

Amending the applicable subjects

One of the remarkable new points of this document is that the governing authority has changed the rate of charter capital owned by of foreign investors in economic organizations from 51% to 50%, in accordance with the provisions of the Law on Investment 2020.

In addition to this amendment, Circular 51 supplements new subjects which are clearing members and issuers of depositary receipts in foreign countries. These are subjects are newly specified in the Law on Securities and Decree 155/2020/ND-CP and are organizations that directly provide services to foreign investors.

Supplementing the information disclosure obligation of the group of affiliated foreign investors

In comparison with Circular 123, the new regulation adds provisions guiding the update of information when changing the number of foreign investors in the group of affiliated foreign investors without changing the representative of ownership and information disclosure. In such a case, the appointed or authorized organization or individual only needs to update the list of the group of affiliated investor groups, together with the power of attorney of the new foreign investor, without requiring the entire existing foreign investors to re-sign the letter of appointment and power of attorney to the State Securities Commission, a subsidiary of the Vietnam Stock Exchange within 07 working days from the date of change.

More options for foreign investors when opening depositary account

According to Circular 51, currently, foreign investors not only can open a depository account at a depository bank but also at a security company. However, foreign investors can only open one depository account at a security company like depository bank.

Additional obligations in providing services to foreign investors

In addition to the performance of obligations as before, Circular 51 also supplements two additional obligations in the provision of services that depository and clearing members must comply with at the request of state agencies such as:

  • Making and storing records and documents on asset depository activities on depository accounts of organizations and individuals that are granted securities trading codes; and
  • Fully keep documents on clearing and settlement of securities transactions of organizations and individuals granted securities trading codes, provide completely, timely and accurately the information and relevant documents.

It is worth noting that the reporting forms of the Securities Depository Center, depository members, service providers for foreign investors in Circular 51 have been simplified, more concise than the old models, helping to reduce the time of preparation and collection of records for applicable subjects.