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General Instruction for Foreign Investors in Vietnam Stock market

1. Definition:

Under Vietnamese laws (Decision No. 1550/2004 QD by the State Bank of Vietnam), foreign investors are defined as:

  • Non-residents being foreign economic organizations established pursuant to foreign laws;
  • Non-residents being foreign individuals not residing in Vietnam and Vietnamese residing overseas;
  • Residents being foreign individuals residing in Vietnam.

Percentage of foreign parties in the Vietnamese stock market (Decision No. 238/2005/QD-TTg of the Prime Minister)

* Shares:

Foreign investors are entitled to hold up to a maximum 49% of total listed shares of the total shares listed or registered for trading by any one organization which has been listed or has registered for trading in a securities trading center. Each investor cannot hold more than 10%. Foreign investors can hold a maximum 30% of total shares in a financial institution.

* Bonds:

There is no limitation on the foreign ownership of bonds.

* Investment fund certificates:

Foreign investors are entitled to hold up to a maximum 49% of total listed investment fund certificates of a securities investment fund, which has listed or registered for trading at a securities trading center.

(Note: This Guide is subject to changes in applicable Laws. Please contact FPTS for the latest amendments)

 

The purchase and/or sale of securities by foreign investors at the securities trading center or stock exchange must strictly follow the Decision No. 1550/2004/QD-NHNN of the Governor of the State Bank of Vietnam dated December 06, 2004.

- The purchase and/or sale of securities by foreign investors within the territory of Vietnam must be in Vietnamese dong (VND).

* Source of funds for purchase of securities

Foreign investor shall be permitted to use the following sources of foreign currency and VND for purchase of securities:

  • Foreign currency remitted into VND from foreign sources(s) in accordance with prevailing regulations on foreign exchange control;
  • Foreign currency and VND of foreign investors deposited at authorized banks;
  • VND in capital contribution accounts or share purchase accounts of foreign investors opened at commercial banks in Vietnam in accordance with regulations of the State Bank on foreign exchange control applicable to capital contribution to and purchase of shareholding in Vietnamese enterprise by foreign investors;
  • Any share of profit distributed to foreign investors from direct investment activities in Vietnam;
  • Revenue of foreign organizations and individuals from assignment, liquidation or dissolution of direct investment project(s) in Vietnam in accordance with the law;
  • Salary, bonuses and other legal incomes of foreign individuals in Vietnam in accordance with the law;
  • Other sources if approved by the State Bank of Vietnam.

* Transfer of funds into and out of Vietnam

  • Any foreign investors transferring or having foreign currency in a foreign currency account at an authorized bank in Vietnam in accordance with the laws on foreign exchange control and wishing to use it to invest in securities must transfer it into a specialized on-call foreign currency deposit account of a securities company opened at an authorized bank in Vietnam. The foreign currency must be sold to an authorized bank to covert into VND in order to purchase the securities;
  • After having fulfilled their tax obligations to the State of Vietnam, foreign investors shall be entitled to purchase foreign currency at an authorized bank to remit overseas in accordance with applicable laws on foreign exchange control;
  • Foreign investors may make payments for their expenses in Vietnam, which are derived from dividends; interests gained from their securities investment.

 

For institutional investors:

  • For transfer of securities (shares, investment fund certificates, bonds excluding tax-free bonds), the payable tax amount shall be equivalent to 0.1% of the total value of securities sold at the time of transfer.
  • For bond interest (except for tax-free bonds), the payable tax amount shall be equivalent to 0.1% of the total value of bonds (including bond par value and receivable interests) at the time of receipt of interests.

For individual investors:

No tax will be imposed.

 

5.1 During the order-matching session, the trading system shall control the amount of shares and investment fund certificates of foreign investors permitted to purchase according to the following principles:

  • The amount of shares and investment fund certificates purchased from foreign investors shall be deducted from the amount permitted to purchase immediately after the purchase order is made. The amount of shares and investment fund certificates sold by foreign investors shall be added to the amount of shares and investment fund certificates permitted to purchase immediately after closing the payment of transactions.
  • The purchase order or part of the purchase order of share and investment fund certificates by foreign investors is not executed, it shall be automatically rescinded if the amount of share and investment fund certificates permitted to purchase is no longer available and the purchase orders added to the trading system shall not be accepted.

5.2 During the negotiation trading session, the trading system shall control the amount of securities of foreign investors permitted to purchase according to the following principles:

  • The amount of securities permitted to purchase by foreign investors shall reduce immediately after the agreed transaction is finalized if such a transaction is made between a foreign purchase investor and a local selling investor.
  • The amount of securities permitted to purchase by foreign investors shall increase immediately after closing of the transaction payment if such a transaction is between a foreign selling investor and a local purchase investor.
  • The amount of securities permitted to purchase by foreign investors shall remain unchanged if the agreed transaction is conducted between two foreign investors.

 

 

Foreign investor is required to have a securities trading code approved by to start trading securities in Vietnam.

The required documents to apply for a securities trading code include:

Individual investor:

  • 01 securities trading code registration form signed by the individual investor (Form 02/MSGD)
  • 01 foreign individual investor’s information verified and sealed by the State Notary Public or by an authorized body of the originating country and legalized by an authorized body of Vietnam (Form 03/MSGD)
  • 01 copy of passport

Institutional investor:

  • 01 securities trading code registration form signed by the institutional investor; (Form 02/MSGD)
  • 01 foreign institutional investor’s information verified and sealed by the State Notary Public or by an authorized body of the originating country and legalized by an authorized body of Vietnam (Form 04/MSGD)
  • 01 copy of passport of legal counsel of the institution
  • Legal counsel of the foreign institutional investor’s information verified and sealed by the State Notary Public or by an authorized body of the originating country and legalized by an authorized body of Vietnam (Form 05/MSGD)
  • Authorization for legal counsel of foreign institutional investor verified and sealed by the State Notary Public or by an authorized body of the originating country and legalized by an authorized body of Vietnam (Form 06/MSGD)
  • 01 notarized copy and 01 English translated copy of Business Registration Certificate in the home country; Business Registration Certificate in Vietnam (if any) verified by State Notary Public in Vietnam;
  • Fund regulations or Fund’s Charter (In case the foreign institution is an investment fund).

* If the foreign institution is a 100% foreign-owned capital company established in Vietnam, it must supply a copy of Investment License verified by an authorized body of Vietnam. In this case, the foreign institutional investor’s information; legal counsel of the foreign institutional investor’s information and authorization for legal counsel of foreign institutional investor does not need to be verified and sealed by the State Notary Public or by an authorized body of the originating country or legalized by an authorized body of Vietnam.

 

After receiving a trading code approval from the Vietnam Securities Depository, the foreign investor may open a trading account at FPT Securities or any other Securities Company.

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