Conditions for establishing a fund management company 2024

Establishing a fund management company requires meeting conditions. Strict compliance with legal regulations ensures that fund management activities are carried out effectively and transparently. This article will advise on the necessary conditions to establish a fund management company in Vietnam.

What is a fund management company?

A fund management company is an enterprise licensed by the State Securities Commission to establish and operate securities business.

The main tasks of the fund management company include:

• Management of securities investment funds
• Manage stock investment portfolio
• Securities investment consulting

Legal basis: Clause 2, Article 3, Circular 99/2020/TT-BTC dated November 16, 2020 of the Ministry of Finance guiding the operations of securities investment fund management companies.

Conditions for establishing a fund management company

Capital conditions

Capital to establish a fund management company requires meeting some of the following basic requirements:

• The minimum charter capital of a fund management company is 25 billion VND. This capital level must be maintained throughout the company’s operations.
• The charter capital contribution to the securities investment fund management company must be in Vietnam Dong;
• The minimum charter capital for securities investment consulting business is 10 billion VND (According to Article 175 of Decree 155/2020/ND-CP).

Legal basis: Clause 1, Article 75 of Circular 99/2020/TT-BTC.

Conditions on shareholders and capital contributing members

Shareholders and capital contributing members of the fund management company must meet the prescribed conditions. Conditions for shareholders and capital contributions include:

• Individuals who are not in the cases are not entitled to establish and manage businesses in Vietnam according to the provisions of the Law on Enterprises 2020.
• The organization must have legal status and be operating legally; Profitable business activities for 02 years immediately preceding the year of application for license; The most recent year’s financial statements must be audited with an unqualified opinion.
• Foreign investors meet the conditions specified in Article 77 of the Law on Securities 2019.
• Shareholders, capital contributing members own 10% or more of the charter capital of a securities investment fund management company and related persons of such shareholders, capital contributing members (if any) do not own above 5% of charter capital of another securities investment fund management company.

Legal basis: Clause 1, Article 75, Points a and b, Clause 2, Article 74, Article 77 of the Law on Securities 2019

Conditions on the structure of shareholders and capital contributing members

Conditions on the structure of shareholders and capital contributing members are stipulated as follows:

First, There are at least 02 founding shareholders and capital contributing members who are organizations.

In case the company is organized as a limited liability company, the owner must be a commercial bank or insurance enterprise or securities company or foreign organization. In particular, foreign organizations contributing capital to establish and purchase capital contributions to own 100% of the charter capital of a securities investment fund management company must meet the following conditions:

• Licensed and continuously operating in the fields of banking, securities, and insurance for 2 years immediately preceding the year of contributing capital to establish and purchase capital contributions.
• The licensing agency of the home country and the State Securities Commission have signed a bilateral or multilateral cooperation agreement on information exchange, management cooperation, inspection and supervision of securities and market activities. stock market.
• Profitable business activities for 02 consecutive years preceding the year of capital contribution, establishment, capital contribution purchase and the most recent year’s financial statements must be audited with full approval.

Second, The total capital contribution ratio of organizations is at least 65% of charter capital, in which organizations that are commercial banks, insurance enterprises, and securities companies own a minimum of 30% of charter capital.

Based on the content of Article 75, Clause 2, Article 77 of the Law on Securities 2019

Facilities conditions

The fund management company must have a working office and equipment that meets operational requirements. Facilities need to ensure safety and information security for fund management activities. Requirements for facilities include:

• Have a secure workplace for securities business activities;
• There are sufficient facilities, techniques, equipment, office equipment, and technology systems in accordance with the professional process of securities business activities.

Based on the content of Article 75 of the Law on Securities 2019

Personnel conditions

The fund management company must have a staff that meets the requirements for professional qualifications and experience. The company must have a General Director (Director), at least 05 employees with fund management practice certificates and at least 01 compliance control employees.

In case there is a Deputy General Director (Deputy Director) in charge of operations, the above standards must be met (except for the standard of having a fund management practice certificate or equivalent certificate according to Government regulations) and have Securities practice certificate appropriate to the profession in charge.

Based on the content of Article 75, Points a, b and d, Clause 5, Article 75 of the Law on Securities 2019

Draft Charter of the fund management company

The draft Charter of a securities investment fund management company must meet the following requirements:

• Must not violate the provisions of the Law on Securities 2019 and the Law on Enterprise 2020.
• In accordance with the company’s organizational and operational model and must have at least the contents according to the Model Charter specified in Appendix XII issued with Circular 99/2020/TT-BTC.
• Public companies refer to the Model Charter applicable to public companies in Appendix I issued with Circular 116/2020/TT-BTC to develop the company Charter.

Application for a license to operate securities business

Based on the content of Article 176 of Decree 155/2020/ND-CP, the application file for a License to establish and operate securities business of a securities investment fund management company includes:

• Application form according to Form No. 64, Appendix issued with Decree 155/2020/ND-CP.
• Minutes of agreement to establish the company of shareholders, members expected to contribute capital or decision of the company owner
• Head office lease contract, documents proving ownership of the head office, right to use the head office; Explanation of facilities according to Form No. 65 Appendix issued with Decree 155/2020/ND-CP.
• List of personnel, personal information according to Form No. 66, Form No. 67, Appendix issued with Decree 155/2020/ND-CP, accompanied by criminal records of members of the Board of Directors and Chairman Board of members, company President, General Director (Director) are granted no more than 06 months from the date of application submission.
• List of shareholders and capital contributing members according to Form No. 68 Appendix issued with Decree 155/2020/ND-CP
• Decisions of competent authorities promulgating professional processes, internal control processes, and risk management processes.
• Draft company charter.

For the list of shareholders, the following documents must be attached:

1. Shareholders are individuals:

• Personal information sheet.
• Judicial records are issued no more than 06 months from the date of application submission of founding shareholders and members who are individuals contributing more than 5% of charter capital;

1. Shareholders are organizations:

• Business registration certificate or equivalent document;
• Company charter; Decision of the competent authority according to the company charter on capital contribution for establishment and appointment of an authorized representative;
• Personal information of the authorized representative
• Audited financial statements for 02 years immediately preceding the year of licensing application of the organization participating in capital contribution.

The capital contributing organization that is the parent company must supplement its audited consolidated financial statements; Written approval of the State Bank of Vietnam for commercial banks, and of the Ministry of Finance for insurance enterprises on capital contribution for establishment (if any)

1. Written commitment of organizations and individuals to meet the provisions of Point c Clause 2, Article 74 and Point c, Clause 2, Article 75 of the Law on Securities 2019

Based on the content of Article 79 of Law on Securities 2019, Article 176 of Decree 155/2020/ND-CP.

Consulting services for establishing a fund management company

At Long Phan, we provide consulting services for establishing a fund management company to support businesses during the licensing process. Service scope includes:

• Analyze the feasibility of the project to establishing a fund management company
• Consulting on conditions for establishing a suitable fund management company
• Support in developing business plans and draft company charter
• Draft documents and related documents, prepare licensing applications according to regulations
• On behalf of customers, carry out procedures establishing a fund management company at a competent authority
• Receive results and return results directly to customers.

The fund management market in Vietnam is developing with great potential. To establishing a fund management company, customers need to meet the conditions of capital, shareholder structure, facilities, personnel, and draft charter. If you have any questions, please contact Long Phan via hotline: 090.673.5368 for support.