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| THE GOVERNMENT | SOCIALIST REPUBLIC OF VIET NAM |
| No. 36/2007/ND-CP | Hanoi, March 8, 2007 |
ON PENALTIES FOR ADMINISTRATIVE OFFENCES IN SECURITIES AND SECURITIES MARKET SECTOR
THE GOVERNMENT
Pursuant to the Law on Organization of the Government dated 25 December 2001; Pursuant to the Law on Securities dated 29 June 2006;
Pursuant to the Ordinance on Dealing with Administrative Offences dated 2 July 2002;
On the proposal of the Minister of Finance;
DECREES:
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2. Administrative offences in the securities and securities market sector comprise:
(a) Breaches of provisions on making public offers of securities;
(b) Breaches of provisions on public companies;
(c) Breaches of provisions on securities listing;
(d) Breaches of provisions on organization of the securities trading market;
(dd) Breaches of provisions on securities business operations and securities business practising certificates;
(e) Breaches of provisions on securities trading;
(g) Breaches of provisions on securities registration, depository, clearance and payment; and on custodian banks;
(h) Breaches of provisions on disclosure of information;
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(k) Breaches of provisions regarding hindering an investigation.
Article 2. Applicable entities
Any domestic or foreign organization, body or individual (hereinafter all referred to as any entity) who breaches the provisions of the law on securities and securities market but not to the level justifying criminal prosecution shall be dealt with for an administrative breach in accordance with the provisions of this Decree, unless an international treaty of which the Socialist Republic of Vietnam is a member contains other provisions in which case the provisions of such treaty shall apply.
Article 3. Principles for imposing penalties for administrative offences
1. The principles for imposing penalties for administrative offences in the securities and securities market sector shall be implemented in accordance with article 3 of the Ordinance on Dealing with Administrative Offences.
2. After an organization is dealt with for an administrative offence which it committed, it must comply with the penalty decision and then identify the individual in such organization whose fault caused the breach in order to determine the legal and financial responsibilities of such individual pursuant to law.
Article 4. Time-limit for imposing penalties for administrative offences
1. The time-limit for imposing a penalty for an administrative offence in the securities and securities market sector shall be two years as from the date the offence was committed. At the expiry of this time-limit, measures for remedying consequences as stipulated in article 7.3 of this Decree shall still apply.
2. If an individual who commits an administrative offence in the securities and securities market sector is investigated for criminal responsibility, or sued or prosecuted and thereafter there is a decision suspending such investigation or case, then the individual shall be dealt with administratively pursuant to the provisions of this Decree. The person issuing the decision to suspend the investigation or case shall forward a copy of such decision to the person authorized to deal with administrative offences. In such circumstances the statutory time-limit for imposing an administrative penalty shall be three months as from the date of receipt of the decision on suspension of the former investigation or case by the person authorized to deal with administrative offences.
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Article 5. Period after which a penalty shall be deemed not to have been imposed
If any entity commits an administrative offence and at the expiry of a period of one year from the date of complete compliance with a penalty decision or from the date of expiry of effectiveness of the penalty decision such offender does not commit a repeat offence, it shall be deemed that the entity was not subject to a penalty for any administrative breach.
Article 6. Mitigating and aggravating circumstances
When imposing a penalty for an administrative offence in the securities and securities market sector, the following shall be regarded as mitigating or aggravating circumstances:
1. The following shall be deemed to be mitigating circumstances:
(a) The offender has taken steps to prevent or mitigate the impact of the breach or has voluntarily redressed its consequences or paid compensation for loss and damage;
(b) The offender has voluntarily confessed the offence and sincerely repented;
(c) The offence was committed under compulsion or during spiritual or material dependency;
(d) The offence was committed due to a lack of understanding;
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2. The following shall be deemed to be aggravating circumstances:
(a) The offence was pre-organized;
(b) The offender has committed a number of offences or has repeatedly committed the same offence in the same sector;
(c) The offender forced a person materially or spiritually dependent on the offender to commit the offence;
(d) The offender took advantage of his or her official position or powers to commit the offence;
(dd) The offence was committed while the offender was subject to an administrative penalty decision;
(e) The offender committed the breach in spite of a request from an authorized person to desist;
(g) The offender took further action to evade or cover-up the administrative breach.
Article 7. Forms of penalty, measures for remedying consequences
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(a) A warning;
(b) A fine.
2. Depending on the nature and seriousness of the breach, the offending entity may also be subject to one or more additional penalties as follows:
(a) Confiscation of the entire revenue earned from the breach and of the number of securities used to commit the breach;
(b) Suspension for a fixed period or rescission of the public securities issue tranche, if after forty (40) days from the date of the breach the deficiency is not remedied;
(c) Revocation for a limited or unlimited period of the certificate for the public issue of securities, or of the licence for establishment and operation of the securities company, securities investments fund management company, or securities investment company; of the licence for registration of securities depository activities; or of the securities business practising certificate. During the period of revocation of the right to use any of the aforementioned documents, the entity shall not be permitted to conduct any professional operation as stipulated in the relevant certificate, licence or practising certificate.
3. An offending entity may, in addition to being subject to the main penalty and additional penalties as stipulated in clauses 1 and 2 of this article, and depending on the nature and seriousness of the breach, also be subject to one or more of the following measures in order to remedy consequences of the breach:
(a) Compulsory compliance with law;
(b) Compulsory rescission or correction of incorrect or false information;
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Article 8. Applicability of laws in other sectors on penalties for administrative offences
If there are other current laws which regulate conduct which constitutes an administrative offence in the securities and securities market sector, and which specifically regulates the form and level of penalties for such conduct, then such other laws shall apply.
ADMINISTRATIVE OFFENCES, FORMS OF PENALTY, AND LEVEL OF FINES
Section 1. BREACHES OF PROVISIONS ON MAKING PUBLIC OFFERS OF SECURITIES
Article 9. Fines for offences regarding public offers of securities
1. A fine of from ten million to twenty million VND shall apply to the issuing organization or to the director or general director, chief accountant or other affiliated person of the issuing organization, the underwriter or the consultant which prepared an application file for registration of a public offer of securities containing incorrect, misleading or incomplete information which affected the decision of investors.
2. A fine of from twenty million to fifty million VND shall apply to the issuing organization or to the director or general director, deputy director or deputy general director, chief accountant or other affiliated person of the issuing organization, the underwriter or the consultant advising on the issue who commits one of the following breaches:
(a) Deliberate announcement of information which is incorrect or which hides the truth;
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(c) Distribution of securities incorrectly in terms of the contents of the registration for the offer regarding the class of securities, the period for conducting the issue and the minimum volume of securities to be offered;
(d) Making an announcement about the issue on the media which is incorrect in terms of the contents of the issue and the time for the issue;
(dd) The underwriter has a total value of securities which exceeds the percentage stipulated by law.
3. A fine of from one per cent (1%) to five per cent (5%) of the total amount of money unlawfully raised shall apply to the issuing organization or to the director or general director, chief accountant or other affiliated person of the issuing organization, the underwriter, the consultant advising on the issue, to the auditing organization which provided approval, the person signing the audit report or entity certifying the application file for registration of the public offer of securities containing false information which caused loss to investors.
4. A fine of from one to five times the amount of money unlawfully collected shall apply to an issuing organization making a public offer of securities without having a certificate of registration of such offer.
5. Forms of additional penalty shall be:
(a) Suspension of the issuing tranche for a period of forty-five (45) days in the case of a breach of clauses 2 and 3 of this article;
(b) Revocation of the certificate of registration of the public offer after the period of suspension stipulated in sub-clause (a) above, if the breach was not remedied;
(c) Compulsory rescission of the issuing tranche in the case of a breach of clause 4 of this article;
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(dd) Confiscation of the entire proceeds illegally collected by the offending entity in the case of a breach of clauses 3 or 4 of this article.
6. Measures for remedying consequences shall be:
(a) If an investor requests rescission of its purchase order within a period of thirty (30) days from the date an issuing tranche is suspended pursuant to clause 5(a) of this article, then the issuing organization must recover the securities which it offered for sale and refund the deposit or purchase monies together with interest at the rate of on-call deposits.
(b) Within a period of thirty (30) days from the date the certificate of registration of the public offer is revoked pursuant to clause 5(b) of this article or from the date the issuing tranche is compulsorily rescinded pursuant to clause 5(c), the issuing organization must recover the securities which it offered for sale and refund investors their deposits or purchase monies together with interest at the rate of on-call deposits.
Section 2. BREACHES OF PROVISIONS ON PUBLIC COMPANIES
Article 10. Fines for offences regarding public offers of securities
1. A fine shall apply to any public company as defined in article 25.1(c) of the Law on Securities which commits a first offence, with mitigating circumstances as defined on article 6 of this Decree, being failure to lodge a file with the State Securities Commission within ninety days of the date of its becoming a public company.
2. A fine of from five million to ten million VND shall apply to a public company which commits one of the following breaches:
(a) Failure to lodge a file with the State Securities Commission within ninety days of the date of its becoming a public company, applicable to the companies defined in article 25.1(c) of the Law on Securities;
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(c) Failure to conduct securities registration or securities depository as required by articles 52 and 53 of the Law on Securities;
(d) Failure to comply with the provisions of the Law on Enterprises regarding corporate management as required by article 28.1 of the Law on Securities.
3. A fine of from ten million to twenty million VND shall apply to a public company which commits one of the following breaches:
(a) Failure to lodge a registration file with the State Securities Commission after the expiry of one year from the date of becoming a public company, applicable to the companies defined in article 25.1(c) of the Law on Securities;
(b) Failure to disclose information as required by article 101 of the Law on Securities;
(c) Breach of the accounting regime applicable to public companies or failure to audit annual financial statements or failure to apply the corporate management regime as required by the Law on Enterprises after the expiry of one year from the date of becoming a public company;
(d) Failure to correctly conduct securities registration or securities depository leading to a dispute or legal proceedings regarding ownership and affecting the interests of shareholders in the public company.
4. Measures for remedying consequences shall be:
Compulsory compliance with law, applicable to the breaches stipulated in clauses 1, 2 and 3 of this article.
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1. A fine of from ten million to twenty million VND shall apply to any entity becoming a major shareholder of a public company with shares listed on the Stock Exchange or a Securities Trading Centre, which entity commits one of the following breaches:
(a) Any entity or group of affiliated persons who become a major shareholder of a public company with shares listed on the Stock Exchange or a Securities Trading Centre and which fails, within a time-limit of seven working days, to report such ownership to the public company, the State Securities Commission [and/or] to the Stock Exchange or Securities Trading Centre where the public company shares are listed;
(b) Providing an inaccurate or incomplete report on major shareholder ownership as required by article 29.2 of the Law on Securities;
(c) Any entity or group of affiliated persons being a major shareholder of a public company with shares listed on the Stock Exchange or a Securities Trading Centre and which fails, within a time-limit of seven working days from the date of changing ownership by more than one per cent of the volume of shares of the same class currently in circulation, to provide an additional report thereon to the public company, the State Securities Commission [and/or] to the Stock Exchange or Securities Trading Centre where the public company shares are listed;
(d) A member of the board of management, board of directors, chief accountant or auditor of the issuing organization or any other affiliated person who trades shares in such listed company but fails to provide notice thereon to the Stock Exchange or Securities Trading Centre seven working days prior to the date of trading and three working days after completion of the transaction.
2. Measures for remedying consequences:
(a) Compulsory compliance with law, applicable to the breach stipulated in clause 1 of this article;
(b) Any member of the board of management, director or general director, deputy director or deputy general director, accountant, finance officer or other manager of the public company who derives a profit from the purchase or sale of the public company shares must repay such profit to the public company within six months of the date of such purchase or sale.
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(a) Failure to make a public announcement of redemption of its own shares at least seven working days prior to the date of such redemption as required by article 30.2 of the Law on Securities;
(b) Making a public announcement of redemption of its own shares but with incomplete information about the purpose of the redemption, the number of shares to be redeemed, the source of funding for the redemption and the period for conducting the redemption; or having registered and made a public announcement about a redemption of shares, but failing to in fact conduct such redemption;
(c) Reselling the number of shares redeemed within six months of the date of the redemption, without approval from the Ministry of Finance.
2. Measures for remedying consequences shall be:
Compulsory compliance with law, applicable to the breaches stipulated in clause 1 of this article.
Section 3. BREACHES OF PROVISIONS ON SECURITIES LISTING
1. A fine of from twenty million to fifty million VND shall apply to the listing organization or to the director or general director, deputy director or deputy general director, chief accountant or other affiliated person of the listing organization, to the consultancy organization advising on the listing, the auditing organization which provided approval, the person signing the audit report or any entity certifying the application file for listing and which commits any one of the following breaches:
(a) The application file for listing on the Stock Exchange or a Securities Trading Centre contains incorrect, misleading or incomplete information;
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(c) The listing organization fails to fully comply with the provisions on the period for announcing information, the items to be announced and the method of announcing information about listing.
2. A fine of from fifty million to seventy million VND shall apply to the listing organization or to the director or general director, deputy director or deputy general director, chief accountant or other affiliated person of the listing organization, to the consultancy organization advising on the listing, the auditing organization which provided approval, the person signing the audit report or any entity certifying the application file for listing and which contains false information which caused serious misunderstanding.
3. Measures for remedying consequences shall be:
Rescission of the listing applicable to the breach stipulated in clause 2 of this article.
4. Other measures for remedying consequences shall be:
Compulsory compliance with law, applicable to the breaches stipulated in clauses 1 and 2 of this article.
Section 4. BREACHES OF PROVISIONS ON ORGANIZATION OF THE SECURITIES TRADING MARKET
1. A fine of from twenty million to fifty million VND shall apply to any entity which organizes a securities trading market contrary to article 33.3 of the Law on Securities but does not thereby derive a profit.
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3. Forms of additional penalty shall be:
(a) Compulsory rescission of the unlawful organization of the securities trading market;
(b) Confiscation of the entire income unlawfully derived from the breach, applicable to the breach stipulated in clause 2 of this article.
3. Measures for remedying consequences shall be:
Compulsory compliance with law, applicable to the breaches stipulated in clauses 1 and 2 of this article.
1. A fine of from twenty million to fifty million VND shall apply to the Stock Exchange or a Securities Trading Centre which commits any one of the following breaches:
(a) Approval or rescission of listing in respect of an application file for listing which fails to abide by the stipulated conditions on capital, business results, financial capability, number of shareholders or number of owners of securities;
(b) Failure to detect a listing organization which does not maintain the stipulated conditions for listing; failure to provide a warning signal or announce information as stipulated by law, affecting the market price of securities.
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Compulsory compliance with the provisions in articles 37.4, 37.6 and 40.1 of the Law on Securities.
1. A fine of from twenty million to fifty million VND shall apply to the Stock Exchange or a Securities Trading Centre which commits any one of the following breaches:
(a) Approval or rescission of membership of a securities company which fails to abide by the stipulated conditions on capital, material and technical facilities, and number of practising staff as required by the Membership Rules;
(b) Failure to detect a trading member which does not maintain the stipulated conditions for membership or breaches provisions on members' obligations in article 39.2 and 39.4 of the Law on Securities.
2. Measures for remedying consequences shall be:
Compulsory compliance with the provisions in articles 37.5, 39.2 and 39.4 of the Law on Securities.
1. A fine of from twenty million to fifty million VND shall apply to the Stock Exchange or a Securities Trading Centre which commits any one of the following breaches:
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(b) Fails to promptly detect breaches of the Trading Rules or fails to comply with the provisions on supervision of trading activities, thereby seriously affecting the fair, public and transparent nature of the market;
(c) Fails to cease, suspend or rescind trading of securities in necessary cases in accordance with the Trading Rules of the Stock Exchange or Securities Trading Centre in order to protect investors, or fails to promptly provide a warning signal or announce information on the market about fluctuations seriously affecting the market.
2. Measures for remedying consequences shall be:
Compulsory compliance with law, applicable to the breaches stipulated in clause 1 of this article.
1. A fine of from twenty million to fifty million VND shall apply to a securities company which trades securities at the company and which commits any one of the following breaches:
(a) Failure to publicly announce at the headquarters of the company, or at its branches or agencies for the receipt of orders, the relevant items regarding trading methods, placing orders, providing a security deposit for trading, term for payment, trading fees and other relevant services concerning trading of securities listed at the Securities Trading Centre; and the list of practising members conducting trading of securities listed at the Securities Trading Centre and being trading members of such Centre;
(b) Failure to fully discharge the obligation to report and to disclose information about trading of securities listed at the Securities Trading Centre.
2. A fine of from fifty million to seventy million VND shall apply to a securities company which trades securities at the Securities Trading Centre of which such company is a member but contrary to the Trading Rules of the Securities Trading Centre as stipulated in article 41.2(b) of the Law on Securities.
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Confiscation of the entire income unlawfully derived from the breach, and compulsory termination of trading at the securities company.
4. Measures for remedying consequences shall be:
Compulsory compliance with the Trading Rules of the Securities Trading Centre, applicable to the breaches stipulated in clauses 1 and 2 of this article.
1. A warning shall apply to a securities company, a fund management company, a securities investment company, or to the branch of a foreign securities company or fund management company in Vietnam which commits any one of the following breaches:
(a) Uses a name for the company or branch other than the name in the licence;
(b) Fails to provide notice of change of head office.
2. A fine of from five million to ten million VND shall apply to a securities company, a fund management company, a securities investment company, or to the branch of a foreign securities company or fund management company in Vietnam which commits any one of the following breaches:
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(b) Operates in breach of its company charter or fund charter, or fails to provide notice of change of such charter.
3. A fine of from ten million to twenty million VND shall apply to a securities company, a fund management company, a securities investment company, or to the branch of a foreign securities company or fund management company in Vietnam which commits any one of the following breaches:
(a) Conducts a securities business operation or provides securities services without a licence;
(b) Lends or assigns its licence;
(c) Conducts a securities business operation or provides securities services in an unlicensed sector or when its licence is no longer valid;
(d) Erases or amends its licence;
(dd) Implements changes regarding securities and the securities market without approval from the State Securities Commission.
4. A fine of from ten million to twenty million VND shall apply to a securities company or a securities investment fund management company which divides, merges, consolidates or converts its company form without approval from the State Securities Commission.
5. A fine of from ten million to twenty million VND shall apply to a representative office of a foreign securities company or fund management company in Vietnam which directly engages in a securities business operation contrary to law.
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(a) Confiscation of the entire income unlawfully derived from the breach, applicable to the breaches stipulated in clauses 3(a), 3(b), 3(c) and clause 5 of this article;
(b) Revocation for a forty-five day period of the right to use the licence for establishment and operation of the securities company, fund management company, securities investment company, or branch of the foreign securities company or fund management company in Vietnam, applicable to the breaches stipulated in clause 2(b); clauses 3(b), 3(c), 3(d); and clause 4 of this article;
(c) Revocation of the licence for establishment and operation of the securities company, fund management company, securities investment company, or branch of the foreign securities company or fund management company in Vietnam, if the breach had not been remedied on expiry of the period of revocation of the right to use the licence stipulated in clause 6(b) of this article;
(d) Revocation of the business registration certificate of the representative office of the foreign securities company or fund management company in Vietnam, applicable to the breach stipulated in clause 5 of this article.
7. Measures for remedying consequences shall be:
Compulsory compliance with law, applicable to the breaches stipulated in clauses 2 to 5 inclusive of this article.
Article 20. Fines for breach by a securities company of the provisions on business activities
1. A fine of from five million to ten million VND shall apply to a securities company which commits one of the following breaches:
(a) Fails to organize and establish systems for internal control, for risk management, and for supervision and prevention of conflicts of interest within the company and during trading with affiliated persons as defined by law;
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(c) Fails to sign written contracts with clients prior to providing services to the clients; fails to provide complete and truthful information to clients;
(d) Fails to comply with the principle to prioritize orders from clients prior to placing self-trading orders of the enterprise; fails to correctly implement orders from investors;
(dd) Fails to fully collate and study information about the financial status, investment objectives, and ability to accept risks of clients; fails to hold periodic assessments and classifications of clients regarding their ability to accept risks; or the recommendations and advice of the company given to clients does not comply with the criteria for assessment and classification of clients regarding the latter's' ability to accept risks;
(e) Fails to observe the regime on maintaining confidentiality of information from clients as stipulated by law.
2. A fine of from twenty million to fifty million VND shall apply to a securities company which commits one of the following breaches:
(a) Fails to maintain the level of liquid capital required by law;
(b) Makes investments or capital contributions in excess of the levels stipulated by law;
(c) Fails to purchase professional indemnity insurance for the business of the company;
(d) Fails to establish sufficient funds for the protection of investors to pay compensation for loss to investors caused by technical breakdowns or errors by staff of the securities company;
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(e) Fails to properly record details of transactions for clients made by the company as stipulated by law.
3. A fine of from fifty million to seventy million VND shall apply to a securities company which commits one of the following breaches:
(a) Sells or permits clients to sell securities when the clients are no longer owners of the securities;
(b) Lends securities to clients to enable them to sell securities contrary to law;
(c) Lends money to clients to enable them to purchase securities, unless regulations of the
Ministry of Finance provide otherwise.
4. Forms of additional penalty shall be:
(a) Revocation for a thirty day period of the right to use the licence for establishment and operation of the securities company, applicable to the breaches stipulated in clause 2 of this article;
(b) Revocation for a forty-five day period of the right to use the licence for establishment and operation of the securities company, applicable to the breaches stipulated in clause 3 of this article;
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5. Measures for remedying consequences shall be:
Compulsory compliance with the provisions on business activities, applicable to the breaches stipulated in clauses 1, 2 and 3 of this article.
Article 21. Fines for breach by a fund management company of the provisions on business activities
1. A fine of from five million to ten million VND shall apply to a fund management company which commits one of the following breaches:
(a) Fails to organize and establish systems for internal control, for risk management, and for supervision and prevention of conflicts of interest within the company and during trading with affiliated persons as defined by law;
(b) Fails to manage separately the securities of each fund;
(c) Fails to sign written contracts with clients entrusting investment to the fund management company;
(d) Fails to provide complete and truthful information to clients during provision of services;
(dd) Fails to fully collate information about the financial status of investors; makes investments contrary to the investment objectives; or provides advice to its entrusting investors contrary to the law on distribution of profit and other provisions.
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(a) Fails to comply with the fund charter; fails to comply with the regulations on protection of the interests of investors;
(b) Fails to purchase professional indemnity insurance for fund management at the company; fails
to establish reserve funds in order to pay compensation for loss to investors as a result of technical breakdowns or errors made by staff of the fund management company;
(c) Fails to properly archive source documents, [and/or] fails to record accurately and in detail all transactions regarding investments of fund assets.
3. A fine of from fifty million to seventy million VND shall apply to a fund management company which commits one of the following breaches:
(a) Conducts a false net asset valuation of a securities investment fund in order to stabilize the price of certificates on the market;
(b) Uses capital or assets of a securities investment fund to lend or to underwrite other issues;
(c) Uses capital or assets of one securities investment fund in order to invest or purchase assets of another fund managed by the same company;
(d) Uses capital or assets of a securities investment fund in order to make a capital contribution, in order to hold shareholding, or in order to borrow from or make a loan to another fund management company;
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(e) Uses capital or assets of a securities investment fund to invest in the securities of an issuing organization in excess of twenty-five (25) per cent of the total value of currently circulating securities in such issuing organization;
(g) Uses capital or assets of a securities investment fund in order to invest in excess of twenty (20) per cent of the total value of the fund assets in currently circulating securities of a issuing organization;
(h) Uses capital or assets of a securities investment fund in order to invest in excess of ten (10) per cent of the total value of a closed fund in real estate, or invests capital of an open fund in real estate;
(i) Uses capital or assets of an investment fund in order to invest in excess of thirty (30) per cent of the total value of assets of a public fund in a company in the same group of companies which have an ownership relationship with each other;
(k) Uses capital or assets of an investment fund in order to make loans or to provide guarantees for any other loan whatsoever;
(l) Borrows money in order to assist activities of a public fund contrary to law.
4. Forms of additional penalty shall be:
(a) Revocation for a thirty day period of the right to use the licence for establishment and operation of the fund management company, applicable to the breaches stipulated in clauses 2(a) and 2(b) of this article;
(b) Revocation for a forty-five day period of the right to use the licence for establishment and operation of the fund management company, applicable to the breaches stipulated in clause 3 of this article;
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5. Measures for remedying consequences shall be:
Compulsory compliance with law, applicable to the breaches stipulated in clauses 1, 2 and 3 of this article.
1. A fine of from ten million to twenty million VND shall apply to a fund management company, a securities investment company, the underwriter, the custodian bank and any affiliated person who commits any one of the following breaches:
(a) The application file for registration of establishment of a public fund, or for an offer of public fund certificates, or for an public offer of shares in a securities investment company as sent to the State Securities Commission contains false, misleading or incomplete information on important items which may affect the decision of investors;
(b) Using information outside the prospectus in order to conduct market research prior to obtaining permission for an offer of public fund certificates or for a public offer of shares in a securities investment company;
(c) Distribution of public fund certificates or shares in a securities investment company to the public prior to conducting an announcement of the issue;
(d) Announcing an offer of public fund certificates or a public offer of shares in a securities investment company incorrectly in terms of the media required by law, or making an announcement which is incorrect in terms of contents, time-limits and duration as required by law;
(dd) Underwriting an issue with a total value of public fund certificates or a total value of shares in a securities investment company which exceeds the stipulated level.
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3. A fine of from thirty million to fifty million VND shall apply to a fund management company, a securities investment company, the underwriter and the person signing the report participating in drafting of an application file for establishment of a fund, for establishment of a public securities investment company or for an offer of public fund certificates or a public offer of shares in a securities investment company, when such application file contains false information.
4. A fine of from fifty million to seventy million VND shall apply to a fund management company, a public securities investment company and the underwriter making an offer of public fund certificates or a public offer of shares in a securities investment company without approval from the State Securities Commission.
5. Forms of additional penalty shall be:
(a) Suspension for a forty-five day period of the offer of public fund certificates or the public offer of shares in the securities investment company, applicable to the breaches stipulated in clause 3 of this article;
(b) Rescission of the offer of public fund certificates or the public offer of shares in the securities investment company, if the breach had not been remedied on expiry of the period stipulated in clause 5(a) of this article;
(c) Compulsory rescission of the offer of public fund certificates or the public offer of shares in the securities investment company, applicable to the breaches stipulated in clause 4 of this article;
(d) Confiscation of the entire income unlawfully derived by the individual or organization from a breach as stipulated in clauses 3 and 4 of this article.
6. Measures for remedying consequences shall be:
(a) The fund management company must organize recovery of all the certificates, and the securities investment company must organize recovery of the shares it offered for sale and must also refund deposits or purchase monies paid for certificates by investors if investors ask to rescind their purchase orders within a time-limit of 15 days from the date of suspension of the offer of public fund certificates or of the offer of shares in the securities investment company as stipulated in clause 5(a) of this article;
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Article 23. Fines for a breach of the provisions on establishment of a member fund
1. A fine of from twenty million to fifty million VND shall apply to a fund management company and any affiliated person who commits one of the following breaches:
(a) The application file for establishment of a member fund sent to the State Securities Commission contains incorrect or incomplete information, affecting the interests of capital contributing members;
(b) The contract for management and supervision of assets of the member fund between the fund management company and the custodian bank is incorrect in terms of the stipulated contents
[and/or] contrary to the fund charter, causing loss to the capital contributing members;
(c) Failure to report or to promptly report on unusual risks to or loss of assets of the fund, seriously affecting the interests of capital contributing members.
2. Measures for remedying consequences shall be:
Compulsory compliance with law, applicable to any breach stipulated in clause 1 of this article.
Article 24. Fines for a breach of the provisions on securities business practising certificates
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(a) Fails to promptly report on a change of professional staff;
(b) Fails to appoint participants for training courses on new laws, new trading systems and new classes of securities.
2. A fine of from five million to ten million VND shall apply to a securities company, a fund management company or a securities investment company which commits any one of the following breaches:
(a) Arranges for a person without a securities business practising certificate to conduct a professional operation when the law requires that such professional operation must be conducted by a person with such certificate;
(b) Fails to change or transfer work of people whose securities business practising certificates have been recovered pursuant to a decision of a competent body.
3. A fine of from ten million to twenty million VND shall apply to a securities business practitioner who commits any one of the following breaches:
(a) Concurrently works for another organization which has an ownership relationship with the securities company or fund management company where such person works;
(b) Concurrently works for another securities company or fund management company;
(c) Concurrently acts as the director or general director of another organization which makes a public offer of securities or which is a listing organization;
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(dd) Any person with a practising certificate and being a member of the board of management, the board of directors or the board of controllers of a securities company who invests in another securities company.
4. A fine of from thirty million to fifty million VND shall apply to a securities business practitioner who commits any one of the following breaches:
(a) Takes advantage of his or her position or powers in order to lend money or securities in the account of a client or to use securities of a client to pledge, or uses money and securities in the account of a client without having authority from such client;
(b) Directly or indirectly commits any act of fraud or cheating, or creates false information or excludes essential information causing serious misunderstanding and affecting the operations being a public offer of securities; securities listing, trading, business or investment; or securities and securities market services;
(c) Lends a securities business practising certificate;
(d) Erases or changes a securities business practising certificate.
5. Forms of additional penalty shall be:
(a) Revocation for an indefinite term of the right to use the securities business practising certificate, applicable to the breaches stipulated in clauses 3 and 4 of this article;
(b) Confiscation of the entire income unlawfully derived by the securities business practitioner from the breach, applicable to the breaches stipulated in clause 4 of this article.
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Compulsory compliance with law, applicable to the breaches stipulated in clauses 1 to 4 inclusive of this article.
Section 6. BREACHES OF PROVISIONS ON SECURITIES TRADING
1. A fine of from thirty million to fifty million VND shall apply to an individual and a fine of from fifty million to seventy million VND shall apply to an organization prohibited by law from direct or indirect participation in share trading which holds or purchases shares by changing name or borrowing the name of another person to conduct securities trading.
2. Forms of additional penalty shall be:
Confiscation of the entire income unlawfully derived and of the quantity of shares used to commit the breach.
3. Measures for remedying consequences shall be:
Compulsory compliance with law, applicable to a breach of article 126.2 of the Law on Securities.
Article 26. Fines for acting fraudulently or cheating during securities trading
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(a) Directly or indirectly participates in committing any act of fraud or cheating, or creating false information or excluding essential information causing serious misunderstanding and affecting the operations being securities issuing, listing, trading, business, investment or services;
(b) Directly participates in provision of false information aimed at inducing the purchase or sale of securities, or directly participates in failure to promptly disclose information about an event affecting the market price of securities.
2. Forms of additional penalty shall be:
Confiscation of the entire income unlawfully derived by the individual or organization investing in securities, applicable to the breaches stipulated in clause 1 of this article.
3. Measures for remedying consequences shall be:
Compulsory compliance with law, applicable to the breaches stipulated in clause 1 of this article.
Article 27. Fines for an offence being inside trading during securities trading
1. A fine of from thirty million to fifty million VND shall apply to an individual and a fine of from fifty million to seventy million VND shall apply to an organization investing in securities which commits any one of the following breaches:
(a) Uses internal information to purchase or sell securities in a public company or public fund for oneself or for a third party;
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2. Forms of additional penalty shall be:
Confiscation of the entire income unlawfully derived by the individual or organization investing in securities, applicable to the breaches stipulated in clause 1 of this article.
3. Measures for remedying consequences shall be:
Compulsory compliance with the provisions prohibiting inside trading, applicable to the breaches stipulated in clause 1 of this article.
Article 28. Fines for an offence being securities market rigging
1. A fine of from thirty million to fifty million VND shall apply to an individual and a fine of from fifty million to seventy million VND shall apply to an organization investing in securities which commits any one of the following breaches:
(a) Colludes during trading of securities, aimed at creating false supply and demand;
(b) Trades securities by colluding with or enticing another person to continually purchase and sell securities in order to rig the price of the securities;
(c) Combines or uses other trading methods in order to manipulate the price of securities.
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Confiscation of the entire income unlawfully derived by the individual or organization investing in securities, applicable to the breaches stipulated in clause 1 of this article.
3. Measures for remedying consequences shall be:
Compulsory compliance with law, applicable to the breaches stipulated in clause 1 of this article.
Article 29. Fines for a breach of the provisions on public offers to acquire
1. A fine of from twenty million to fifty million VND shall apply to any entity which makes an offer to acquire voting shares resulting in ownership of twenty-five (25) per cent or more of the number of currently circulating shares in a public company, or which makes an offer to acquire without having registered the public offer to acquire with the State Securities Commission or without approval from the State Securities Commission.
2. A fine of from fifty million to seventy million VND shall apply to any entity which makes an offer to acquire voting shares resulting in ownership of twenty-five (25) per cent or more of the number of currently circulating shares in a public company, or which makes an offer to acquire to entities which are compulsorily required to sell their shares and which commits any one of the following breaches:
(a) Directly or indirectly purchases or undertakes to purchase a number of the shares which are currently the subject of the public offer from a person not involved in the offer;
(b) Sells or undertakes to sell a number of shares which are currently the subject of the offer to purchase;
(c) Treats unequally owners of the same class of shares which are the subject of a current offer to purchase;
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(dd) Fails to comply with the provisions on the period for conducting a public offer tranche of securities;
(e) Conducts a public offer when the subjects of the offer are persons who are compulsorily required to sell the shares which they currently own;
(g) Fails to apply the conditions of the public offer to all shareholders in the public company;
(h) Refuses to purchase shares from a particular shareholder in accordance with the conditions of the public offer.
3. Forms of additional penalty shall be:
(a) Suspension for a forty-five day period of the public offer to acquire, applicable to the breaches stipulated in clauses 1 and 2 of this article;
(b) Rescission of the public offer to acquire, if the breach had not been remedied on expiry of the period stipulated in clause 3(a) of this article.
4. Measures for remedying consequences shall be:
Compulsory compliance with the provisions on public offers to acquire, applicable to the breaches stipulated in clauses 1 and 2 of this article.
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1. A fine of from ten million to twenty million VND shall apply to the Securities Depository Centre and to any securities depository member who commits any one of the following breaches:
(a) Organizes securities registration, depository, clearance and payment while failing to satisfy the stipulated conditions on material and technical facilities required for such activities;
(b) Fails to formulate operational rules and rules on risk management for each professional operation as required by law;
(c) Fails to have methods to protect databases and to archive all source documents regarding registration, depository, settlements and payments for securities as required by law.
2. A fine of from twenty million to fifty million VND shall apply to the Securities Depository Centre, its staff and to any securities depository member who commits any one of the following breaches:
(a) Breaches the regime on preservation and archiving of securities, and the regime on registration, depository, settlement and payment for securities as stipulated by law, causing loss to clients;
(b) Breaches the regime on maintaining confidentiality of depository accounts of clients as stipulated by law;
(c) Fails to provide promptly complete and accurate lists of securities owners, lists of shareholders and other relevant data as requested by a public company.
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to any securities depository member who breaches the provisions on time for payment, time-limit for transferring ownership of securities, or who amends or erases or falsifies source documents during payment and/or transfer of ownership of securities, causing material loss to clients.
4. Forms of additional penalty shall be:
(a) Revocation for a minimum ninety day period of the right to use the certificate of registration of securities depository operation, applicable to any securities depository member who breaches a provision in clause 2(a) or clause 3 of this article;
(b) Confiscation of the entire income unlawfully derived by the organization and its staff conducting securities registration, depository, clearance and payment, applicable to the breaches stipulated in clauses 2 and 3 of this article.
5. Measures for remedying consequences shall be:
Compulsory compliance with the law, applicable to the breaches stipulated in clauses 2 and 3 of this article.
1. A fine of from ten million to twenty million VND shall apply to a custodian bank which exercises the function of a custodian bank while failing to satisfy the stipulated conditions on material and technical facilities required for such operation.
2. A fine of from twenty million to fifty million VND shall apply to a custodian bank which commits any one of the following breaches:
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(b) Certifies reports on assets of a public fund or of a securities investment company which were prepared inaccurately or erroneously by the fund management company or by the securities investment company.
3. A fine of from fifty million to seventy million VND shall apply to a custodian bank which commits any one of the following breaches:
(a) Preserves assets of a securities investment fund or assets of a securities investment company contrary to the charter of the fund or the charter of the company;
(b) Fails to ensure separate preservation of assets of one investment fund from assets of another investment fund;
(c) The custodian bank, or a member of the board of management or board of directors or staff of the custodian bank has an ownership relationship, or a lending or borrowing relationship with the fund management company or securities investment company, or vice versa;
(d) The custodian bank, or a member of the board of management or board of directors or staff of the custodian bank directly conducts the duties of supervising the purchase and sale of assets of a public fund or of a securities investment company.
4. Forms of additional penalty shall be:
(a) Revocation for a thirty day period of the right to use the certificate of registration of securities depository operation, applicable to any breach of a provision in clause 3 of this article;
(b) Withdrawal of the certificate of registration of securities depository operation, if the breach had not been remedied on expiry of the period stipulated in clause 4(a) of this article.
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Compulsory compliance with the law, applicable to the breaches stipulated in clauses 1, 2 and 3 of this article.
Section 8. BREACHES OF PROVISIONS ON DISCLOSURE OF INFORMATION
Article 32. Fines for an offence being a breach of the provisions on disclosure of information
1. A fine of from ten million to twenty million VND shall apply to an issuing organization, a public company, a listing organization, a securities company, a fund management company, a securities investment company, or to the Stock Exchange or a Securities Trading Centre which commits any one of the following breaches:
(a) Discloses information but fails to provide a report to the State Securities Commission on the information which has been disclosed;
(b) The person disclosing the information lacks the authority required by law to make the disclosure.
2. A fine of from twenty million to thirty million VND shall apply to an issuing organization, a public company, a listing organization, a securities company, a fund management company, a securities investment company, or to the Stock Exchange or a Securities Trading Centre which commits any one of the following breaches:
(a) Arranges for the disclosure of information on the media but incorrectly in terms of the provisions of law;
(b) Makes a disclosure of information which is incomplete or out of time, or not made promptly as required by law.
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(a) Discloses information which contains false items, causing a serious fluctuation in market prices;
(b) Discloses confidential or secret information or data;
(c) Deliberately delays the disclosure of unusual information or the disclosure of information at the request of the State Securities Commission.
4. Measures for remedying consequences shall be:
Compulsory compliance with the law on disclosure of information, applicable to the breaches stipulated in clauses 1, 2 and 3 of this article.
Section 9. BREACHES OF PROVISIONS ON REPORTING
Article 33. Fines for an offence being a breach of the provisions on reporting
1. A warning or a fine of from five million to ten million VND shall apply to the Stock Exchange, a Securities Trading Centre, a Securities Depository Centre, a public company, a listing organization, a securities company, a fund management company, a securities investment company or a custodian bank which commits any one of the following breaches:
(a) Provides a report which is incomplete in terms of the content requirements;
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(c) Provides a report not on the correct standard form as stipulated by law.
2. A fine of from ten million to twenty VND shall apply to the Stock Exchange, a Securities Trading Centre, a Securities Depository Centre, a public company, a listing organization, a securities company, a fund management company, a securities investment company or a custodian bank which commits any one of the following breaches:
(a) Ceases operation without reporting to the State Securities Commission, or having reported to the State Securities Commission does not yet have approval from the State Securities Commission;
(b) Fails to report or reports outside the time-limit on the occurrence of an unusual event which seriously affects financial capacity and ability to conduct the business operation or provide the securities services.
3. Measures for remedying consequences shall be:
Compulsory compliance with the law on the reporting regime applicable to offenders who commit any breach stipulated in clauses 1 and 2 of this article.
Section 10. BREACHES OF PROVISIONS ON HINDERING AN INVESTIGATION
Article 34. Fines for an offence being a breach of the provisions on hindering an investigation
1. A warning shall apply to an issuing organization, a listing organization, a securities company, a fund management company, a securities investment company, a custodian bank, the Stock Exchange, a Securities Trading Centre, a Securities Depository Centre or any entity involved in securities and securities market activities which, at the request of an inspection group or an inspector, hides or fails to provide prompt and complete information, data or databases.
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3. A fine of from ten million to twenty million VND shall apply to an issuing organization, a listing organization, a securities company, a fund management company, a securities investment company, a custodian bank, the Stock Exchange, a Securities Trading Centre, a Securities Depository Centre or any entity involved in securities and securities market activities which commits any one of the following breaches:
(a) Hides or changes source documents, data or accounting books or changes exhibits during the course of being investigated;
(b) Deliberately dismantles, removes or otherwise changes objects which have been sealed such as money, source documents, data, files, accounting books, exhibits or other sealed facilities.
AUTHORITY AND PROCEDURES FOR IMPOSING PENALTIES
Article 35. Authority to impose penalties
1. The head of the Inspectorate of the State Securities Commission shall have authority:
(a) To impose a warning;
(b) To impose a fine up to seventy million VND.
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(a) To impose a warning;
(b) To impose a fine up to seventy million VND;
(c) To impose penalties for breaches as stipulated in articles 9.3, 9.4 and 14.2 of this Decree;
(d) To impose additional penalties and measures in order to remedy consequences as stipulated in articles 7.2 and 7.3 of this Decree.
Article 36. Delegation of authority to impose penalties for administrative offences
If the person authorized to impose penalties by article 35 of this Decree is absent, then such person shall have authority to delegate authority to his or her deputy by providing a written authorization. Such authorization must be implemented in accordance with article 11 of the Ordinance on Dealing with Administrative Offences and article 14 of Decree 134 of the Government dated 14 November 2003 implementing the said Ordinance.
Article 37. Immediate cessation of an administrative offence
When any person authorized to deal with an administrative offence detects such breach, he or she must immediately issue an order for the cessation of such administrative breach.
Article 38. Preparation of minutes of an administrative offence
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2. Minutes must be prepared with respect to every administrative offence in the securities and securities market sector, except in a case where a warning is given, and except in a case which has been transferred from the criminal courts.
3. Minutes must be prepared in two copies on the stipulated form, and they must be signed by the person preparing the minutes, by the offender or by the representative of an offending organization.
If there are witnesses present, persons who suffered loss or representatives of organizations which suffered loss, then they must also sign the minutes, and if the minutes run to more than one page, then each page of the minutes must be signed by all the aforementioned persons. If any person being the offender, the representative of the offending organization, a witness, a person who suffered loss or the representative of an organization which suffered loss refuses to sign the minutes, then the person who prepares the minutes must record this fact into the minutes.
4. When minutes have been prepared, one copy must be handed to the offending entity; and if the person preparing the minutes does not have the jurisdiction to deal with the breach, then such person must forward the original minutes together with all relevant data and the file to the authorized person within a time-limit of three days from the date of preparation of the minutes.
1. A penalty decision must be made on the standard form and must be made in at least five copies in the case of a warning and at least six copies in the case of a fine.
2. A penalty decision must be issued within a time-limit of 10 working days from the date of completion of the minutes of administrative offence, and in a complicated case this time-limit may be extended but not to exceed 30 days. If in a complicated case more time is required to verify the circumstances, then the authorized person must notify his or her superior in writing and request the extension, and any extension granted must be granted in writing but not to exceed 30 days. At the expiry of the above-mentioned time limit the authorized person shall not be permitted to issue a penalty decision but shall still have authority to apply the measures to remedy consequences stipulated in article 7.3 of this Decree.
3. Only one penalty decision shall be issued in the case of any one offending individual or organization committing a number of offences. In the case of a number of offending individuals and/or organizations committing a number of breaches which are similar but there is no relationship between the offenders, then a separate penalty decision shall be issued in respect of each offender. Depending on the nature and seriousness of the breach by each offender, the authorized person shall decide the appropriate level of penalty.
If a case exceeds the jurisdiction of an authorized person, then such authorized person must transfer the file to the higher level.
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5. A penalty decision shall take effect from the date of its signing, unless the substance of the penalty decision stipulates otherwise.
6. A penalty decision must be sent to the offender and to the body collecting fines within a time-limit of three working days from the date of issuance of the decision.
Article 40. Procedures regarding fines
1. Imposition of fines must be correctly implemented in accordance with the procedures stipulated in articles 38 and 39 of this Decree. An offender must pay the fine stipulated in the penalty decision within a time-limit of 10 working days from the date the penalty decision is sent to such offender, and the payment must be made to the State Treasury and the offender shall receive a receipt for payment of the fine.
2. A specific fine shall be the average of the levels of fine within the framework stipulated for such offence, and if there are mitigating circumstances then the fine should be reduced but not below the minimum level of the framework, and if there are aggravating circumstances then the fine should be increased but not above the maximum level within such framework.
1. The Chairman of the State Securities Commission shall have authority to issue decisions revoking the right to use licences and practising certificates as stipulated in article 7.2(c) of this Decree. Any decision which revokes the right to use a licence or practising certificate must specify the name, type and number of the licence or certificate; and the period for which the right to use the licence or certificate is revoked. If a decision is issued suspending only one type of professional operation, then the authorized person must specify in the penalty decision the type of professional operation which is suspended and the duration of the suspension.
2. If the authorized person discovers that a licence was not issued correctly in accordance with authority or contains contents contrary to law, then the authorized person must immediately revoke the licence and at the same time notify the licence-issuing body.
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Article 43. Procedures for suspension or rescission of a public offers of securities
In the case of application of the additional penalty of suspension for a limited period or rescission of a public offer of securities, the authorized person must specify such details in the penalty decision, and implement procedures in accordance with articles 22 and 23 of the Law on Securities.
Article 44. Compulsory enforcement of penalty decisions
1. If an offender files to voluntarily comply with a penalty decision, then the following compulsory enforcement methods shall apply:
(a) Deduction of a part of salary or a part of income, or deduction from a bank account;
(b) Seizure of assets with a value equal to the amount of the fine in order to auction the assets;
(c) Application of other compulsory enforcement methods to confiscate exhibits and means used to commit the breach, or compulsory return of the original status quo.
2. The person authorized to impose penalties by article 35 of this Decree shall issue a decision on compulsory enforcement and shall organize implementation of the compulsory enforcement method.
3. An offender must strictly comply with a decision on compulsory enforcement.
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5. The offender shall bear the costs of compulsory enforcement of an administrative penalty.
Article 45. Supervision and inspection of dealing with administrative offences
The Minister of Finance shall be responsible for regular supervision of imposition of penalties for administrative offences in the securities and securities market sector; for resolution of complaints, and for dealing with denunciations of persons authorized to impose penalties by article 35 of this Decree; and for implementing the reporting regime on the status of administrative offences in the securities and securities market sector.
1. Any offender subject to a penalty for an administrative offence in the securities and securities market sector shall have the right to lodge a complaint; and the competent State body shall be responsible for resolving such complaint in accordance with the law on complaints and denunciations.
Institution of legal proceedings before the people's court in respect of a penalty for an administrative offence in the securities and securities market sector shall be implemented in accordance with the law on resolving administrative cases.
An offender must comply with the penalty decision on the administrative offence in the securities and securities market sector pending a decision resolving the complaint or pending a decision by the people's court.
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This Decree shall be of full force and effect fifteen (15) days after the date of its publication in the Official Gazette and shall replace previous provisions on penalties for administrative offences in the securities and securities market sector.
Article 48. Responsibility to provide guidelines
The Ministry of Finance shall provide guidelines for implementation of this Decree.
Ministers, ministerial equivalent bodies, heads of Government bodies and chairmen of peoples committees of provinces and cities under central authority shall be responsible for implementation of this Decree.
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- 1Circular No. 97/2007/TT-BTC of August 8, 2007, guiding implementation of Decree 36/2007/ND-CP of The Government of March 08th, 2007 on penalties for administrative offences in securities and securities market sector.
- 2Law No.70/2006/QH11 of June 29, 2006 on securities
- 3Law no. 60/2005/QH11 of November 29, 2005 on enterprises
- 4Decree of Government No. 161/2004/ND-CP of September 7, 2004 on sanctioning of administrative violations in the field of securities and securities market
- 5Decree No. 134/2003/ND-CP of November 14, 2003, detailing the implementation of a number of articles of the 2002 Ordinance on Handling of Administrative Violations.
- 6Ordinance No. 44/2002/PL-UBTVQH10 of July 02, 2002 on handling of administrative violations
- 7Law No. 32/2001/QH10 of December 25, 2001 on organization of the Government
Decree No. 36/2007/ND-CP of March 8, 2007, on penalties for administrative offences in securities and securities market sector.
- Số hiệu: 36/2007/ND-CP
- Loại văn bản: Nghị định
- Ngày ban hành: 08/03/2007
- Nơi ban hành: Chính phủ
- Người ký: Nguyễn Tấn Dũng
- Ngày công báo: Đang cập nhật
- Số công báo: Đang cập nhật
- Ngày hiệu lực: Kiểm tra
- Tình trạng hiệu lực: Kiểm tra