1. Introduction

In the context of Vietnam’s rapidly developing—but still under-penetrated—financial market, fund management companies (FMCs) play a central role in mobilizing indirect investment, allocating capital, and professionalizing the securities market. However, participation by investment funds and the popularity of fund products in Vietnam remain significantly lower than in many regional peers.

According to Mr. Phạm Tiến Đạt of the Institute for Strategic and Financial Policy (March 2025):

• Fund assets amount to only about 6 % of GDP in Vietnam, versus 70 % in South Korea, 21 % in Thailand, and 53 % in Malaysia;
• Only 1 % of the population invests via open-end funds in Vietnam, compared to 34 % in Japan, 53 % in South Korea, and 57 % in the United States;
• Retail investors account for 85 % of daily trading volume—far higher than in developed markets—diminishing the role of professional investors and exacerbating market risk.

See also: “Regulation of the French Securities Market for Foreign Investors.”

2. Legal Framework Governing FMCs

Licensing Conditions

• Charter capital: Minimum VND 25 billion (Clause 2, Article 175, Decree 155/2020/ND-CP).
• Personnel: At least one General Director (or Director) and, if applicable, a Deputy General Director.

Requirements for the General Director (Director)

• Not under criminal investigation, serving a prison term, or subject to securities-related practice bans.
• Minimum 4 years’ experience in financial-securities-banking-insurance operations or in corporate finance, accounting or investment.
• Possession of a fund management license or equivalent certificate as prescribed by the Government.
• No securities-related administrative sanctions within six months prior to application.

Specialist Staff

• At least five employees holding fund-management practice licenses.
• At least one dedicated compliance officer.

Scope of Activities (Article 73, Securities Law)

• Management of investment funds;
• Discretionary portfolio management;
• Investment advisory services.

Duties and Responsibilities (Articles 89–90, Securities Law; Circular 99/2020/TT-UBCK)

• Full transparency of information;
• Segregation of fund assets from corporate assets;
• Compliance with governance and internal-control standards.

Application Dossier for an FMC License

1. Application form.
2. Minutes/Resolution of establishment (company name, address, business lines, charter capital, ownership structure, approval of the Charter, legal representative).
3. Premises documents (lease or title deeds; facilities statement).
4. Key personnel dossier (roster and personal data plus judicial record of the Board of Directors, Chairman of the Members’ Council, Chairman, and General Director).
5. Shareholder/capital-contributor dossier:
   • Individuals: Personal data; judicial record for any individual holding ≥ 5 % of charter capital.
   • Organizations: Business Registration Certificate; Charter; capital-contribution resolution and power-of-attorney; representative’s personal data; audited financial statements for the two preceding years; SBV/MoF approval if applicable.
6. Written commitment to comply with Point c, Clause 2, Article 74 and Point c, Clause 2, Article 75 of the Securities Law.
7. Decision issuing operational, internal-control, and risk-management procedures.
8. Draft Company Charter.

Licensing Procedure

• Facilities inspection: The State Securities Commission (SSC) inspects premises
• New license issuance:
  a. Within 20 days of a complete dossier, the SSC issues a notice requiring completion of facilities, capital-lockup (invested in facilities with remaining charter capital frozen in a bank account), and staffing.
  b. If within 3 months of that notice the applicant fails to comply, the SSC may refuse the license.
  c. Within 5 working days of receiving the capital-lockup certificate, facilities-inspection report, and other valid documents, the SSC will grant the license or, if refusing, issue a written explanation.

3. Current Status and Legal Barriers

As analyzed by Mr. Phạm Tiến Đạt:

• Stock‐market downturn and heavy retail outflows reduced open-end fund investors to just 422,900 by end-2024.
• Lack of tax incentives for fund investors compared to developed markets.
• Unclear ESG and fintech investment regulations, despite global trends.
• Cumbersome fund registration procedures.
• Foreign‐ownership limits in FMCs hinder strategic investor attraction.
• Retail investor short-term mindset and low product diversity.
• IPO market unattractiveness, low liquidity, and weak transparency deter foreign investors.
• Sectors such as banking, technology, insurance, and fintech hold potential for new fund products.

4. Recommendations for Legal Enhancement

According to Ms. Nguyễn Thị Hằng Nga, CEO of Vietcombank Fund Management:

• Breakthrough policies on distribution and taxation to accelerate market development.
• Bank distribution of fund certificates to leverage banks’ networks (e.g. DBS, Standard Chartered—in Vietnam via Private Banking).
• Investor protection through guidance by reputable banks, reducing participation in unregulated channels.
• Long-term tax incentives to encourage sustained capital allocation to funds.
• International best practices: e.g. Thailand’s exemption of individual income tax on long-term fund investments (up to THB 500,000/year, approx. USD 15,000).

5. Conclusion

Vietnam’s legal framework for fund management companies is largely complete, providing a solid foundation for industry growth. To capitalize on the opportunity to mobilize and allocate medium-to-long-term capital, enhance professionalism, protect investors, and boost regional competitiveness, regulations must be continuously refined and updated in tandem with appropriate incentive policies.

Note: This article reflects regulations in force as of May 2025. For the most accurate and comprehensive information, readers should consult the latest legal documents or contact HMLF’s legal and financial experts.

Harley Miller Law Firm

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