CIRCULAR

ON PERCENTAGE OF PARTICIPATION OF FOREIGN PARTIES IN THE SECURITIES MARKET OF VIETNAM PROVIDING GUIDELINES ON DECISION 146/2003/QD-TTg OF THE PRIME MINISTER OF THE GOVERNMENT DATED 17 JULY 2003

In order to implement Decision 146/2003/QD-TTg of the Prime Minister of the Government dated 17 July 2003 on percentage of participation of foreign parties in the securities market of Vietnam, and having reached agreement with the State Securities Commission, the Ministry of Finance provides the following guidelines:

1. Applicable entities

This Circular shall apply to foreign organizations and individuals purchasing or selling shares or bonds on the centralized trading market and to foreign securities business organizations contributing capital to establish joint venture securities companies or joint venture funds management companies operating in Vietnam.

2. Interpretation of terms

In this Circular, the following terms shall be construed as follows:

2.1 Foreign organization and individual means:

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(b) A foreign organization in an enterprise with foreign owned capital in Vietnam;

(c) A foreign individual;

(d) A Vietnamese residing overseas.

2.2 Listed shares of an issuing organization means shares which have been issued and which are listed on the centralized trading market.

2.3 Joint venture securities company means a securities company which has been established on the basis of a joint venture contract between a foreign securities business organization and a Vietnamese party in accordance with a licence for establishment and operation issued by the State Securities Commission.

2.4 Joint venture funds management company means a funds management company which has been established on the basis of a joint venture contract between a foreign securities business organization permitted to conduct funds management and a Vietnamese party in accordance with a licence for establishment and operation issued by the State Securities Commission.

2.5 Circulating bonds means bonds which have been issued and which are listed on the centralized trading market.

3. Percentage shareholding

3.1 Foreign organizations and individuals purchasing or selling shares on the securities market of Vietnam may hold a maximum of thirty (30) per cent of the total listed shares of any one issuing organization.

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4. Percentage bond and convertible bond holding

4.1 The percentage holding of foreign organizations and individuals purchasing or selling circulating bonds of any one organization listed on the securities market of Vietnam shall be unrestricted.

4.2 If a foreign investor holds convertible bonds which are converted into shares, the foreign investor must ensure its holding does not exceed thirty (30) per cent of the total listed shares of any one issuing organization.

5. Percentage capital contribution of foreign securities business organizations

5.1 A foreign securities business organization may make a maximum capital contribution of forty nine (49) per cent of the charter capital of a joint venture securities company or a joint venture funds management company. Parties contributing capital to a joint venture shall be responsible to pay fully their capital contribution portion in accordance with the charter of the joint venture company and the provisions of law. The legal capital of a joint venture may not be reduced during the period of operation.

5.2 Any change in the percentage of capital contribution or any assignment of capital contribution by parties to the joint venture must be the subject of a decision by the board of management of the joint venture company and must be reported to the State Securities Commission.

6. Undertaking supervision

6.1 Foreign organizations and individuals purchasing or selling securities on the centralized trading market must register for a code number for management of foreign investors with the Securities Trading Centre - Securities Trading Department via a depository member in accordance with regulations of the State Securities Commission. The remittance of foreign currency into or out of Vietnam by foreign organizations and individuals shall be conducted in accordance with the laws of Vietnam on foreign exchange control.

6.2 Securities Trading Centres shall supervise maximum percentage shareholdings and trading and holding of convertible bonds by foreign organizations and individuals in the securities market of Vietnam. Every quarter, Securities Trading Centres shall report to the State Securities Commission and the Ministry of Finance on the status of holdings of foreign organizations and individuals of listed shares (on the attached Form).

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7. Implementing provision

This Circular shall be of full force and effect after fifteen (15) days from the date of its publication in the Official Gazette and shall replace Circular 01/1999/TT-UBCK of the State Securities Commission dated 30 December 1999 on percentage of participation of foreign parties in the securities market of Vietnam.

If any problems arise during the implementation of this Circular, they should be reported in writing to the Ministry of Finance for its investigation and resolution.

FOR THE MINISTER OF FINANCE
DEPUTY MINISTER




Le Thi Bang Tam