Foreign investors allowed to establish commodity exchanges in Vietnam

As from 1 June 2018, foreign investors may (i) contribute capital to establish commodity exchange (“CE”); and (ii) purchase shares of or pay capital to the CE established in Vietnam at a proportion of not exceeding 49% of the charter capital of the CE.

In addition, foreign investors are also allowed to engage in commodity trading through the CE as clients or as members of the CE (brokerage member, trading member) at unlimited owned proportion of the charter capital.

For the establishment of the CE, the Establishment License of the CE will no longer be simultaneously the Enterprise Registration Certificate. Investors must establish enterprises in accordance with the Law on Enterprises and the Law on Investment with proper registered business lines before applying to the Ministry of Industry and Trade for being issued with a license for establishment of the CE.

Moreover, a number of conditions on the establishment of the CE have been removed, such as conditions on diplomas, working time and civil legal capacity of the Director or General Director of the CE. Instead, the CE will meet the new conditions on the information technology systems as follows:

(a) The server system is stable and at least one backup server is always available in the event of a major system failure;

(b) The server system ensures data backup of business applications, transaction data, ensures the recovery of data information in case of incidents;

(c) Application software must comply with the requirements of intellectual property rights in accordance with the laws;

(d) The software system must have a log function to keep track of all transactions of goods, payments, deliveries in the business process for at least 5 years; and

(e) Information technology system must satisfy the technical standards for the safety of network information, if any.

The above are some highlights of Decree No. 51/2018 /ND-CP promulgated by the Government on 9 April 2018 to amend and supplement a number of provisions of Decree No. 158/2006/ND- CP guiding the Commercial Law on trading activities through the CE after more than ten (10) years of application of such Decree. Decree No. 51/2018/ND-CP will officially take effect as from 1 June 2018.