Member funds (or private funds) are one of the attractive investment options for professional investors with financial potential and investment experience. However, not everyone knows the regulations on the member fund and how to establish a member fund. Therefore, LSX legal firm would like to give you an insight into this problem: “How to set up a member fund in Vietnam?”
Legal grounds
- Law on securities 2019
- Circular 98/2020/TT-BTC
Member fund
Article 4. Definitions
For the purpose of this Law, the terms below are construed as follows:
41. A private fund means a securities investment fund that has 02 – 99 capital contributors who are all professional investors.
Establish a member fund
Conditions to establish a member fund
The establishment of a member fund must satisfy the following conditions:
- The minimum contributed capital: VND 50 billion.
- has 02 – 99 capital contributors who are all professional investors.
- Managed by 01 securities investment fund management company.
- Assets of member funds are deposited at a depository bank that is independent to the securities investment fund management company.
What are the fees of a member fund
- Fund management expenses paid to the fund management company.
- Fees for custody of fund assets, monitor fees (if any) paid to the depository bank or custodian bank.
- Auditing expenses paid to the auditing organization;
- Expenses for appraisal of prices paid to valuation enterprises (if any), expenses for legal consulting services, quotation services, and other reasonable services, and remuneration paid to the Representative Committee of the fund.
- Cost of drafting, printing, sending prospectus, prospectus summary, financial statements, and other documents for capital contributors; expenses for information disclosure of the fund, expenses for holding meetings of the General Meeting of Investors and Board of Representatives.
- Fees related to the operations of transactions of the fund’s assets and other expenses as prescribed by law.
- Expenses related to the change of depository bank, custodian bank (if any), or other service providers.
Dossier and report on the establishment of a member fund
- A written request for the registration of a member fund made by the fund management company;
- Fund charter;
- Prospectus;
- Asset custody contract;
- Certificate of depository bank on the scale of contributed capital;
- Minutes of capital contribution agreement, list of organizations participating in capital contribution, and the following documents:
- Authenticated copy of the establishment decision, business registration certificate, or other equivalent papers of the capital contributing member. For members as foreign organizations, a copy of the business registration certificate or equivalent document authenticated by the agency where such organization has registered no more than six (06) months before the date of completing the application for registration of fund establishment. Also, its translation must be notarized under relevant laws.
- Minutes of the meeting and decisions of the General Meeting of shareholders or the board of directors, decisions of the Board of members, or the owner, it must be consistent with the provisions of the company’s charter of the capital contributing organization on the contribution of capital to the fund, on the appointment of an authorized representative of the contributed capital, together with the individual profile of this person.
- Lastly, a copy of the certificate of registration of securities trading codes of the foreign organization.
Besides, the report file must be made in one (01) original set with an electronic data file, and the original dossier set shall be sent directly to the State Securities Commission or sent by post.
Responsibilities of the fund management company
The fund management company takes responsibility and obligations for:
- Firstly, Ensuring that the information in the dossiers are complete, accurate, and truthful.
- Secondly, Update, amend and implement the dossier if found incorrect information, important information arises, or omitted important information as prescribed in the dossier.
- Thirdly, Must not use the mass media to advertise or mobilize for capital contribution.
Equally important, the amended and supplemented document must signed by the people who have signed it in the dossier or by people with the same title as such persons or by the legal representative of the company.
Time limit for confirmation of the establishment of a member fund
Confirmation of the State Securities Commission
- 15 days from the date of receipt of a valid application.
- Form of notification: in writing confirming that the fund management company has reported on the establishment of the member fund.
- In case of refusal, a written reply must be given clearly stating the reason.
Publication of information on the establishment of a fund by a fund management company
- Within 5 days from the date of receipt of the notice of the State Securities Commission.
- The capital of member funds can only be disbursed after the State Securities Commission’s notice.
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Related questions
The issuance of securities is the initial offering of new securities.
Besides, Issuance of securities to the public is a public offering of securities to investors that are not the issuers to mobilize capital from the public.
To establish a company, the business has to prepare a valid set of documents:
Firstly, the Business registration application form.
Secondly, the Company charter
Thirdly, List of founding members/shareholders (According to the form issued by the Ministry of Planning and Investment).
Lastly, the business owner’s identity papers.
Contact LSX
Finally, hope this article is useful for you to answer the question about “How to set up a member fund in Vietnam?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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