In the booming period of the Vietnamese capital market, a lot of investment funds have seen the prospect and jumped into the market.

Together with the money contribution, the fund certificate IPO, the investment policy and other matters, the organisational structure of the open-ended fund should also be taken into consideration. Under the laws of Vietnam, the decision-making structure of an open-ended fund must include (i) the General meeting of investors; and (ii) the Board of representatives.

General meeting of investors

The annual General Meeting of investors is the highest decision-making authority of a fund under the law of Vietnam. Their scope of power spans a wide range of decisions such as amendments to the charter, fundamental changes of the investment policy, dividend distribution, or election of representatives of the board.

The meeting must be convened and held within 04 months of the end of the fiscal year. If the Board of representatives request for the extension, the General meeting of investors may be held on a later date, but must not exceed 06 months upon the end of the fiscal year. Also, the charter of the fund may allow and specify the procedures for written circular resolution.

In addition, the fund managers are obligated to call the extraordinary General meeting of investors upon the occurrence of a number of special events listed in the law and the fund charter.

Board of representatives

The Board of representatives must comprise at least 03 members but must not exceed  11 members, who are elected by General meeting of investors in a personal meeting or by means of the written circular resolution. 2/3 of which must be non-executive members who are not related persons of the fund manager, custodian bank or their authorized representatives and they must qualify for criteria set out in the fund charter.

In addition, in the Board of representatives, there must be

• at least 01 independent member with professional qualifications and experience in the field of accounting and auditing;
• at least 01 independent member with professional qualifications and experience in securities investment analysis or asset management; and
• at least 01 member has professional qualifications in law.

The Board of representatives must hold its meeting quarterly or upon request of the fund manager, the meeting is organized in accordance with the regulations applicable to the board of directors.

It should be noted that the quorum for its meeting is 2/3  of the total members, of which the non-executive members must be the majority.  As the law allows absentee voting, the resolutions of the Board shall be ratified if the below requirements are satisfied:

(i) the majority of total members cast their affirmative votes; and

(ii) the majority of the non-executive members cast their affirmative votes.

Investment Committee

In addition to the two decision making authorities of the fund above, the Investment Committee may also be set up to carry out the investment activities of the fund, instead of engaging only the investment team of the fund manager. It is notable that this option may be a divide between jurisdictions and policies of the investors.

For instance, the investment committee may be responsible for monitoring the investment management policies of the funds in accordance with the objective of the funds. The investment committee meetings may be held quarterly or monthly in performing the following functions: (i) select appropriate strategies to achieve the proper performance of the fund in accordance with the fund management policies and the charter; (ii) ensure that the strategies selected are properly and efficiently implemented by the fund manager; and (iii) actively monitor, measure and evaluate the fund management performance of the fund manager.