A member fund is a securities investment fund with the number of members contributing capital from 02 to 99 members. Fund members only include professional securities investors. The portfolio and investment activities of member fund must comply with securities laws and relevant regulations.
1. Investment principles of member fund
The fund’s investment portfolio must be consistent with the investment objectives and policies specified in the Fund Charter and announced in the Prospectus.
2. Allowed investment assets
– The fund may invest in the following assets:
+ Deposits at commercial banks as prescribed by the Law on banking and approved by the Fund Representative Board;
+ Money market instruments, including financial instruments and negotiable instruments as approved by the Fund Representative Board and prescribed by law;
+ Government’s debt instruments, Government-backed bonds and municipal bonds;
+ Listed shares, shares registered for trading, bonds listed on SE, and public fund certificates;
+ Unlisted shares of issuers that are operating under the law of Vietnam; shares of joint-stock companies or stakes of limited liability companies;
+ Rights arising in connection with securities held by the fund;
+Other securities and assets as prescribed by law.
– Contribute capital to establish joint-stock companies or limited liability companies in accordance with regulations of the Law on enterprises.
– Invest in eligible real estate as prescribed in the Law on real estate business if permitted in the fund’s charter and approved in writing by the General Meeting of Investors.
3. Regulations for fund management companies
– When managing a private fund, the fund management company shall:
+ Not use the fund’s capital and assets to make investments in that fund;
+ Not use the fund’s capital and assets to provide loans or loan guarantees; not underwrite the offering of securities;
+ Invest in public fund certificates and shares of public securities investment companies managed by other fund management companies, but ensure the following limits:
++ Not invest in more than 10% of total outstanding fund certificates of a public fund or total outstanding shares of a public securities investment company;
++ Not invest more than 20% of total value of its assets in fund certificates of a public fund or shares of a public securities investment company;
++ Not invest more than 30% of total value of its assets in public fund certificates or shares of public securities investment companies.
+ If permitted in the fund’s charter, the fund is allowed to get mortgage loans, overdraft facility or loans in other form from the custodian bank, borrow money to purchase securities (margin trading) according to the following principles:
++ Borrowing of assets must be conformable with regulations of law;
++ Borrowing limit shall be decided by the General Meeting of Investors, provided that total debts and amounts payable of the fund shall not exceed 30% of total value of the fund’s assets at any time;
++ Organizational structure and operations of the credit department of the custodian bank must be separated from the fund’s depository department; credit activities are independent from depository activities and fall beyond the scope of the depository contract;
++ The fund management company shall provide information about rights and interests of the custodian bank and potential conflict of interest for the General Meeting of Investors for consideration.
– The fund management company and organizations contributing capital to establish the private fund are not allowed to use means of mass media for advertising or raising capital.
>> 07 STRICTLY PROHIBITED ACTS IN SECURITIES https://linconlaw.vn/07-strictly-prohibited-acts-in-securities/
4. Overseas investment activities of member fund
The fund shall make indirect outward investments in accordance with regulations of the Law on investment after obtaining SSC’s approval, and must comply with the following rules:
– The fund has obtained the indirect outward investment limits set by SBV;
– The fund shall only make indirect outward investment in the assets specified in the fund’s charter and in conformity with SBV’s regulations;
– The fund’s outward investment shall not exceed 20% of its NAV and its registered investment limit certified by SBV.
– The fund’s indirect outward investments, indirect outward investment limits and adjustment thereof shall comply with regulations on investments, investment limits and adjustment thereof laid down in provisions of securities.
Legal basis:
- Law on Securities 2019;
- Circular 98/2020/TT-BTC guiding the operation and management of securities investment funds issued by the Ministry of Finance on November 16, 2020.
𝐋𝐈𝐍𝐂𝐎𝐍 𝐋𝐀𝐖 𝐅𝐈𝐑𝐌 – 𝐒𝐮𝐬𝐭𝐚𝐢𝐧𝐚𝐛𝐥𝐞 𝐜𝐨𝐨𝐩𝐞𝐫𝐚𝐭𝐢𝐨𝐧
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