VietNamNet Bridge – Securities company operations will be
strengthened from January 15 under new regulations circulated by the Ministry
of Finance and prompted by scandals surrounding securities companies.
The ratio of total debts over
total equity capital of a securities firm will be cut from the current 6 times
to not over 3 times. The new regulation also gives details on eligible total
debt value, which does not include investor deposits, bonuses and welfare funds
or compensation for investor losses.
Securities companies will not be
permitted to invest in real estate, except for the purpose of making a property
their headquarters, branch or transaction office. The value of property
purchases will not exceed 50 per cent of total asset value of a company.
Securities firms will not be
allowed to use more than 70 per cent of their equity to buy corporate bonds or
make capital contributions to other companies. Investments in listed companies
also may not exceed 20 per cent of their equity.
However, the circular also opens
a door for the investment of securities companies. A fund management company is
allowed to hold more than 20 per cent of the outstanding shares of a listed
company but not over 15 per cent of a unlisted company.
A securities company having
associated companies can record profits of these companies into its financial
statement based on the capital contribution rate. In addition, they are not
required to make provision for such investments.
Only Saigon Securities Inc (SSI)
has seven associated companies and all of them are listed. Combined profits
from these companies to SSI were VND89 billion (US$4.2 million) in the first
nine months of this year.
SSI chairman Nguyen Duy Hung said
profits from long-term investments in affiliate companies helped SSI complete
its business goals.
However, in the context that most
securities companies were struggling to survive on the market, the new
regulations were strictly requiring companies to set up a risk control system.
Also in bid to curb the prevailing situation in which many companies had abused
customers' deposit accounts, the circular forces companies to separate accounts
of customers from those of the company.
The circular also gives details
on procedures of merging securities companies as well as regulations on the
dissolution and bankruptcy of securities companies if they fail to meet new
operation requirements of the State Securities Commission.
Circular 210/2012/TT-BTC takes
effect from January 15, 2013, and will replace Decision 27/2007/QD-BTC guiding
the establishment and operation of securities companies.
Source: VNS
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