CIRCULAR

Amendments to certain Articles of Circular No. 10/2016/TT-NHNN dated June 29, 2016 on the Governor of the State Bank of Vietnam (SBV) elaborating Decree No. 135/2015/ND-CP dated December 31, 2015 of the Government on foreign porfolio investment (FPI)

Pursuant to the Law on State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated January 18, 2024;

Pursuant to the Law on Investment No. 61/2020/QH14 dated June 17, 2020;

Pursuant to the Ordinance on Foreign Exchange dated December 13, 2005; and the Ordinance dated March 18, 2013 on amendments to certain Articles of the Ordinance on Foreign Exchange;

Pursuant to Decree No. 70/2014/ND-CP dated July 17, 2014 of the Government of Vietnam elaborating the Ordinance on Foreign Exchange and Ordinance on amendments to the Ordinance on Foreign Exchange;

Pursuant to Decree No. 135/2015/ND-CP dated December 31, 2015 of the Government on foreign porfolio investment (FPI);

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At the request of the Director of Foreign Exchange Management Department;

The Governor of the SBV hereby promulgates a Circular on amendments to certain Articles of Circular No. 10/2016/TT-NHNN dated June 29, 2016 on the Governor of the State Bank of Vietnam (SBV) elaborating Decree No. 135/2015/ND-CP dated December 31, 2015 of the Government on foreign porfolio investment (FPI).

Article 1. Amendments to Circular No. 10/2016/TT-NHNN

1. Amendments to Clauses 2 and 3 Article 3:

a) Clause 2 is amended as follows:

“2. A foreign organization having an offshore-issued bonus share plan refers to an organization that is established under foreign law (hereinafter referred to as foreign organization).”

b) Clause 3 is amended as follows:

“3. The organization implementing the offshore-issued bonus share plan refers to an organization established and operated in Vietnam, including:

a) A foreign organization commercially presenting in Vietnam as a foreign-invested business organization; branch; representative office; or executive office of a foreign investor in a business cooperation contract;

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2. Amendments to Article 8:

“Article 8. Rules of implementing the offshore-issued bonus share plan

The implementation of the offshore-issued bonus share plan must ensure the following rules:

1. An offshore-issued bonus share plan having employees with Vietnamese nationality involved shall only be implemented through an organization implementing the offshore-issued bonus share plan.

2. Foreign currency earned from dividends and other legal income related to the offshore-issued bonus share plan must be transferred to employees with Vietnamese nationality via a separate account serving execution of the plan as specified in Article 12 This Circular.

3. The implementation of the offshore-issued bonus share plan must comply with regulations on foreign exchange management, obligations to pay personal income tax and other relevant laws of Vietnam.”

3. Amendments to Article 9:

“Article 9. Bonus forms

1. Direct bonus shares.

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4. Amendments to Article 10:

“Article 10. Rights of employees with Vietnamese nationality

1. Participate in the offshore-issued bonus share plan according to terms and conditions of the foreign organization in a manner that is not contrary to the provisions of law of Vietnam.

2. Receive foreign currencies earned from dividends and other legal income related to the offshore-issued bonus share plan. The receipt of foreign currencies earned from dividends and other legal income related to the offshore-issued bonus share plan must comply with the regulations in clause 2 Article 8 of this Circular.”

5. Amendments to Article 12:

“Article 12. Opening and use of the separate account serving execution of the plan

1. The organization implementing the offshore-issued bonus share plan must open 01 (one) separate account serving execution of the plan to collect and make payments as regulated in Clause 2 and Clause 3 of this Article.

2. Collections: Collect dividends and other legal income related to the offshore-issued bonus share plan.

3. Payments:

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b) Transfer money to foreign exchange accounts of employees with Vietnamese nationality involved in the offshore-issued bonus share plan;

c) Other legal payments related to the offshore-issued bonus share plan.”

6. Point c Clause 1 article 13 and point c clause 1 Article 15 are amended as follows:

“c) Copy of notice confirming the fulfillment of tax obligations at the latest time according to current regulations of tax law;”

7. Point b Clause 2 of Article 22 is amended as follows:

“b) No later than May 15^th annually, the SBV shall confirm or refuse to confirm the registration of proprietary trading limit in writing. In case of refusal to confirm the registration of proprietary trading limit, the SBV shall specify reasons thereof in writing.”

8. Clause 2 of Article 23 is amended as follows:

“2. Within 05 (five) working days from the date on which the application for the registration of temporary proprietary trading limit is received, the State Bank shall, in consideration of the total FPI of the preceding year and the safe investment ratio of the proprietary trader, confirm in writing according to the Form in Appendix No. 18 enclosed herewith or refuse to confirm the proprietary trader’s registration of temporary proprietary trading limit in writing. In case of refusal, the SBV shall specify reasons thereof in writing.”

9. Point b Clause 2 of Article 24 is amended as follows:

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10. Clause 2 of Article 25 is amended as follows:

“2. Within 05 (five) working days from the date on which the application for the registration of temporary trust limit is received, the State Bank shall, in consideration of the total FPI entrusted to the trustee in the preceding year, confirm in writing according to the form in Appendix No. 20 enclosed herewith or refuse to confirm the registration of temporary trust limit in writing. In case of refusal, the SBV shall specify reasons thereof in writing.”

11. Clause 2 of Article 26 is amended as follows:

“2. Examine and retain documents and papers which are provided by customers in connection with collections and payments made on proprietary trading accounts, trust accounts and separate accounts serving plan execution in order to ensure that foreign exchange services are provided in proper manner and in conformity with laws.

Licensed credit institutions are only allowed to make collections and payments via separate accounts serving plan execution on the basis of:

a) Checking and comparing information and documents related to the offshore-issued bonus share plan with the participation in the offshore-issued bonus share plan by employees with Vietnamese nationality provided by the organization implementing offshore-issued bonus share plan according to the regulations in point b clause 2 Article 28 of this Circular;

b) Requesting the organization implementing the offshore-issued bonus share plan to provide documents proving that the organization implementing the offshore-issued bonus share plan complies with electronic reporting to the SBV according to the provisions of this Circular (photocopy of the report sent to the SBV’s email inbox for the most recent reporting period) before providing foreign exchange services to the organization implementing the offshore-issued bonus share plan (except for the offshore-issued bonus share plan implemented for the first time in Vietnam).”

12. Point b Clause 2 Article 28 is amended and clause 4 Article 28 is added as follows:

a) Amendments to Point b Clause 2:

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b) Addition of Clause 4:

“4. In case the organization implementing the offshore-issued bonus share plan terminates operations or is dissolved, before terminating operations or dissolution and before closing the separate account serving the plan execution opened as prescribed in Article 12 of this Circular, the organization implementing the offshore-issued bonus share plan must settle the benefits related to the plan for employees with Vietnamese nationality and transfer all earnings to employees with Vietnamese nationality who participate in the plan issued abroad via the separate account serving the plan execution.”

13. Addition of Clause 5 of Article 29:

“5. Take charge and cooperate with relevant units of the SBV in handling issues related to the foreign porfolio investment (FPI) within the scope of this Circular.”

14. Amendments to Article 35:

“Article 35. Reporting regimes for the organization implementing the offshore-issued bonus share plan

Every month, no later than the 12th day of the month immediately following the reporting month, the organization implementing offshore-issued bonus share plan shall submit a report on the implementation of the offshore-issued bonus share plan for employees with Vietnamese nationality to the SBV using the form in Appendix No. 16 enclosed herewith. Closing date: from the 1^st day to the last date of the reporting month. The report is sent electronically to the SBV's email at [email protected] and sent in writing to the SBV."

Article 2. Addition, replacement, annulment of some articles and Appendices of Circular No. 10/2016/TT-NHNN

1. Article 11 is annulled.

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a) Appendix No. 02 is annulled;

b) Appendix No. 16 of Circular No. 10/2016/TT-NHNN is replaced with Appendix No. 16 enclosed herewith;

c) Appendix No. 17, Appendix No. 18, Appendix No. 19 and Appendix No. 20 are added to this Circular.

Article 3. Implementation responsibilities

The Chief of Office, the Director General of the Foreign Exchange Management Department, Heads of units under the SBV, the credit institution, foreign bank branches, relevant organizations and individuals are responsible for the implementation of this Circular.

Article 4. Implementation Clauses

1. This Circular comes into force from August 12, 2024.

2. After 01 year from the effective date of this Circular, offshore-issued bonus share plans in the form of awarding call options with preferential conditions whose registration has been confirmed by the SBV before the effective date of this Circular can only be implemented in other forms of offshore-issued bonus share plans without outbound cash flow.

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PP. GOVERNOR
DEPUTY GOVERNOR




Pham Quang Dung