Vietnam: Using additional reserve fund of charter capital to pay dividends is strictly forbidden

From November 21, 2014, it is strictly forbidden that securities companies, asset management companies use the additional reserve fund of charter capital, and operational risk and financial reserve funds to pay dividends.

Besides, Circular No. 146/2014/TT-BTC of the Ministry of Finance of Vietnam also specifies the purpose of additional reserve fund of charter capital, and operational risk and financial reserve funds as follows:

- Additional reserve fund of charter capital shall be used for annual supplementation of charter capital of the securities company or asset management company as decided by their Shareholder Meeting/Board Member/Owners. The annual set-up level shall be decided by the Shareholder Meeting/Member Board/Owners of securities companies, asset management companies under the regulations of the companies.

- Operational risk and financial reserve funds shall be used to cover the remaining of the property loss and damage incurred in the course of operation after being offset by indemnities paid by the organizations, individuals causing the damage, the insurers. Investor protection fund shall be used for securities firms. Risk reserve and loss indemnity fund shall be used for asset management companies and the provision set up in expense shall be used. Board of Directors/member Board of securities companies, asset management companies shall manage and use this fund.

Other provisions can be found in Circular No. 146/2014/TT-BTC of the Ministry of Finance of Vietnam, which takes effect from November 21, 2014.

Thu Ba

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