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question and answer
:: Question :: Under the event that the Investor sells the securities which are on their ways to the account of the Investor, is it considered a short sell or not ?
Answer:
Pursuant to Article 71.9 of the Law on Securities 2006 on obligations of securities companies (SC), it is regulated that obligation of a SC is to conduct the sale of, or to permit the client to sell securities, which are un-owned and to lend a clients securities to sell in accordance with regulations of the Ministry of Finance (MOF).
Therefore, it is understood that the law does not prohibit a SC to permit the Investors to sell their securities when they have not owned them, however, the sale must comply with regulations by the MOF. Currently, the MOF has not issued any regulation on short sell of securities.
In respect of the time of effectiveness of a transfer of ownership of securities at a Securities Depository Centre (SDC), the SC understands the provisions in Article 54.2 (a) as follows:
In the case of securities which have been deposited in the form of general depository at a
Securities Trading Centre, transfer of ownership of the securities shall be effective on the day on which a book entry is made in the securities depository account at the SDC. Legally, it is an exact understanding. However, whether the Investors have become the owners of securities or not is not the legal basis to define whether they have right to place orders to sell these securities or whether the SC is entitled to receive orders of the Investors. The moment that Investors are entitled to place orders to sell their securities and the SC is entitled to receive their orders must comply with regulations on the current securities law and regulation.
Pursuant to Article 33.5 of the regulations on organization and operation of SC issued attached with Decision No. 27-2007-QD-BTC of the MOF dated April 24, 2007, a SC shall only be permitted to receive orders from clients with sufficient money and securities as stipulated by the State Securities Commission, and must take necessary measures to ensure the ability of clients to pay when a trading order is performed.
In addition to that, pursuant to Article 9 of the Regulation on Securities Trading at the Hanoi Securities Trading Centre (now is Hanoi Stock Exchange) issued attached with Decision No. 353/QD-TTGDHN dated November 26, 2007 of the Director of Securities Trading at the Hanoi Securities Trading Centre, it is regulated as below: An Investor must, when placing a securities purchase order or a purchase order by way of put through trading, have a sufficient quantity of securities offered for sale in its securities trading account opened at the member, unless otherwise stipulated by the MOF.
Regulation on Securities Trading at the Ho Chi Minh Securities Trading Centre (HOSE) provides as below:
When placing a securities sale order or publishing to selling securities (when placing a securities purchase or publishing to purchase securities), the balance of securities (money) in the account of the Investor opened at a member must satisfy conditions on deposit level of securities (money).
Therefore, pursuant to the applicable laws and regulations, before the securities reach the account of the Investors, the Investors are not permitted to place order to sell such securities, and the SC is not permitted to accept such orders unless there are securities in the account of the Investors. Any Investor who sells securities that are on the way to his/her account shall commit breach of the laws on securities.
orther:
- » Question :: We are a securities company (SC) which is conducting the procedures for registration of electronic transaction services at the State Securities Commission of Vietnam (the SSC). Please kindly advise the regulations on circumstances where SSC discloses confidential information on our information technology system that was invested by us with a huge investment amount, such as the compensation for damages (16/12/2009)
- » Question :: My company has been dealt with breach by the State Securities Commission (SSC) due to its breach of the regulation on tender offer of securities. The SSC requested the Board of Management to convene the extraordinary meeting of the GMS to inform shareholders of such breach and, concurrently, to inform shareholders of returning the money paid by them for buying securities if they request. After that, base on the request of the SSC, the Board of Management approved this decision and inform the GMS. However, at the extraordinary GMS, a member of the Board of Management supposes that the GMS has to approve this decision, instead of just informing like that. Is the opinion of the member of the Board of Management right or wrong? (02/12/2009)
- » Question :: The joint stock company of that we are the shareholders had taken place on the extraordinary meeting of the General Meeting of Shareholders (the “GMS”) on October 06, 2009. However, before the meeting was held, the website of our Company had post the Regulation on organizing the GMS. Accordingly, the Regulation was approved at the meeting of the Board of Management on September 27, 2009, and it would come into effect from October 6, 2009, at the GMS. However, in the GMS dated October 6, 2009, the organization Board did not raise the Regulation to the GMS for us to approve it. Please kindly advice whether the action of the Organization Board of this meeting is illegal or not? What could the shareholders do in this case ? (29/11/2009)
- » Question :: My father is a founding shareholder holding 20% of ordinary shares of A Joint Stock Company, which was established in 2008. In early 2009, my father passed away without a will. Please kindly advise how my father’s shares of Company A will be dealt with? Is there any regulation in the Law on Enterprises that provides the heritance of such shares? (09/11/2009)
- » Question :: We are an oversea fund management. Instead of delivering our documents from Vietnam to abroad for sealing, we would like to bring our overseas corporate seal into Vietnam to sign some contracts and documents with Vietnamese enterprises. Please kindly advice us on the related procedure? (05/11/2009)