Luat Viet

:: Question :: What happen if a securities company (the “SC”) or a fund management company (the “FMC”) fails to satisfy conditions on the charter capital in accordance with Decree No. 14/2007/ND-CP (“Decree 14”) providing detailed guidelines for implementing some articles of the Law on Securities? Which sanctions can be applied to such failure?

If a SC or a FMC does not comply with the regulations on the increase of the legal capital in accordance with the timing schedule as required by Decree 14, such company shall be applied sanctions stipulated by the securities law, the details are as below:
Article 70.1.a of the Law on Securities provides that the operation of a SC or a FMC shall be suspended in case it fails to maintain the conditions for the issuance of a license for establishment and operation provided in Article 62 of this Law.
In addition to that, in accordance with Article 62.1.b of this law, one of conditions shall be applied to the issuance of the license for establishment and operation of a SC or FMC is that it must “have enough legal capital in accordance with the regulations of the Government”.
Therefore, if after a SC and the FMC is issued the license for establishment and operation by the State Securities Committee, it fails to comply with requirement on the legal capital stipulated in the Decree 14 (or has not performed procedure for increasing the capital within two years after the effective date of the Decree 14), it shall be suspended by the State Securities Committee.
The license for establishment and operation of a SC or FMC might be revoked by the State Securities Committee if after its operation suspended, such SC or FMC still fails to remedy a breach on the legal capital in accordance with Article 70.2.c of the Law on Securities.
 

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