|Nguyen Hoang Ly|
On December 31 2015, the State Bank of Vietnam issued Circular 40, which regulates the opening and use of capital accounts denominated in Vietnamese Dong (VND) for the offshore issuance of securities in Vietnam.
Circular 40 implements article 11 of government decree 70/2014/ND-CP. This provides that offshore issuers are only allowed to issue securities in VND in Vietnam. Furthermore, all proceeds must be remitted into a securities issuance capital account (SICA) denominated in VND and opened at an authorised credit institution in Vietnam.
Under Circular 40, an offshore issuer must open a SICA for each of its investment projects in Vietnam. All of the proceeds from the issuance must be blocked until the authorised credit institution receives:
- a request from the offshore issuer to release the account balance; and,
- confirmation from the State Securities Commission of the result of the securities issuance.
Circular 40 specifies certain transactions that must be carried out using the SICA of the offshore issuer. These include:
- receiving proceeds from a securities issuance in Vietnam;
- receiving remittances from the VND payment account of an offshore issuer to pay out dividends, bond interest and to discharge other obligations in respect of a securities issuance in Vietnam;
- remitting dividends, bond interest and discharging other obligations that the offshore issuer owes to investors;
- making remittances into the VND payment account of an offshore issuer opened with an authorised credit institution in Vietnam to implement an investment project in Vietnam;
- redeeming securities issued in Vietnam by an offshore issuer; and,
- other payment transactions relating to the issuance of securities in Vietnam by an offshore issuer.
Circular 40 took effect on March 1 2016.
Nguyen Hoang Ly