In January 2012, the Ministry of Finance issued Decision 62/2012/QD-BTC on Approving Plan on Restructuring Securities Companies. The main purpose of the restructuring is to raise their operational quality, financial capability, corporate governance and ability to control risks, and on these grounds, to gradually reduce the number of securities companies
Criteria and classification of securities companies
In order to proceed with the restructuring, securities companies and fund management companies shall be re-grouped in accordance with the gradual reduction of their risk levels and based on these two criteria: liquid capital ratio (ratio of the value of liquid capital over total risk value comprising market risks, payment risks and operational risks) and ratio of accumulated losses over charter capital, specifically as follows:
(i) Group 1, Normal Group: containing those securities companies with a liquid capital ratio above 150%, and with accumulated profit or losses below 30% of their charter capital.
(ii) Group 2, Control Group: containing those securities companies with a liquid capital ratio above 120% to below 150%, and with accumulated losses from 30% to 50% of their charter capital.
(iii) Group 3, Special Control Group: containing those securities companies with a liquid capital ratio below 150%, and with accumulated losses above 50% of their charter capital.
There are three-step processes. Each stage will take place during a specific period of time.
(i) Immediate measures to be taken (from now until April 1, 2012):
The State Securities Commission (SSC) shall take the following measures with respect to securities companies which fail to comply with the requirements on liquid capital ratio:
• Require securities companies with a liquid capital ratio below 150% to report weekly, and those companies with a ratio below 120% to report daily.
• Appoint an investigation team to attend these companies to investigate their operational status, and any company which is found to have failed to separate investor’s assets will be required to do so within a minimum two months, and it will be proposed that the board of management (or members’ council) consider and make a submission to the general meeting of shareholders (owner) to consider a plan to increase charter capital.
• Instruct the two stock exchanges and Vietnam Depository Center to closely control security companies’ payments for transactions.
• Consider withdrawal of the securities brokerage licence in accordance with law in a case of consecutive breaches of payment for transactions and/or misuse of client deposits.
(ii) Measures to be taken to each group after April 1, 2002:
• Group 1, Normal Group: There will be continued financial supervision of securities companies in this group in order to implement prompt solutions if market difficulties continue.
• Group 2, Control Group: The administrative and economic solutions stipulated in Circular 226 will be applied.
• Group 3, Special Control Group: The administrative and economic solutions stipulated in Circular 226 will be applied.
(iii) Measures to be taken after 2012:
Strengthening corporate governance and operational capacity of securities companies on three main bases, namely by providing regulations on capital levels; regulations and guidelines on risk management by securities companies; and regulations on rating securities business organizations in accordance with international standards and thereby classifying and supervising such organizations.