THE STATE
SECURITIES COMMISSION
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SOCIALIST
REPUBLIC OF VIETNAM
Independence- Freedom- Happiness
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No.31/1999/QD-UBCK6
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Hanoi, October
12, 1999
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DECISION
CONCERNING THE ISSUANCE OF THE REGULATION ON THE INSPECTION
AND SUPERVISION OF SECURITIES ACTIVITIES AND THE STOCK MARKET
PRESIDENT OF THE STATE SECURITIES COMMISSION
Pursuant to the Ordinance on Inspection dated
April 1, 1990;
Pursuant to Decree No.15/CP dated March 2, 1993 by the Government concerning
tasks, powers and responsibilities of ministries and ministerial level bodies;
Pursuant to Decree No.75/CP dated November 28, 1996 by the Government
concerning the establishment of the State Securities Commission;
Pursuant to Decree No.48/1998/ND-CP dated July 11, 1998 by the Government
relating to securities activities and the stock market;
Pursuant to Decree No.61/1998/ND-CP dated August 15, 1998 by the Government
concerning the inspection and supervision of enterprises;
According to the proposal of the Chief Inspector of the State Securities
Commission;
DECIDES
Article 1: To issue this
Decision in connection with the "Regulation on the inspection and
Supervision of Securities Activities and the Stock Market".
Article 2: The decision
becomes effective 15 days after the date of signing.
Article 3: Chiefs of
personnel departments of, chief inspectors and heads of units belonging to the
State Securities Commission, the Stock Exchange Centre, organisations and
individuals associated to securities activities and the stock market are
entrusted with the responsibility of implementing this Decision.
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PRESIDENT OF THE STATE
SECURITIES COMMISSION
Le Van Chau
REGULATION
ON THE INSPECTION AND SUPERVISION OF SECURITIES ACTIVITIES
AND THE STOCK MARKET
(issued in connection with Decision No.31/1999/QD-UBCK6 dated October 12,
1999 by the President of the State Securities Commission)
Chapter I
GENERAL PROVISIONS
Article 1: The
Regulation provides provisions, principles, objectives, contents, methods and
processes of the inspection and supervision of securities activities and the
stock market. The inspection and supervision of securities activities and the
stock market is aimed at the stabilisation, equality, efficiency and publicity
of the stock market as well as the protection of the State interest and legal
powers and interests of investors.
Article 2:
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a) Organisations issuing shares listed in the
collective stock market;
b) The Stock Exchange Centre;
c) Securities companies, securities investment
funds, investment fund management companies, members of securities depository,
and supervising banks;
d) Entities involved in securities transactions;
and
e) Organisations and individuals associated with
securities activities and the stock market.
2. Areas of inspection and supervision include:
a) The issuance of shares;
b) Securities transactions;
c) Stock exchange, registration, clearing and
settlement and depository; and
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Article 3:
Responsibilities of
supervisors and inspectors:
1. The Inspectorate of the State Securities
Commission must operate under the direct management of the commission. It is
entrusted with responsibility of inspecting and supervising the implementation
of policies and legal documents as well as the operations of the Stock Exchange
Centre, organisations and individuals associated with the issuance, exchange
and providing of securities services.
2. Functional departments of the State
Securities Commission are responsible for supervising operations of
organisations which are issuing, trading and exchanging stocks and individuals
who are operating in the fields of securities in accordance with inforce
regulations and laws and within their powers and responsibilities.
3. The Stock Exchange Centre has responsibility
for and powers of conducting the inspection and supervision of securities
transactions of the Stock Exchange Centre.
4. Organisations providing securities services
are responsible for regularly self-supervising their implementation of in-force
regulations and laws associated to their business.
Chapter II
SUPERVISION
Article 4:
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Functional departments of the State Securities
Commission, the Inspectorate of the State Securities Commission and the Stock
Exchange Centre are responsible for regularly conducting the supervision
effectively.
Article 5:
Regulations on the
supervision of the issuance, listing securities and disclosing information
include:
1. Analysing applications for issuing and
listing securities;
2. Supervising and analysing the obedience of
regulations on the disclosure of information;
3. Analysing the transferability of shares and
bonds;
4. Analysing the payable capabilities of
principles and dividends of shares and bonds;
5. Considering serious damages, such as stopping
production, changing business lines, and separating or merging companies which
influence prices of saleable shares and bonds of companies; and
6. Foreseeing trends of securities issued and
listed.
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The supervision of
operations of the Stock Exchange Centre includes the following activities:
1. Analysing the selling and buying of
securities as well as the fluctuation of prices and securities sale volume to
discover signs of disorder in securities transactions;
2. Conducting the supervision aimed at the
discovery of insider trading or market and price manipulating trading
activities;
3. Examining the possession of domestic and
foreign investors;
4. Investigating rumours influencing market
prices; and
5. Foreseeing developing trends in the market.
Article 7:
The supervision of
financial powers and operations of organisations trading and providing
securities services include the following activities:
1. Maintenance of liquidity capital and assets;
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3. Trading performances;
4. Equity capital;
5. State Budget's obligatory;
6. Evaluations of management and organising
results of organisations trading and providing securities services; and
7. Supervisions of the application of regulated
conditions when granting operation licences.
Chapter III
INSPECTION
Article 8:
Based on results of
supervision, functional departments of the State Securities Commission and the
Stock Exchange Centre are responsible for discovering signs of shortcomings and
violations to, in a timely manner, report to the Inspectorate of the State
Securities Commission.
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Article 9:
The inspection applicable
to share issuing organisations must be focused on doubtful or erroneous signs
in the issuance and listing of securities as well as the disclosure of
information, which include:
a) The accuracy, adequacy and legitimacy of
applications for issuing and listing securities;
b) The accuracy, adequacy and punctuality of the
information disclosure;
c) Mortgage assets (if any) and guarantee of the
issuance;
d) The obedience of safety conditions in
accordance with in-force regulations;
e) The establishment of funds used to pay
principals and interests of bonds; and
f) Damages and corrective measures.
Article 10:
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a) The volume of securities issued publicly;
b ) Price index and transactional volume of
securities with doubtful signs;
c) Statistics and documents of intermediary
companies and main investors involved in the securities transations;
d) Definitions of causes triggering daily
changes in prices and securities sales volume; and
e) Analysing relations and information:
* Relations between insiders of shares issuing
organisations and collective investors;
* Relations among large investors concerning
accounts, prices and securities sales volume;
* The selling and buying of collective
securities, large securities sales volume; and large scale transactions, and
* Securities transactions with signs of
violation.
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Inspections of financial
powers and operations of organisations trading and providing securities
services, which include:
1. Inspections of the operational nature of
securities:
* The obedience of regulations on opening and
managing securities transaction accounts of customers;
* The appropriateness of the brokerage and
private business professions;
* The obligatory of catching information related
to customers; and
* The obedience of regulations on brokerage and
private business.
2. Inspections of unfair actions:
* The collection of charges and fees by
customers surpassing regulated levels;
* Timely and completely sending notices on
recognising transactional results to customers;
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* Actions that force, incite and mobilise
customers to the speculation of securities.
3. Inspections of financial powers:
* The portion of the net liquidity capital
counted at the time of inspection which will be compared with those of previous
periods;
* Portions of investment capital contributions
which will be compared with the regulated levels;
* Investment quality of private business
securities; and
* Income sources from trading, brokerage,
private business and issuing guarantee;
4. Inspections of accounting activities:
* Opening book-entry systems, and archiving
documents and book-keeping systems;
* The legitimacy of the book-keeping systems;
and
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5. Inspections of inside operation controls:
* The obedience of regulations on the inside
operation controls;
* Quality and efficiency of the inside operation
controls; and
* Co-operative relations between inside
operation controls with outside auditing activities and Sate-owned securities
management bodies.
Article 12:
Inspections applicable to
members of the State Securities, Commission must follow regulations stated in
the decision on inspection by the President of the State Securities Commission.
Main regulations are as follows:
a) Quality of inside operation controls and
supervisions of members as regulated;
b) The obedience of regulations on the
settlement of obstacles, complaints and accusations; and
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Article 13:
1. The President of the
State Securities Commission and the Chief Inspector of the State Securities
Commission are authorised to determine the inspections on organisations and
individual, who are involved in securities issuance, trading and transactions.
2. The director of the Stock Exchange Centre is
authorised to determine the examinations on all securities transactions of the
Stock Exchange Centre.
3. Decisions on inspections and examinations are
required to include all legal bases, contents, requirements, areas and terms of
inspection and examinations, as well as the powers and responsibilities of the
Inspectorate.
4. Inspected and examined organisations must
know in advance the inspection and examination at least seven days, before the
decisions on inspections and examination are announced, excluding sudden cases.
5. Term of inspections:
a) The term of inspections cannot exceed 30
days:
a) In case of necessity, those who are
authorised to determine the inspection are eligible to extend the term which,
however, cannot exceed 30 days; and
b) The term of inspections is within the date of
announcing the decision on inspections to the inspected organisation and the
date of announcing results of the inspection.
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a) The term of examinations cannot exceed five
days from the date of announcing the decision on examinations; and
b) In case of necessity, those who are
authorised to determine the examination are eligible to extend the term of
examinations which, however, cannot exceed regulated levels for each
examination.
Chapter IV
STIPULATIONS ON MAKING
REPORTS
Article 14:
Organisations involved in
securities issuance, trading and transactions; and individuals doing business
in the field of securities, which are under the inspection and supervision of
the State Securities Commission, are required to, in a timely manner, provide
inspectors of the State Securities Commission, functional departments of the
State Securities Commission, and the Stock Exchange Centre with appropriate and
accurate information and reports in accordance with stipulations stated in the
Regulation on Information and Reports.
Article 15:
Functional departments of
the State Securities Commission, Stock Exchange Centre, securities companies
and investment fund management companies are required to, annually and
quarterly, send inspectors of the State Securities Commission reports on
results of inspections, supervisions, examinations, inside operation controls,
and settlement of complaints and accusations.
Inspectors of the State Securities Commission
are required to monthly send the President of the State Securities Commission
reports on the directions and implementations of results of inspections and
supervisions; and annually and quarterly send the President of the State
Securities Commission and the State Chief Inspector reports on results of
inspections, supervisions, and settlements of complaints and accusations.
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AWARDS AND PENALTIES
Article 16:
Staff, officials,
co-ordinators, inspectors and inspectorates, who succeed in the inspection,
supervision, and examination of securities activities, will receive awards in
accordance with State regulations.
Article 17:
Those who take advantage
of their post and powers of inspection and supervision of securities activities
and the stock market to serve their own interests and purposes, and violate
legal interests of inspected and supervised organisations and individuals; and
those who hinder, bribe or retaliate against inspectors and co-ordinators of
inspectorates, or violate other regulations concerning the inspections and
supervisions of securities activities and the stock market will be
administratively punished or prosecuted in terms of their criminal liability in
accordance with in-force regulations and laws.
Chapter VI
IMPLEMENTATIONS
Article 18:
1. The Chief
Inspector of the State Securities Commission is responsible for providing
guidance on the implementation of this Regulation.
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PRESIDENT OF THE STATE
SECURITIES COMMISSION
Le Van Chau