Nowadays, the stock market with a potential economy attracts a lot of young investors. Therefore, many securities companies were established. However, not everyone knows about the conditions for establishing a securities company. To have an insight into this problem, follow this article of LSX: “Conditions for securities company establishment in Vietnam”.
Legal grounds
- Law on Enterprise 2020
- Law on Securities 2019
What is a securities company?
Securities companies are enterprises that operate in securities trading. They perform one, several, or all of the following operations: securities brokerage, securities trading, underwriting securities, securities investment consulting,…
Due to the nature of the conditional business line of the securities business; conditions are also required when establishing a securities company to ensure its legal operation.
Conditions for securities company establishment
Headquarter
- Having a head office for securities trading activities;
- Having material bases, techniques, devices, office equipment, facilities, as well as technology systems suitable for the professional process of securities trading activities.
Capital
Enterprises wishing to conduct securities business must have an amount of charter capital at least equal to the legal capital as prescribed by law at the time of the establishment. According to the Law on Securities 2019, the charter capital of a securities company must be contributed in VND. The minimum charter capital is specified as follows:
- For securities brokerage: at least 25 billion VND;
- For securities trading: at least 100 billion VND;
- Securities underwriting: at least 165 billion VND;
- For securities investment consulting: at least 10 billion VND;
- Additionally, in case an enterprise applies for a license for more than one business operation, the minimum charter capital is the total capital corresponding to each operation in the application.
Human resources
Having a Chief Executive Director (Director), at least 03 employees with appropriate licenses/certificates to practice securities for each securities business operation (that requires license), and at least 01 compliance officer. Besides, the General Director (Director) must meet the following criteria:
- Not in the case of being accounted for criminal charges or serving a prison sentence or banned from securities practice;
- At least 02 years of experience working in the professional department of organizations in the finance, securities, banking, insurance business; or the finance, accounting, investment departments in other enterprises;
- Also, having a practicing certificate of financial analysis or fund management;
- Not have been sanctioned for administrative violations in the line of securities and securities market within the last 6 months up to the time of application.
In case there is a Deputy General Director (Deputy Director) in charge of operations, then the Deputy Director must meet the standards specified at Points a, b, and d, Clause 5, Article 74 of the Law on Securities 2019. On the other hand, he/she must have a practicing certificate in line with the profession in charge.
Shareholders, Limited partners
- Firstly, Shareholders and Limited partners (as individuals): people who do not belong to cases that not eligible to establish and manage enterprises in Vietnam under the Law on Enterprises;
- Secondly, as organizations, they must have legal status and operate legally; business having profit for 02 consecutive years before the year of application for license; the most recent annual financial statements must be audited with a qualified opinion;
- Shareholders and Limited partners own 10% or more of the charter capital of a securities company. Related individuals of such shareholder or Limited partners (if any) do not own more than 5% of charter capital of 01 other securities company;
- Shareholders and Limited partners being foreign investors must satisfy the conditions specified in Article 77 of the Law on Securities 2019.
Operations of securities company
Currently, the Law on Securities stipulates 07 forms of the securities business (4 main forms popular in Vietnam). According to Article 72 of the Law on Securities 2019; the business operations of a securities company include one or several of the following activities:
- Stockbroker: act as an intermediary to buy and sell securities for customers.
- Securities trading: A securities company buying or selling securities for itself.
- Underwriting securities: a form of the securities business in which an enterprise will make a commitment to a securities issuer to carry out procedures before offering securities, purchase a part or all of the securities issued by the issuer.
- Consulting on securities investment: Enterprises perform analysis of problems related to securities that customers intend to invest in.
In addition to 04 popular forms of securities business above; companies also carry out a number of business operations such as: securities depository; securities investment fund management; stock portfolio management.
According to Clause 1, Article 85 of the Securities Law 2019; During its operation, a securities company is required to comply with the conditions of charter capital, shareholder status, facilities, human resource, etc.
Business lines
Stockbroker:
- Receive entrustment to manage securities trading accounts of individual investors; distribute or act as a securities distribution agent; manage securities trading accounts; providing services on securities owner management for other enterprises;
- Provide online securities trading services; providing or coordinating with credit institutions to loan customers money to buy securities/ providing securities loan services; stock depository; securities settlement;…
Securities trading:
- Trading securities on securities trading accounts and investing, contributing capital, issuing and offering financial products.
Underwriting securities:
- Provide consulting services on stock offering records, carry out procedures before stock offering; securities depository, payment, and transfer stocks;
- Consulting on restructuring, unification, annex, reorganization, purchase, and sale of enterprises; management consulting, business strategy consulting; consulting on offering, listing, and registering for securities trading; consulting on equitization of enterprises.
Securities investment consulting:
- Sign a contract to provide services for customers according to Clause 32, Article 4 of the Securities Law 2019.
Securities companies may only provide other financial services under the provisions of the law after reporting them in writing to the State Securities Commission. The State Securities Commission has the right to suspend the operations of other financial services if the providing of such services is contrary to the provisions of law or causes risks to the securities market.
LSX legal firm’s service on business establishment
When establishing a company, people must carry out the procedure following the law at the competent business registration authority (under the Law on Enterprise 2020). The process of establishing a business includes many different steps and phases. If you are not familiar with the law, this process may take a lot of time.
With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.
Using our service, you do not need to do the paperwork yourself. We guarantee to help you prepare documents effectively and legally.
Also, you will not have to waste time preparing the application; submitting application, or receiving results. At those stages, we will help you do it smoothly.
After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.
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Conditions to establish a Software Company in Vietnam
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Change of business registration to increase charter capital of the company in Vietnam
Related questions
Clause 3, Article 2 of Circular 99/2020/TT-BTC:
The fund management company is an enterprise licensed by the State Securities Commission to establish and conduct securities business activities, performing securities investment fund management, securities portfolio management, stock investment consulting.
According to Article 72 of the Law on Securities 2019, a securities company has the right to operate:
Stockbroker.
Securities trading.
Underwriting securities.
Securities investment consulting.
Contact LSX
Finally, hope this article is useful for you to answer the question about “Conditions to establish a Software Company in Vietnam”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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