What is a supervisory bank? Limits on supervisory banks in Vietnam

What is a supervisory bank? Limits on supervisory banks in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What is a supervisory bank?

According to Clause 1, Article 116 of the Law on Securities 2019, a supervisory bank is a commercial bank that has the certificate of securities depository registration granted by SSC, provides depository services and supervises the management of public funds and investment companies.

2. Limits on supervisory banks in Vietnam

Specifically, Article 117 of the Law on Securities 2019 stipulates the limits on on supervisory banks as follows:

- Supervisory banks, their Boards of Directors, executives and employees that supervise and manage assets of public funds and investment companies must not be related persons, owners, lenders or borrowers of the fund management companies or investment companies, and vice versa.

- Supervisory banks, their Boards of Directors, executives and employees that supervise and manage assets of public funds and investment companies must not be buyers or sellers of assets of public funds and investment companies.

3. Obligations of the supervisory bank in Vietnam

Supervisory banks shall supervise operations of fund management companies that are relevant to the public funds and investment companies that are the banks’ clients. A supervisory bank in Vietnam has the following obligations:

- Fulfill the obligations specified in Clause 3 Article 56 of the Law on Securities 2019;

- Deposit assets of public funds and investment companies; separately manage assets of public funds, investment companies and assets of the bank;

- Supervise to compliance of this law, charters of securities investment funds and charters of investment companies by fund management companies and their General Directors (Directors);

- Manage revenues, expenses, payments and transfer of assets of public funds and investment companies at the request of the fund management companies or General Director (Director) of the investment companies;

- Verify reports prepared by fund management companies and investment companies that are relevant to the public funds or investment companies;

- Supervise reporting and information disclosure by fund management companies and investment companies in accordance with this Law;

- Report to SSC in case a fund management company, investment company, organization or individual commits violations against the law, the fund’s charter or the investment company’s charter;

- In cooperation with fund management companies and investment companies, periodically examine accounting books, financial statements and transactions of public funds and investment companies;

- Fulfill other obligations prescribed by law, the charter of the securities investment fund and investment company.

(Clause 2, Article 116 of the Law on Securities 2019)

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