Regulations on charter capital and financial reporting of fund management companies: 2025 Update

Two of the most critical legal requirements are charter capital and financial reporting, which form the basis for assessing the operational capacity and financial health of fund management firms.

I. Regulations on Charter Capital

1. Minimum Charter Capital Requirement under Current Law

• Minimum amount: Fund management companies must maintain a minimum paid-up charter capital of VND 25 billion, pursuant to Clause 3, Article 175 of Decree No. 155/2020/ND-CP.
• Explanation: Charter capital refers to the contributed equity capital, not derived from loans or ambiguous sources. This is a prerequisite for the State Securities Commission (SSC) to issue or renew an operation license.

2. Maintaining and Complying with Charter Capital Requirements

 Pursuant to Point c, Clause 1, Article 85 of the Law on Securities: Fund management companies must continuously comply with licensing conditions under Clause 1, Points b and c of Clause 2, Clauses 4 and 5 of Article 75 of the same law, including:

- Maintaining the charter capital of VND 25 billion throughout the company’s operation.

- Reporting any capital changes to amend the business license under Article 181 of Decree 155/2020.

- Foreign shareholders must meet the requirements under Article 77 of the Law on Securities.

- No shareholder holding 10% or more in one fund management company, nor their related parties, may own over 5% in another fund management company.
 

Conditions on facilities and staffing:

• Must have a head office suitable for securities operations.
• Equipped with appropriate technologies and office facilities.

Personnel requirements: Minimum of 7 employees, including:

• 01 General Director (CEO);
• At least 05 employees holding fund management practitioner certificates;
• At least 01 compliance officer.

Standards for the CEO:

• Must not be under criminal investigation, serving a prison sentence, or barred from practicing.
• At least 4 years of experience in finance, securities, banking, insurance, or corporate investment.
• Possess a valid fund management certificate or equivalent.
• Must not have been administratively sanctioned in securities within the past 6 months.

Deputy CEO (if any):

• Must meet similar qualifications as the CEO;
• Must hold a practitioner certificate appropriate for their role.

3. Sanctions for Violating Charter Capital Regulations
 As prescribed in Article 4 of Decree 156/2020 as amended by Decree 128/2021/ND-CP:

Principal sanctions:

• Warning;
• Monetary fine;
• Temporary suspension of securities trading activities (1 to 12 months);
• Suspension of representative office operation or professional licenses (1 to 24 months).

Additional sanctions:

• Suspension of activities (1–12 months) such as public tender offers, securities business and services, underwriting, custodial, clearing and settlement services, and trading;
• Revocation of licenses or certificates;
• Confiscation of assets used in the violation.

Remedial Measures (depending on severity):

• Revocation of securities offered/issued in violation; refund to investors including interest;
• Mandatory disclosure of audited capital utilization reports;
• Mandatory correction and truthful information disclosure;
• Return of illegal gains or assets;
• Forced public tender offers or divestment to reduce ownership ratios;
• Required revision or re-approval of capital usage plans;
• Required listing/registration of securities transactions;
• Mandatory segregation and custody of investor, fund, company, and bank assets;
• Suspension of custodial and clearing/settlement activities;
• Mandatory separate accounts for custody, margin, clearing per customer;
• Asset and position segregation between customers and clearing members;
• Mandatory asset segregation between Vietnam Securities Depository and Clearing Corporation (VSDC) and its members;
• Disabling software or websites used for violations;
• Termination of public company registration and representative office operations;
• Return of forged/amended licenses or certificates.

II. Financial Reporting Requirements

III. Implementation Guidelines

1. Financial Statement Preparation Process

 Step 1: Data Collection

• Statements must reflect the substance over form (Article 6, Law on Accounting No. 88/2015/QH13).
• Ensure consistency, accuracy, and completeness of accounting indicators.

Step 2: Prepare Financial Reports Using Standard Templates

 Based on Circular 200/2014/TT-BTC and Circular 33/2016, required statements include:

• Balance Sheet
• Income Statement
• Cash Flow Statement
• Notes to Financial Statements

Step 3: Internal Review and Approval

• Reports must be reviewed by accounting and internal control departments and approved by the Board of Directors or CEO.
• Internal audit or Supervisory Board approval may be required depending on the governance structure.

Step 4: Timely Submission

• Submit via https://thuedientu.gdt.gov.vn or to competent tax authorities as specified in Article 110, Circular 200/2014/TT-BTC.

2. Best Practices in Financial Management

• Establish a robust internal control system
   Ensure compliance with Vietnamese Auditing Standards (VSA); include approval delegation, balance checks, internal audits.
• Regularly update accounting procedures
   Ensure compliance with Vietnamese Financial Reporting Standards (VFRS). VFRS will be mandatory by 2030 per Decision 345/QD-BTC.
• Ongoing staff training
   On tax/accounting/legal updates and financial reporting tools; via internal programs or organizations like VACPA, VAA.
• Seek expert advice in complex cases
  • Corporate lawyers for legal issues (e.g., capital transfer, M&A);
  • Independent auditors to ensure reports are free from material misstatement under VSA.

Conclusion

Compliance with charter capital and financial reporting regulations is not only a legal obligation but a cornerstone for sustainable development of fund management companies. Businesses should proactively update and strictly implement these requirements.