The Ministry of Finance is collecting opinions to develop a decree amending and supplementing articles of Decree No. 156/2020/ND-CP of the Government prescribing penalties for administrative violations in the field of securities as well as the securities market.

Principles of sanctioning administrative violation in the field of securities
are amended and supplemented. Source: Internet.

Compared with Decree 156/2020/ND-CP, this draft decree has amended and supplemented Article 5 of Decree 156, further clarifying the principles of sanctioning administrative violations on securities and securities market.

The draft stipulates organisations and individuals shall only be sanctioned for administrative violations in securities and the securities market when committing administrative violations in securities and securities market as prescribed in the provisions of this decree.

Organisations and individuals that commit many acts of administrative violations shall be sanctioned for each violation, except in the following cases:

Firstly, a case at a time when a competent person detects that an organisation or individual has committed an administrative violation that has previously committed such an administrative violation but it has not been handled and the time limit has not expired. The solution is sanctioning an administrative violation with the highest frame of monetary penalty among the acts committed stipulated in the provisions of this draft decree and apply the aggravating circumstances of the administrative violation many times.

Secondly, if an organisation or individual is late or fails to disclose information, reports many documents that must be disclosed, reported at the same time as prescribed, they will be sanctioned for one act of failing or late disclosure of information and reports as prescribed in this decree and apply aggravating circumstances for repeated administrative violations.

Thirdly, in case an organisation or individual fails to report on an expected transaction in the month, including buying or selling transactions with different transaction values, the penalty framework will be determined according to the total purchase value or the highest total selling value in that month.

Fourth, if the case is that at a time when the competent person discovers the organisation or individual does not report on the expected transaction or transaction outside when the Vietnam Stock Exchange or its subsidiary discloses information or exceeding the registered value in different months with different values of traded securities, the sanction will be based on the total value of traded securities of the months in which the organisation or individual violates and applies aggravating circumstances for the administrative violation many times.

Fifthly, if the case is at a time when the competent person discovers organisations or individuals do not report on trading results, or fail to report on time about the results of transactions in different months with different traded securities value. The sanction will be based on the highest trading value of securities among the acts specified in this decree and apply the aggravating circumstances of administrative violations many times.

Sixthly, the case is at a time when the competent person discovers an organisation or individual has performed many transactions, leading to a change in the percentage of shares or exchange traded fund that they own more than the threshold of 1% of the total number of voting shares or when owning 5% of the exchange traded fund or more of the voting shares of a public company, public securities investment company or exchange traded fund or when no longer a major shareholder, investor owns 5% or more of exchange traded fund certificates of a closed-end fund but fails to report or fails to report on time. This will be sanctioned for an act of failure to report or report not on time as prescribed in this decree and apply aggravating circumstances for repeated administrative violations.

Regarding the fine level, the draft decree maintains the same fine level as specified in Decree 156/ND-CP (the maximum fine level in the sanctioning of administrative violations for other violations in the field of securities is VND 3 billion for organisations and VND 1.5 billion for individuals).

However, the draft of this decree supplements the provisions that when determining the fine level for organisations and individuals that violate aggravating and extenuating circumstances, the aggravating circumstances will be reduced following the principle that one aggravating circumstance will be reduced if there is one extenuating circumstance.

When imposing fines, the specific fine level for an act of violation in the securities and securities market sector is the average of the fine frame prescribed for that act. If there are extenuating circumstances, the lowest level of the fine frame will be applied; if there are aggravating circumstances, the highest level of the fine frame shall be applied.

In the principle of application of forms of suspension of securities operations, the draft stipulates that when determining the duration of suspension of operations or revoking the right to use the representative office operation registration certificate or practice certificate of securities for violating organisations and individuals that have both aggravating and extenuating circumstances, they will be entitled to reduction of aggravating circumstances under the principle that aggravating circumstance will be reduced if there is one extenuating circumstance.

The time limit for operation suspension, revoking the right to use a representative office operation registration certificate or a specific securities practice certificate for a violation in the field of securities and securities market is the average of the timeframe specified for the behaviour. If there are extenuating circumstances, the shortest level of the time frame will be applied; if there are aggravating circumstances, the longest level of the time-frame shall apply.