Specific financial management mechanism for the Stock Exchange, Vietnam Securities Depository and Clearing Center

Vietnam Stock Exchange, Vietnam Securities Depository and Clearing Corporation are allow to perform external investment in the field of securities and stock market.

External investments of enterprises are only allowed in the securities sector

According to Decree 59/2021/ND-CP stipulating a number of specific contents on financial management mechanisms and performance evaluation for the Vietnam Stock Exchange (Stock Exchange), the Vietnam Securities Depository and Clearing Corporation, these two entities are only allowed to perform external investment in the field of securities and stock market.

The form and authority to perform external investment of the Stock Exchange of Vietnam, Vietnam Securities Depository and Clearing Corporation shall comply with the provisions of the law on management and use of state capital invested in production and business in enterprises and the charter of organization and operation of the Vietnam Stock Exchange, Vietnam Securities Depository and Clearing Corporation.

Regarding the revenue of the two units, the decree stipulates that the revenue of the Vietnam Stock Exchange includes three sources: revenue from professional activities (including revenue from member management activities; revenue from other professional activities as prescribed by law); revenue from service provision (including revenue from information provision services; revenue from technology infrastructure services for the stock market; revenue from other services as prescribed by law); revenue and income from capital investment activities in subsidiaries (including the remaining net income after taxes after setting up funds at subsidiaries, collecting the difference between equity and charter of subsidiaries; financial income and other income as prescribed by law).

Regarding Vietnam Securities Depository and Clearing Corporation, besides the revenue from professional activities (such as: revenue from member management activities; revenue from securities registration activities; revenue from securities depository activities; revenue from securities transfer activities), revenue from service provision activities (including revenue from information provision services; revenue from other services as prescribed).

This Decree also stipulates that besides revenue from financial activities and other incomes as prescribed by law on management and use of state capital invested in production and business in enterprises, Vietnam Securities Depository and Clearing Corporation is entitled to account revenue from financial activities for the interest of deposits arising from the payment of dividends, principal and interest on government debt instruments and government guarantee bonds, local government bonds, and other securities and exercise the right to purchase securities.

Decree 59 also stipulates that the Vietnam Stock Exchange and Vietnam Securities Depository and Clearing Corporation will manage revenue and other income, and manage expenses following the provisions of Article 30 of Decree No. 91/2015/ND-CP on the state capital in enterprises and use and management of capital and assets in enterprises and guiding, amending, supplementing and replacing documents (if any).

Exclude objective factors in business evaluation

In terms of costs, this Decree also stipulates that Vietnam Securities Depository and Clearing Corporation is included in expenses when determining taxable income for a number of specific expenses, including expenses for setting up funds of risk prevention in professional operation as prescribed in Clause 3, Article 156 of Decree No. 155/2020/ND-CP detailing the implementation of a number of articles of the Law on Securities and guiding, amending, supplementing and replacing documents (if any).

The deduction for the professional operation risk prevention fund is made quarterly. In the fiscal year, if it is not used up, the balance of the fund will be carried forward to the following year for further use. Along with that, the cost of transferring revenue from the transaction of transferring ownership of securities to a subsidiary of the Vietnam Stock Exchange is not through the securities trading system.

Regarding performance evaluation and enterprise classification, the Vietnam Stock Exchange and Vietnam Securities Depository and Clearing Corporation comply with the law on performance evaluation and enterprise classification of State-owned enterprises (SOEs).

At the same time, when calculating the criteria to evaluate the performance of enterprises, besides the objective factors that are excluded following the legal regulations on evaluating the performance of SOEs, the Stock Exchange of Vietnam, the Vietnam Securities Depository and Clearing Corporation are excluded from other objective factors such as State management policies affecting the listing and trading of securities and the situation of registration, custody, clearing and securities transaction settlement on the stock market.

For the Vietnam Stock Exchange, the objective factors that are excluded are revenue from professional activities, the revenue and income from capital investment activities in the subsidiary, which changes due to fluctuations in factors such as: quantity of listed companies, number of companies registered for trading; trading volume and trading price; the number of members of the Vietnam Stock Exchange; value of winning bonds, plan and scale of capital mobilization through bond issuance; bond trading value.

As for Vietnam Securities Depository and Clearing Corporation, the objective factors to be excluded include the change in revenue from professional activities due to fluctuations in the following factors: volume of deposited securities during the year; the value of securities registered (for the first time) made in the year and the number of additional registrations of securities; the value of payment of principal and interest on government debt instruments, government guarantee bonds, local government bonds, etc.

Regarding financial management regulations, regulations on supervision and evaluation of operational efficiency for subsidiaries of the Vietnam Stock Exchange, the Decree stipulates that the Vietnam Stock Exchange promulgates the regulation on financial management and the regulation on supervision and evaluate the performance of subsidiaries.

Accordingly, the regulation on the financial management of the subsidiary includes the following basic contents: charter capital, capital mobilization and external capital investment; investment, construction, procurement of fixed assets, asset management; subsidiary's revenue; expenses of the subsidiary; distribution of net income after tax and provision of funds.