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THE
MINISTRY OF FINANCE
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
11/2000/TT-BTC
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Hanoi,
May 01, 2000
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CIRCULAR
GUIDING THE FINANCIAL MANAGEMENT REGIME APPLICABLE TO
JOINT-STOCK AND LIMITED LIABILITY SECURITIES COMPANIES
Pursuant to the Law on Enterprises passed on
June 12, 1999 by the Xth National Assembly at its 5th session;
Pursuant to the Government’s Decree No.178/CP of October 28, 1994 on the tasks,
powers and organizational structure of the Ministry of Finance;
Pursuant to the Government’s Decree No.48/1998/ND-CP of July 11, 1998 on
securities and securities market;
The Ministry of Finance hereby guides the financial management regime
applicable to joint-stock and limited liability securities companies, as
follows:
Chapter I
GENERAL PROVISIONS
1. This Circular guides only the regime of
financial management applicable to securities companies being joint-stock
companies or limited liability companies (hereafter referred to as securities
companies), which are lawfully established in Vietnam and licensed by the State
Securities Commission to conduct securities trading in one or several forms.
2. Securities companies take limited liability
for their capital, assets and business results, have obligations toward the
State budget and the responsibility to preserve capital of shareholders and
capital contributors.
3. Securities companies are subject to financial
management by the State finance agency, have to observe provisions on financial
management guided in this Circular and relevant legal documents. They shall
conduct the cost-accounting and accountancy and make financial settlement
reports according to the current accounting regimes.
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SPECIFIC PROVISIONS
I. CAPITAL SOURCES OF
SECURITIES COMPANIES
1. Charter capital: is the capital amount
contributed by all members of a securities company and inscribed in such
company’s charter. The charter capital of a securities company includes:
1.1. Contributed State-owned capital, including:
- State-owned capital contributed by State
enterprises by mode of purchasing shares of a joint-stock securities company or
contributed to a limited liability company. This capital may be in cash, land
use right value or land rental or value of other assets.
- Dividend amounts left by the contributing
State enterprises to increase the securities company’s charter capital (if
any).
- Source accumulated by the securities company
through deduction for the setting up of the reserve fund for charter capital
supplement, in proportion to State enterprises’ percentage of capital
contribution to the securities company.
1.2. Contributed capital not owned by the State:
- Capital contributed by members, for limited
liability companies, or share capital of shareholders, for joint-stock
companies.
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- Dividends or yields from contributed capital
divided to and left by members other than State enterprises to increase the
securities company’s charter capital (if any).
2. Capital mobilized by the securities company,
including:
- Capital mobilized through the issuance of
shares (except for limited liability securities companies);
- Capital mobilized through the issuance of
bonds;
- Capital borrowed from organizations within and
without the country;
- Capital contributed by partners intended to
set up joint-ventures and other forms.
3. Other capital sources (capital formed
in the settlement process, entrusted investment capital, aid capital...).
4. Funds and interests created in the
course of profit distribution.
The creation, mobilization, management and use
of capital sources of the securities companies must comply with the State’s
current regulations applicable to joint-stock companies and limited liability
companies as well as regulations on securities trading activities.
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Securities companies shall have to preserve
their own capital by themselves, ensure safety for the capital contributors,
ensure their liquidity in the course of operation, and raise the efficiency of
capital use. The preservation of securities companies' capital shall be effected by the
following modes:
1. Setting up of compulsory reserve funds according
to provisions of Section IV, Clause 3, Chapter II of this Circular.
2. Reserves deducted as expenditures:
a/ Reserves for securities price decrease
calculated upon each type of securities shall be deducted as follows:
Reserve level for securities investment
Price decrease for the plan year
=
Volume of securities with
decreased prices at Dec.31st of the reporting year
x [
Price of securities accounted on
accounting book
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Closing price of Dec.31st or the latest closing
price if Dec.31st is not a trading day
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- Securities companies shall have to set aside
reserve for each securities type with decreased price and may synthesize such
reserves to serve as basis for accounting them into their operation
expenditures.
- Securities price decrease reserves shall be
accounted into operation expenditures of the reporting year for purpose of
recording in advance the value of losses that may be incurred in the following
year, and providing securities companies with a financial source to offset such
losses, so as to preserve their business capital.
- Securities companies shall have to refund
securities price decrease reserves into their incomes. The refunding of already
set aside reserves and the setting aside of new ones shall be carried out at
the time of closing accounting books for making annual financial statements.
b/ For reserves for risks arising in the payment
process, the deduction level shall be equal to 0.1% of the total payment value.
3. Purchase of insurance for assets and other
insurance types necessary for operations of securities companies
III. THE MANAGEMENT OF
REVENUES AND EXPENDITURES OF SECURITIES COMPANIES
1. Revenues of a securities company include the
followings:
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- Securities brokerage commission;
- Securities trading profits;
- Investment portfolio management charge;
- Revenues from issuance underwriting
activities;
- Securities investment consultancy charge;
- Securities custody charge;
- Securities transaction charge;
- Dividends and yields from securities owned by
the company.
b/ Revenues from financial activities,
including: interests on deposits and revenues from other financial activities.
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- Revenues from lease of assets;
- Revenues from fines; from the recovery of
already written off debts; refunded reserves deducted in the preceding year,
which have been unused or have not been used up; liquidated, assigned or sold
assets; and other revenues.
2. Expenditures of a securities company
a/ Securities trading expenses:
- Securities trading center membership fee (for
securities companies being members of securities trading centers);
- Securities listing and registration charge
(for securities companies issuing securities listed at securities trading
centers);
- Share and bond custody charge;
- Securities transaction charge;
- Expenses for securities issuing agents;
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- Share and bond withdrawing charge;
- Via-account share and bond transfer charge;
- Share and bond consigning charge;
- Charge for use of equipment systems of
securities trading centers;
- Postage, expenses for maintenance and repair
of fixed assets, procurement of working tools, working trip allowance,
loading-unloading costs and transport freight, expenses for treasury
operations, expenses for inspection and auditing activities;
- Expenses for advertisement, marketing, sale
promotion, guest reception, festive occasions, transactions, external
relations, conferences and other expenses shall comply with the following
regulations: For the first 2 years after the company establishment, the expense
level must not exceed 7% of the total expenditures; from the third year on, it
must not exceed 5% of the total expenditures;
- Fixed asset depreciation;
- Expenses for materials and tools;
- Charges for services purchased from outside;
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- Such deductions set aside under the State’s
regulations as: social insurance, medical insurance, trade union operating
fund.
b/ Expenses for financial activities:
- Expenses for loan interest payment;
- Expenses for bond interest payment;
- Expenses for lease of assets to be used in business
activities;
- Other expenses.
c/ Payment of taxes, charges and fees according
to provisions of law.
d/ Other regular and reasonable expenses:
- Reserves set aside according to provisions of
Section II, Chapter II of this Circular;
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- Expenses for severance allowances paid to
laborers as prescribed;
- Expenses for professional training;
- Expenses for mid-shift meals, provided that
the expense level must not exceed the minimum wage level prescribed by the
State for State employees;
- Expenses for liquidation, assignment and sale
of assets;
- Expenses for property insurance and other
necessary insurance types;
- Yearly dues to associations to which the
securities company is a member;
- Other expenses.
3. Securities companies must not account into
their expenditures the following:
- Damage already subsidized by the Government or
compensated by the damage causing party(ies) or insurance agency;
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- Allowances for overseas working trips in
excess of the level prescribed by the Managing Board;
- Expenditures from welfare fund and reward
fund;
- Regular or irregular difficulty allowances,
charity sums;
- Financial supports for mass organizations,
societies and other agencies, excluding amounts in support of education
activities outside the company, such as: contributions to the study promotion
fund, assistance to disabled pupils;
- Expenses on capital construction investment
and fixed asset procurement;
- Expenses covered by other funding sources.
IV. DISTRIBUTION OF PROFITS
AND DEDUCTIONS FOR SETTING UP FUNDS
The profit of a securities company is determined
as the difference of its total revenues minus (-) its total expenditures
(including taxes prescribed by law). The arising profits shall also includes
the preceding year’s profit amount, which is discovered in the year, minus the
loss(es) already determined in the final settlement of the year according to
the current regulations.
The profits earned in the year by a securities
company shall, after payment of enterprise income tax as prescribed by law, be
distributed in the following order:
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2. Making up for losses not yet cleared against
pre-enterprise income tax profit;
3. After the above-said amounts are deducted,
the remaining profit amount (assuming 100%) shall be distributed as follows:
- Deductions for setting up the reserve fund for
charter capital supplement, which are equal to 5% of the annual net profit.
Such fund shall be deducted till it is equal to 10% of the charter capital of
the securities company;
- Deductions for setting up the compulsory
reserve fund, which are equal to 5% of the annual net profit. Such fund shall
be deducted till it is equal to 10% of the charter capital of the securities
company;
- Dividing dividends, as for joint-stock
securities companies (or dividing profit, as for limited liability securities
companies) in proportion to the percentage of capital contributed by
shareholders or capital-contributing members;
- Setting up other funds.
V. USE PURPOSES OF FUNDS
1. The reserve fund for charter capital
supplement: shall be used to supplement and increase the charter capital, and
expand business activities.
2. The compulsory reserve fund: shall be used to
secure the safety of the securities companies and deal with force majeure
circumstances.
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3. Other funds: shall be used according to
regulations of the Managing Board and in compliance with annual resolutions of
the Shareholders’ Congress.
Chapter III
ACCOUNTING, STATISTICAL
AND AUDITING WORK
1. The fiscal year of securities companies
begins on January 1st and ends on December 31st of every calendar year.
2. Securities companies shall have to conduct
the cost-accounting and accountancy, and make financial statements in strict
accordance with the current accounting and statistical regime of the State.
3. Annually, securities companies must have
their financial statements audited. The auditing activities shall be conducted
by an independent auditing company after the latter is approved by the State
Securities Commission.
4. Quarterly and annually, securities companies
shall have to make and send their financial statements to the Ministry of
Finance, tax agencies and the State Securities Commission. Quarterly statements
must be sent within the first 15 days of the next quarter at the latest; annual
statements must be sent within 45 days after the year ends.
a/ An annual statement of a securities company
must contain the following documents:
- Report on operations in the year.
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+ Accounting balance sheet
+ Report on business operation result
+ Report on monetary circulation
+ Explanation of financial statement
+ Report on capital resources and the use
thereof
+ Report on deductions for setting up and use of
funds, distribution of dividends.
b/ A quarterly statement must contain the
following documents
- Accounting balance sheet
- Report on business operation result
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- Report on capital sources and the use thereof.
5. Within 45 days after the end of each fiscal
year, the securities companies shall have to publicize their financial matters.
Annual financial statements must be certified by independent auditors.
6. Depending on practical conditions, annually,
the Ministry of Finance shall coordinate with the concerned agencies in
examining the final financial settlements of securities companies if deeming it
necessary.
Chapter IV
ORGANIZATION OF
IMPLEMENTATION
This Circular takes effect after its signing.
Any problems arising in the course of implementation must be promptly reported
to the Ministry of Finance for consideration and solution.
FOR THE MINISTER OF FINANCE
VICE MINISTER
Le Thi Bang Tam
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