Securities companies would, for the first time in Vietnam, be required to determine the daily value-at-risk of their own assets, according to a draft circular on financial safety ratios, dissolution and bankruptcy of securities companies elaborated by the State Securities Commission (SSC).
These assets include cash, bonds, certificates of public funds, stocks of listed companies and public companies and other long-term financial investments. At the same time, securities companies would be asked to report on their financial safety ratios to the SSC. Their operation would be placed under control if any of financial safety ratios falls under the prescribed level.
To secure interests of shareholders and clients of securities companies, the draft paper stipulates that after the issuance of the SSC’s decision approving the dissolution of a securities company, the company’s executive officers are prohibited from hiding or dispersing assets of the company and clients; pledging, mortgaging, donating or leasing assets; raising capital in all forms; terminating the performance of valid contracts; waiving or reducing rights to claim debts; or converting unsecured debts into secured ones.
In addition, the company and its executive officers may neither open securities trading accounts, act as securities brokers nor conduct securities investment and other activities related to money accounts and securities accounts of the company itself and its clients.
Within 90 days after the issuance of the decision approving the dissolution, the following transactions of the securities company are considered null and void: donating movable or immovable assets to others; paying debts to creditors who are also debtors; paying immature debts; pledging or mortgaging assets for debts, making payment for contracts under which the value of the company’s obligations is obviously larger than the value of other parties’ obligations.
As proposed by the drafters, upon detecting that a securities company falls into bankruptcy, its creditors, employees, owners, shareholders or capital contributors may file applications for opening of bankruptcy procedures under the Bankruptcy Law.
After receiving the court’s notification of the opening of bankruptcy procedures for a securities company, the SSC would issue a decision to place the company under special control and then request the company to transfer its rights and obligations toward its clients to another securities company and temporarily freeze some or all of money accounts and securities accounts of its clients in order to apply measures to restore solvency.
The SSC is also drafting a circular guiding the merger and consolidation of credit institutions, aiming to create a complete legal foundation to further protect investor interests upon changes in the operation of securities companies.-