PENALTIES FOR ADMINISTRATIVE VIOLATIONS IN SECURITIES SECTOR

LEGAL UPDATE

On 30 December 2021, the Government of Vietnam issued Decree 128/2021/ND-CP amending and supplementing some provisions of Decree 156/2020/ND-CP on penalising administrative violations in securities and the securities market sector (Decree 128). Decree 128 came into effect on 1 January 2022.

In this legal update, we will discuss the noteworthy takeaways from Decree 128.

1. Rule for Repeated and Simultaneous Violations

1.1 General

Decree 128 clarifies that an individual or institution that commits many violations simultaneously or repeats a violation will be penalised for each violation. Notwithstanding, if the individual or institution repeatedly commits a violation and the violations are discovered at the same time but have not yet been penalised and the statute of limitations has not expired, such individual or institution will be penalised only once for the violations, and the aggravating cir

1.2 Exceptions

For the following repeated violations, the violating entity shall be penalised for only one violation with the highest range of monetary penalty imposed among the repeated violations, and the aggravating circumstance of repeated violations to be applied:

• late reporting or failure to report upon a change of shareholding or fund certificate ratio beyond or reaching, as applicable, the threshold provided by law;

• late reporting or failure to report on the result of the transaction;

• failure to report on planned transactions or conducting transactions beyond the registered period or the period announced by Vietnam Stock Exchange (VNX) or disclosed by a subsidiary or with a transaction value exceeding the registered value; and

• late disclosure of information or failure to disclose information as required by law.

The transition clause of Decree 128 provides that for violations being committed before the effective date of Decree 128 and discovered or being considered for issuance of penalty decision after the effective date of Decree 128, Decree 128 will be applicable if it does not provide legal liability or provides more lenient legal liability.

2. Additional or Amended Penalties

2.1 Issuing Additional Shares

Decree 128 adds a monetary penalty of VND 100‑150 million for the following violations when issuing additional shares:

• Failure to transfer the amount collected from the additional issuance tranche into an escrow account at a bank or a branch of a foreign bank; or

• Using the amount collected from the offering before the State Securities Commission issues a written notice on receipt of the report on the result of the issuance tranche.

2.2 Publishing Maximum Foreign Ownership Ratio

Decree 128 adds the following monetary penalties for violations in publishing maximum foreign ownership ratio:

• Penalty of VND 30-50 million for publishing a change of the maximum foreign ownership ratio which is not complying with the timeline provided by law; and

• Penalty of VND 50-70 million for public companies not publishing maximum foreign ownership ratio or any change in maximum foreign ownership ratio.

 2.3 Selling Treasury Shares

Decree 128 adds a penalty of VND 50-70 million for selling treasury shares prior to the time limit provided by law, and for the failure to complete the sale of treasury shares within the provided time limit.

2.4 Reporting Regime

Decree 128 increases the penalty from VND 70-100 million to VND 100‑200 million for false or inaccurate reporting.

For more information, please contact:

Huyen Pham / Senior Associate

huyen.pham@acsvlegal.com

Duc Tran / Associate

duc.tran@acsvlegal.com

© 2022 ACS Legal Vietnam Company Limited – All rights reserved

This legal update is not an advice and should not be treated as such.

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