New Regulations on VND Accounts for Foreign Indirect Investment in Vietnam

I. Transactions Requiring an Indirect Capital Account (ICA)

The following foreign indirect investment transactions in Vietnam must be conducted through an ICA as stipulated by Circular 03:

1. Purchasing or selling securities and other valuable papers on Vietnam's securities market.

2. Contributing capital or purchasing shares/equity in unlisted enterprises that are not required to open a direct investment capital account (DICA) under Circular No. 06/2019/TT-NHNN dated June 26, 2019 (and its amendments, if any).

3. Making entrusted investments in VND through fund management companies and other organizations permitted to receive investment entrustments by law.

4. Purchasing or selling other types of securities as prescribed by the laws on securities.

II. Opening an Indirect Capital Account

1. 'A foreign investor is permitted to open only one (1) ICA at one (1) licensed bank to carry out all receipt and payment transactions related to foreign indirect investment in Vietnam (subject to the exceptions in Clause 2).

2. A foreign investor may open additional ICAs corresponding to each securities trading code granted in the following cases: a) A foreign securities company may open two (2) ICAs for its two securities trading codes: one (1) for its proprietary trading activities and one (1) for its brokerage activities. b) A foreign investment fund or foreign organization managed by multiple foreign fund management companies may open additional ICAs. Each investment portfolio managed by a separate foreign fund management company can have one (1) ICA corresponding to its unique securities trading code. A self-managed portfolio with its own trading code can also have one (1) corresponding ICA. c) A foreign investor that is a foreign government investment institution or a financial/investment institution of an international financial organization of which Vietnam is a member may open additional ICAs. Each portfolio held at a different custodian bank with a unique securities trading code can have one (1) corresponding ICA.

3. In cases where an additional ICA is opened under Clause 2, the foreign investor must submit documents proving that the Vietnamese competent authority has granted the corresponding securities trading code.

4. For ICA application dossiers involving foreign-language documents or documents issued by foreign authorities, the following rules apply: a) Documents must be notarized or authenticated in accordance with Vietnamese or foreign law within 12 months prior to submission to the licensed bank. b) The licensed bank may agree with the client whether to translate these documents into Vietnamese, provided that: (i) The bank must review, control, and be responsible for confirming that the content of the foreign-language documents meets all information requirements of this Circular. (ii) The documents must be translated upon request by a competent authority. The translation must be certified by an authorized person of the licensed bank or be notarized/authenticated.

5. If a foreign investor wishes to open an ICA at a different licensed bank, they must transfer the entire balance from the existing ICA to the new one and then close the old account. The new ICA can only be used for transactions after the previous ICA has been closed and settled.

III. Using an Indirect Capital Account

An ICA is used to conduct the following receipt (credit) and payment (debit) transactions related to foreign indirect investment in Vietnam:

1. Permitted Credits (Receipts): a) Receipts from selling foreign currency to a licensed bank. b) Receipts from the transfer of contributed capital, shares, sale of securities, and other valuable papers; receiving dividends, bond interest, and profits from investments in securities and valuable papers in VND; profits distributed from capital contributions in indirect investment activities. c) Inward transfers from the foreign investor's own VND payment account at a licensed bank (excluding another ICA). d) Inward transfers from the accounts of fund management companies or other organizations permitted to receive investment entrustments on behalf of the foreign investor. e) Inward transfers of interest and other legal income related to margin trading transactions by foreign institutional investors. f) Inward transfers for deposits or escrow related to indirect investment transactions, including: (i) Receiving funds for making deposits or escrow payments. (ii) Receiving refunds of deposits or escrow payments. g) Inward transfers from a previous ICA when moving the account to a new licensed bank.

2. Permitted Debits (Payments): a) Payments for capital contribution, purchase of shares, equity, securities, and other valuable papers. b) Payments to purchase foreign currency from a licensed bank to transfer capital, profits, and other legal income abroad. c) Outward transfers to the foreign investor's own VND payment account at a licensed bank (excluding another ICA). d) Outward transfers to the accounts of fund management companies or other organizations receiving investment entrustments. e) Payments for losses and other expenses arising from margin trading transactions by foreign institutional investors. f) Payments for fees, taxes, administrative penalties, and other costs related to indirect investment activities. g) Outward transfers for deposits or escrow related to indirect investment transactions, including: (i) Making deposit or escrow payments. (ii) Transferring refunded deposits/escrow funds (previously transferred into Vietnam) to the investor's VND payment account or using them to purchase foreign currency for remittance abroad. h) Outward transfers to a new ICA when moving the account to a new licensed bank.

IV. Obligations of Foreign Investors

1. Comply with the provisions of this Circular and all relevant Vietnamese laws on investment, securities, anti-money laundering, combating the financing of terrorism, and combating the financing of the proliferation of weapons of mass destruction.

2. Honestly and fully declare the details of all transactions related to foreign indirect investment in Vietnam. Provide all required documents, information, and data to the licensed bank when opening and using an ICA. Be responsible before the laws of Vietnam for the authenticity, validity, and legality of all provided documents and information.

The information contained in this article is general and intended only to provide information on legal regulations. DB Legal will not be responsible for any use or application of this information for any business purpose. For in-depth advice on specific cases, please contact us.

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