WHAT SHOULD INVESTORS NOTE WHEN TRADING OPEN-ENDED FUND CERTIFICATES?

Open-ended fund certificates are a type of security that confirms an investor’s ownership of a portion of the capital contribution of a securities investment fund, in which the fund certificates offered to the public must be repurchased at the request of the investor.

For trading open-ended fund certificates, investors need to pay attention to the following issues:

1.         General provisions of trading open fund certificate

–           The fund management company shall arrange the trading of the fund certificates for investors, a periodical basis as prescribed in the fund’s charter and the prospectus or summary prospectus. The trading frequency is at least twice a month.

–           Investors shall conduct fund certificate transactions at distribution agents mentioned in the prospectus or summary prospectus or on the website of the fund management company. The fund management company, distribution agents and relevant service providers must establish a system for receiving trading orders to ensure that investors can place trading orders at distribution agents.

–           Trading orders can be received by phone, fax, online trading orders via the internet or other electronic means and transmission lines, recorded on the order slip. Investor’s trading orders will only be executed when the order slip has been filled in accurately and completely with information according to the prescribed form.

–           Orders will only be executed if received before the order book closes. Orders received after the order book closing time are canceled or continue to be valid for execution on the next fund certificate trading day according to the provisions of the Fund Charter and Prospectus.

–           Information about the investor’s post-transaction ownership is recorded and a confirmation is sent to the investor within 03 working days from the date of the fund certificate transaction, but not later than the next fund certificate transaction date.

–           Investors have the right to request account statements and sub-accounts.

–           Investors are allowed to convert funds in cases where the fund management company has two or more open funds and has provisions in the Fund Charter and Prospectus.

2.         Order to buy open-ended fund certificates

–           The execution of buy orders must comply with the following principles:

+          The purchase order must be accompanied by valid documents confirming that the investor has completed payment to the specified account and has been fully confirmed.

+          Payment can be signed by the agent on the basis of the value difference between the buy order and the sell order.

+          Investors pay for the purchase of fund certificates in the form of bank transfer or other forms as prescribed in the Fund Charter and Prospectus, to the account as prescribed.

+          The transaction value of the purchase order must not be less than the minimum purchase value (if any) specified in the Fund Charter and Prospectus.

+          The number of fund units sold to investors or registered agents can be an odd number in decimal form, rounded to the second number after the decimal point.

–           Money to buy fund certificates when transferred to the fund’s cash account at the custodian bank is disbursed for investment on the day of the fund certificate transaction.

–           In case the order to buy fund certificates and payment for the purchase order is made by an individual or organization other than the investor, the order slip and documents confirming the payment must clearly state the name and account number trading fund certificate, transaction sub-account number or ID/National ID number or Passport or other legal personal identification number or Business Registration Certificate number and payment value of the investor.

>> REGISTRATION OF SECURITIES TRADING IN EQUITIZED ENTERPRISES https://linconlaw.vn/registration-of-securities-trading-in-equitized-enterprises/

3.        Order to sell open-ended fund certificates

–           The execution of sell orders must comply with the following principles:

+          An investor’s sell order can only be executed when the investor or registered agent has a sufficient number of fund units to sell as required and the number of remaining fund units after the investor’s transaction is not lower than Minimum amount (if any) to maintain accounts and sub-accounts specified in the Fund Charter and Prospectus.

+          Sell orders may not be executed, or may only be partially executed according to regulations.

+          Payment term shall comply with the provisions of the Fund Charter and Prospectus but must not exceed 05 working days from the date of transaction of fund certificates, except in cases permitted according to regulations.

+          Proceeds from the sale of fund certificates are transferred by the fund to the investor’s bank account, registered name agent or bank account designated by the investor.

–           Within 03 working days from the date of receiving payment according to regulations, payment to investors must be completed.

–           In case the Fund Charter and Prospectus stipulate that the fund management company may transfer part of the investment portfolio instead of paying in cash to investors.