Proposal to increase penalties for administrative violations in the securities sector

Proposal to increase fines from VND 2 billion to VND 2.5 billion for acts of falsifying documents, confirming on fake documents proving eligibility to offer, issue shares, convertible bonds, bonds with individual warrants.

Proposal to increase fines from VND 2 billion to VND 2.5 billion for acts of falsifying documents, confirming on fake documents proving eligibility to offer, issue shares, convertible bonds, bonds with individual warrants.

The Ministry of Finance is seeking comments on the draft Decree amending and supplementing a number of articles of Decree No. 156/2020/ND-CP regulating administrative sanctions for violations in the field of securities and the securities market, Decree No. 128/2021/ND-CP amending and supplementing Decree No. 156/2020/ND-CP, Decree No. 158/2020/ND-CP on derivative securities and the derivative securities market.

The Ministry of Finance said that Decree No. 156/2020/ND-CP and Decree No. 128/2021/ND-CP amending and supplementing Decree No. 156/2020/ND-CP have created a legal basis for strict handling of violations in the securities market. However, the Securities Law 2019 has been amended and supplemented by Law No. 56/2024/QH15, Decree No. 155/2020/ND-CP dated December 31, 2020 of the Government detailing the implementation of a number of articles of the Securities Law is being proposed for amendment and supplementation. Therefore, it is necessary to amend and supplement the provisions on acts and sanctions in the Decree on administrative sanctions in the securities sector to ensure the implementation of the amended and supplemented contents of the Securities Law and Decree No. 155/2020/ND-CP.

In addition, the implementation of Decree No. 156/2020/ND-CP, amended and supplemented according to the provisions of Decree No. 128/2021/ND-CP, has so far also raised some difficulties, such as: regulations on the principles of sanctioning and determining the level of fines for organizations and individuals who commit administrative violations many times need to be clarified and adjusted to be consistent with the Decree amending Decree 118/2021/ND-CP guiding the Law on handling administrative violations that is being developed; regulations on violations of regulations on private offering and issuance of bonds are different in nature from violations of regulations on public offering and issuance of shares and public offering and issuance of bonds (in terms of conditions, obligations, procedures, subjects); violations of regulations on the activities of securities companies and branches of foreign securities companies need to be reviewed and amended to be more suitable to reality; Violations of regulations on transactions by insiders and related persons are adjusted in accordance with the expected adjustment of the principle of sanctioning multiple administrative violations...; some regulations on sanction levels and additional sanction forms, through practice, show that they need to be amended and supplemented to suit the nature and extent of some administrative violations, to ensure deterrence and prevention of violations, contributing to the stable development of the stock market.

Accordingly, the Draft proposes to amend and supplement Article 8 of Decree No. 156/2020/ND-CP regulating administrative sanctions for violations in the field of securities and the securities market, which has been amended and supplemented with a number of articles according to Decree No. 128/2021/ND-CP as follows:

Violations of regulations on offering and issuing private shares, private convertible bonds, and bonds with private warrants by public companies, securities companies, and securities investment fund management companies:

1. A fine of VND 50 million to VND 70 million shall be imposed for acts of buying back bonds before maturity or exchanging bonds without approval or buying back bonds before maturity or exchanging bonds not in accordance with the approved plan.

2. A fine of 70 million to 100 million VND for one of the following violations:

Offering and issuing shares, convertible bonds, bonds with individual warrants not within the prescribed time; Not announcing the report on capital use, the amount of money collected from the offering or issuance audited by an approved auditing organization at the annual General Meeting of Shareholders, the Board of Members, reporting to the company owner or not explaining in detail the use of capital, the amount of money collected from the offering or issuance in the audited annual financial report, except for the case of offering convertible bonds, bonds with individual warrants...

3. A fine of between VND 100 million and VND 150 million shall be imposed for one of the following violations:

Do not amend or supplement the registration dossier for offering and issuing shares, convertible bonds, bonds with individual warrants. When detecting incorrect information or missing content as required in the dossier or when information arises related to the submitted dossier or dossier submitted to the competent organization or individual; Offering or issuing shares, convertible bonds, bonds with individual warrants that are not in accordance with the plan registered with the State Securities Commission or the plan approved in the offering or issuance dossier...

4. A fine of between VND 200 million and VND 300 million shall be imposed for one of the following violations:

Changing the plan for using capital or money collected from a private offering or issuance without approval from the General Meeting of Shareholders or the Board of Directors or the Board of Members or the Chairman of the Company or the Owner of the Company or changing the plan for using money collected from a private offering or issuance without authorization from the General Meeting of Shareholders; changing the plan for using capital or money collected from a private offering or issuance when authorized by the General Meeting of Shareholders with a change of 50% or more of the capital or money collected from the offering or issuance; failing to report the change in the plan for using capital or money collected from the offering or issuance at the most recent General Meeting of Shareholders; Using the proceeds from the offering or private placement not in accordance with the plan approved by the General Meeting of Shareholders or the Board of Directors of the company or the Board of Members or the Chairman of the company or the Owner of the company or the content disclosed to investors or the content reported to the competent state management agency or approved by the competent authority.

5. A fine of between VND 300 million and VND 400 million shall be imposed for one of the following violations:

Offering and issuing shares, convertible bonds, bonds with individual warrants without fully meeting the conditions prescribed by law; offering and issuing shares, convertible bonds, bonds with individual warrants without registering with the State Securities Commission or without the State Securities Commission notifying in writing the offering and issuing organization and announcing on the State Securities Commission's website that it has received a complete application for offering and private issuance from the offering and issuing organization; Changing the terms and conditions of issued bonds not in accordance with the law.

6. A fine of VND 500 million to VND 600 million (instead of the current fine of VND 400 million to VND 500 million in Decree 156/2020/ND-CP) shall be imposed on the act of preparing and confirming registration dossiers for offering and issuing shares, convertible bonds, bonds with individual warrants with false or untrue information or concealing the truth.

7. A fine of VND 2 billion to VND 2.5 billion (instead of the current fine of VND 1 billion to VND 1.5 billion in Decree 156/2020/ND-CP) shall be imposed for the act of falsifying documents, confirming on fake documents proving eligibility for offering and issuance in the registration dossier for offering and issuing shares, convertible bonds, and bonds with individual warrants.

Proposal to increase fines from VND 2 billion to VND 2.5 billion for acts of falsifying documents, confirming on fake documents proving eligibility to offer, issue shares, convertible bonds, bonds with individual warrants.

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