Circular No. 02/2008/TT-NHNN dated April 2, 2008 of the State Bank of Vietnam guiding the implementation of the Government’s Decree No. 28/2005/ND-CP dated March 9, 2005, on organization and operation of small-sized financial institutions in Vietnam, and Decree No. 165/2007/ND-CP dated November 15, 2007, amending, supplementing and annulling a number of articles of the Government’s Decree No. 28/2005/ND-CP dated March 9, 2005, on organization and operation of small-sized financial institutions in Vietnam

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Issuing body:	State Bank of Vietnam	Effective date:	Known Please log in to a subscriber account to use this function. Don’t have an account? Register here
Official number:	02/2008/TT-NHNN	Signer:	Tran Minh Tuan
Type:	Circular	Expiry date:	Known Please log in to a subscriber account to use this function. Don’t have an account? Register here
Issuing date:	02/04/2008	Effect status:	Known Please log in to a subscriber account to use this function. Don’t have an account? Register here
Fields:	Finance - Banking

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THE STATE BANK OF VIETNAM -----	SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ----------
No. 02/2008/TT-NHNN	Hanoi, April 2, 2008

CIRCULAR

GUIDING THE IMPLEMENTATION OF THE GOVERNMENT'S DECREE No. 28/2005/ND-CP OF MARCH 9, 2005, ON ORGANIZATION AND OPERATION OF SMALL-SIZED FINANCIAL INSTITUTIONS IN VIETNAM, AND DECREE No. 165/2007/ND-CP OF NOVEMBER 15, 2007, AMENDING, SUPPLEMENTING AND ANNULLING A NUMBER OF ARTICLES OF THE GOVERNMENT'S DECREE No. 28/2005/ND-CP OF MARCH 9, 2005, ON ORGANIZATION AND OPERATION OF SMALL-SIZED FINANCIAL INSTITUTIONS IN VIETNAM

On March 9, 2005, the Government promulgated Decree No. 28/2005/ND-CP, on organization and operation of small-sized financial institutions in Vietnam, then on November 15, 2007, Decree No. 165/2007/ND-CP, amending, supplementing and annulling a number of articles of Decree No. 28/2005/ND-CP. Below the State Bank Governor guides the implementation of a number of specific contents of these decrees:

I. GENERAL PROVISIONS

1. Governing scope and subjects of application

1.1. This Circular guides the implementation of a number of contents of Decree No. 28/2005/ND-CP on March 9, 2005, on organization and operation of small-sized financial institutions in Vietnam (below referred to as Decree No. 28/2005/ND-CP for short) and Decree No. 165/2007/ND-CP on November 15, 2007, amending, supplementing and annulling a number of articles of Decree No. 28/2005/ND-CP (below referred to as Decree No. 165/2007/ND-CP for short).

1.2. Unless otherwise provided for by this Circular and relevant particular legal documents, the Enterprise Law and the Law on Credit Institutions apply to organization and operation of small-sized financial institutions.

2. Interpretation of terms

In this Circular, the terms below are construed as follows:

2.1. Small-sized credit means loans of small value, secured or unsecured, provided to low-income individuals or households for use to generate income and improve their living conditions. A loan for a customer is called small-sized credit when the total outstanding debt owed to the small-sized financial institution by that customer does not exceed VND 30 million. This lending rate may be adjusted by the State Bank Governor in each period.

2.2. Executives include the general director (director), deputy general directors (deputy directors), chief accountant, chief internal auditor (if any) and other executive positions specified by the Charter of a small-sized financial institution.

2.3. Managers include owners, members of the Members' Assembly, chairman and members of the Management Board, general director (director) and other managerial positions specified by the Charter of a small-sized financial institution.

2.4. Direct relative of a person means the wife, husband, father, adoptive father, mother, adoptive mother, a child, an adopted child or a sibling of that person.

2.5. Vietnamese non-governmental organization means an organization established and operating under the Government's Decree No. 88/2003/ND-CP of July 30, 2003, on organization, operation and management of associations.

2.6. Country of origin of a foreign capital-contributing party means the country in which a foreign organization is established or registers its head-office location or the country in which a foreigner registers his/her citizenship.

2.7. Foreign organization or individual means an organization established under a foreign law or registering its head-office location in a foreign country, a foreigner or an overseas Vietnamese.

2.8. Authorized representative means an individual authorized in writing by capital-contributing parties to exercise their rights on their behalf at a small-sized financial institution.

2.9. Founding members are members (individuals, organizations) contributing capital, involved in the formulation and approval of, and signing the first charter of a small-sized financial institution.

2.10. Re-organization means the division, split, consolidation, merger, acquisition or transformation of a one-member limited liability company into a limited liability company with two or more members, and vice versa.

3. Types of small-sized financial institution

A small-sized financial institution may be established in the form of a limited liability company, taking responsibility for its debts and other asset liabilities corresponding to the size of its charter capital, specifically:

3.1. A small-sized financial institution in the form of one-member limited liability company is the one owned by a Vietnamese socio-political organization.

3.2. A small-sized financial institution in the form of limited liability company with two or more members is the one established with capital contributed by two or more organizations defined in Clause 2. Article 1 of Decree No. 28/2005/ND-CP or with capital contributed by one or more of these organizations together with one or more of other domestic or foreign individuals and organizations; such a small-sized financial institution has no more than 5 capital-contributing members, except for cases permitted by the State Bank Governor.

4. Use of the term of small-sized financial institution

Only small-sized financial institutions with establishment and operation licenses granted by the State Bank may use the term of "small-sized financial institution" in any language in their names or titles or as a supplement to their names or titles or in the titles of their invoices, documents, notices, advertisements or descriptions of their business activities.

5. Charter capital

5.1. Charter capital of a small-sized financial institution is contributed in cash or kind.

a/ Capital contributed in cash:

- Capital-contributing members being Vietnamese organizations or individuals shall contribute charter capital in Vietnam dong;

- Capital-contributing members being foreign organizations or individuals may contribute capital in freely convertible foreign currencies or Vietnam dong. If they contribute capital in freely convertible foreign currencies, the contributed capital amounts must be converted into Vietnam dong according to the exchange rates announced by the State Bank at the time of conversion.

b/ Capital contribution in kind: Kind must be assets with lawful papers evidencing their ownership rights or use rights (for land) and assets used directly for operations of a small-sized financial institution. The valuation and transfer of ownership rights to assets contributed as capital comply with current provisions of Vietnamese law. The amount of charter capital contributed in kind must not exceed 5% of the total charter capital amount of a small-sized financial institution.

5.2. With regard to organizations that have conducted small-sized financial operations before this Circular takes effect, their own capital shall be included in the charter capital of small-sized financial institutions. Own capital of such organizations includes allocated capital, aid capital, contributed capital, raised capital or capital of the nature of raised capital, funds (reserve fund for capital supplementation, financial provisions-professional development investment fund) and undivided profit, after offsetting losses, including accumulated losses. The State Bank shall determine own capital of such an organization the basis of:

a/ Dossiers and papers evidencing the receipt of capital, contribution of capital and/or equivalent documents;

b/ Financial statements already audited by an independent audit organization on the list of those publicized by the Finance Ministry as qualified for enterprise audit, which are made within 6 months prior to the submission of the application and dossier for the establishment of a small-sized financial institution;

c/ Commitment(s) of person(s) applying for a license regarding the own capital of the organization at the time of application and commitment to promptly notify the State Bank of any fluctuations which may affect the value of this own capital amount until a license for the establishment of a small-sized financial institution is granted;

d/ Opinions of the State Bank's Inspectorate on capital sources of the organization.

6. Proportions and mode of charter capital contribution

Proportions and mode of charter capital contribution by capital-contributing members of a small-sized financial institution in the form of limited liability company with two or more members shall be agreed upon by the parties and stated in the charter. Capital contribution proportions must ensure that:

6.1. The total capital amount contributed by foreign organizations and individuals is less than 50% of charter capital of the small-sized financial institution, except for special cases decided by the Prime Minister.

6.2. The total capital amount contributed by organizations defined in Clause 2, Article 1 of Decree No. 28/2005/ND-CP represents at least 25% of charter capital and makes the highest proportion compared with the amount of capital contributed by each of the remaining members.

7. Transfer of capital shares

7.1. For a small-sized financial institution in the form of one-member limited liability company: The owner may transfer the whole or part of his/her/its capital shares to other organizations or individuals or transfer all of his/her/its contributed capital amount to other organizations or individuals or to Vietnamese socio-political organizations, provided that he/she/it satisfies the conditions prescribed in Clause 7, Article 8 of Decree No. 28/2005/ND-CP (amended and supplemented under Clause 5, Article 1 of Decree No. 165/2007/ND-CP).

If, after the transfer, the contributed capital of the small-sized financial institution is owned by two or more capital-contributing members, that institution must be converted into the one in the form of limited liability company with two or more members and comply with the provisions applicable to this form of company.

7.2. For a small-sized financial institution in the form of limited liability company with two or more members: Capital-contributing members in the institution may transfer part or the whole of their contributed capital according to the following provisions:

a/ They must transfer their capital shores to other capital-contributing members in the institution in proportion to the latter's capital shares in that institution under the same conditions;

b/ They may transfer their capital shares to other organizations and individuals only if the remaining capital-contributing members in the institution refuse to buy or do not buy all their shares within 30 days after they offer the transfer. The transfer of capital shares to organizations and individuals other than the remaining capital-contributing members of the small-sized financial institution must be combated under conditions not more preferential than the conditions prescribed at Point 7.2, Item a of this Clause.

7.3. The transfer of capital is subject to advance approval by the State Bank.

8. Profit sharing

8.1. Capital-contributing members of a small-sized financial institution shall share profits in proportion to their capital shares, unless they have otherwise mutually agreed in writing.

8.2. The Members' Assembly (owners) may reach written agreement on non-sharing of profit and use of part or the whole of profit to increase the institution's own capital.

8.3. The profit-sharing principle must be prescribed in the charter of the small-sized financial institution.

II. PROVISIONS ON THE GRANT OF ESTABLISHMENT AND OPERATION LICENSES TO SMALL-SIZED FINANCIAL INSTITUTIONS

9. Conditions for being granted establishment and operation licenses (referred to as licenses for short)

9.1. Having the demand for small-sized financial operations.

9.2. Having the opinion of the People's Committee of the province or centrally run city where the small-sized financial institution will locate its head office on the necessity to establish this institution in the locality.

9.3. Having charter capital at least equal to the charter capital level prescribed in Clause 2, Article 1 of Decree No. 165/2007/ND-CP.

9.4. Having a working office, material foundations, technological and information systems to ensure operations of a small-sized financial institution.

9.5. Having administrators, controllers and executives with full civil act capacity and professional qualifications suitable to operations of a small-sized financial institution.

9.6. Having a feasible business plan for the first three years of operation.

9.7. With regard to a small-sized financial institution established in the form of limited liability company with two or more members: At least one of its capital-contributing members is an organization defined in Clause 2, Article 1 of Decree No. 28/2005/ND-CP, fully meeting the following conditions:

a/ Directly engaged in the management and/ or administration of one or some organizations, programs or projects providing compulsory savings-receiving and small-sized credit-granting services in Vietnam for three years before the time of application for a license;

b/ Being able to prove safe and sustainable management, control and administration of small-sized financial operations for at least one year before the time of application for a license, specifically:

- The total outstanding debts of customers with overdue debts represents less than 5% of the total outstanding loan debts of the small-sized financial institution (PAR);

- The total income from small-sized financial operations is enough to offset expenses, including expenses for capital raising, administrative affairs and credit risk provisions.

c/ Being not subject to examination for handling of administrative violations in the financial or monetary domain or having redressed any violations in this domain at least one year before submitting the dossier of application for a license;

d/ Its contributed capital amount in the small-sized financial institution must reach the percentage specified in Clause 6, Point 6.2 of this Circular.

9.8. With regard to small-sized financial institutions established in the form of one-member limited liability company: The owner must be a socio-political organization lawfully established and operating in Vietnam which meets the conditions prescribed at Point 9.7, Items a, b and c of this Clause, except for special cases permitted by the Prime Minister.

9.9. With regard to foreign-invested small-sized financial institutions: Apart from the conditions set at Points 9.1 thru 9.7 of this Clause, a foreign capital-contributing member must be permitted by a competent agency of the country of origin to contribute capital to a small-sized financial institution in Vietnam.

10. Dossier of application for a license

10.1. Application for a license (Appendix 1, not printed herein):

a/ With regard to a small-sized financial institution established in the form of one-member limited liability company: The application must be signed by the at-law representative or an authorized representative of the socio-political organization;

b/ With regard to a small-sized financial institution established in the form of limited liability company with two or more members: The application must be signed by founding members or their authorized representatives.

10.2. Draft charter: The charter of a small-sized financial institution is the major document that determines the organizational, administration and executive apparatus of the institution. The first charter of a small-sized financial institution must be approved and signed by its owner or founding members. The charter must conform to the law and have the following principal contents:

a/ Name of the small-sized financial institution;

b/ Address of its head office;

c/ Major contents and scope of its operation;

d/ Charter capital and mode of capital contribution;

e/ Rights and obligations of the owners and capital-contributing members;

f/ Mode of election, appointment and dismissal of members of the Management Board, the general director (director) and the Control Board;

g/ Tasks and powers of the Members' Assembly, the Management Board, the Control Board and the general director (director);

h/ At-law representative of the small-sized financial institution;

i/ Financial, accounting, inspection, internal control, internal audit and risk management principles; reporting and information publicity regimes;

j/ Mode of sharing profit and handling losses of the small-sized financial institution;

k/ Procedures for settlement of internal disputes;

l/ Procedures for amendment and supplementation of the charter;

m/ Cases of dissolution and dissolution procedures;

n/ Signature(s) of the owner (for one-member small-sized financial institution) or all founding members (for small-sized financial institution with two or more members).

10.3. Operation plan for the first three years, clearly stating:

a/ Operation objectives of the small-sized financial institution;

b/ Projected operation area and branch locations (including new and/or existing branches, for organizations that have been conducting small-sized financial operations);

c/ Criteria for small-sized financial customers and estimated number of individuals and households which satisfy this criterion in the projected operation area;

d/ Products and services to be provided to small-sized financial customers and other customers, and regulations and conditions to be applicable to each product or service;

e/ Projected organizational structure and personnel;

f/ Information and communication technology to be used;

g/ Risk management systems, including inspection, internal control and internal audit systems;

h/ Balance sheet, profit and loss statement, portfolio of loans forecasted for subsequent three financial years;

i/ The institution's expected social impacts in the locality.

10.4. Opinion of the People's Committee of the province or centrally run city where the small-sized financial institution is to locate its head office on the necessity to establish this institution in the locality.

10.5. a/With regard to a small-sized financial institution to be established in the form of limited liability company with two or more members: The list of founding members, capital contribution levels (stating capital amounts contributed in Vietnam dong, foreign currencies or other assets, and capital share of each member must be stated), capital contribution plan (stating capital contribution mode and schedule), commitment of each founding member and the following enclosed papers:

- For founding members being individuals:

+ Copies of the people's identity card, passport or other lawful personal identification certificate;

+ Resume (Appendix 2, not printed herein);

- For founding members being organizations established and operating in Vietnam:

+ Copies of the establishment and operation decision or license or an equivalent document, proving the lawful establishment and operation in Vietnam;

+ Business register certificate (for enterprises);

+ Written mandate, people's identity card, passport or other lawful personal identification certificate of the authorized representative;

+ Current charter or an equivalent document;

+ Report on the operation situation of the organization over the last three years;

+ Some relevant information: purpose of contribution of capital to the small-sized financial institution; administration, executive, inspection, internal control and internal audit system;

+ Detailed declaration on all investigation or prosecution activities related to the organization or proving that the organization is free from any investigation or prosecution for the last 10 years;

+ Declaration on contributed capital or equities of founding members at credit institutions and other enterprises;

A founding member which is a unit attached to a group must supply information on the main scope of operation of that group together with an organizational diagram of the group and detailed information on whether the group has and/or holds equities at other credit institutions.

- For founding members being foreign organizations:

Apart from papers specified at Point 10.5, Item a of this Clause as required for founding members being organizations set up and operating in Vietnam, a foreign organization shall submit:

+ Business registration certificate or equivalent paper authenticated by the agency where that organization has registered within 3 months prior to the date of submission of the dossier of application for establishment and operation of the small-sized financial institution;

+ Document of a competent foreign agency permitting foreign organizations and individuals to contribute capital to a small-sized financial institution in Vietnam. If, under regulations of the country of origin, such document is not required, the concerned organization or individual shall clearly explain and commit to take responsibility for the accuracy of the explanation.

b/ With regard to a small-sized financial institution established in the form of one-member limited liability company:

- Copy of the establishment decision or license or an equivalent document proving the lawful establishment and operation in Vietnam;

- Written mandate, people's identity card, passport or another lawful personal identification certificate of the authorized representative;

- Current charter or an equivalent document;

- Other relevant information: purpose of contribution of capital to establish the small-sized financial institution; administration, executive, inspection, internal control and internal audit systems.

10.6. The list, resumes (Appendix 2, not printed herein) and copies of diplomas and certificates proving professional capabilities and qualifications, of members of the Management Board, the Control Board, the general director (director) of the small-sized financial institution.

10.7. Apart from the dossiers specified at Points 10.1 thru 10.6 of this Clause, the organization applying for the establishment of a small-sized financial institution shall add the following reports and documents related to small-sized financial services it has provided to customers:

a/ Brief report on its organizational structure, branch network, financial situation and services currently provided to customers;

b/ Financial statements of the last two years which have been audited by an independent audit organization;

c/ Reports on the operation and operation efficiency of each of branches to be proposed to the State Bank for further operation after the giant of a license;

d/ Papers and documents proving the amount of its own capital according to Clause 5, Point 5.2, Items a, b and c of this Circular.

10.8. The State Bank may request additional information necessary for clarifying issues related to licensing conditions.

11. Provisions on dossiers of application for licenses

11.1. A dossier of application for a license to establish a small-sized financial institution whose founding members are Vietnamese organizations and individuals must be made in two sets in Vietnamese.

11.2. A dossier of application for a license for a small-sized financial institution whose founding members are foreign organizations and individuals must be made in three sets, two in Vietnamese and one in English.

11.3. Documents in the dossier specified at Points 11.1 and 11.2 of this Clause must be originals or copies which meet the following requirements:

- Copies of papers and documents made in a foreign country must be certified by a competent agency or person of that country;

- Translations of papers and documents from English into Vietnamese must have signatures authenticated;

- Copies of papers and documents in Vietnamese must be granted from books of originals or certified that they are true copies;

- Documents made in foreign countries must be consularly legalized, including documents granted by competent agencies of the country of origin proving the legal status of the foreign organization or individual contributing capital to the small-sized financial institution (establishment license, business registration certificate, personal certification or an equivalent document); document of a foreign competent agency allowing the foreign organization or individual to contribute capital to a small-sized financial institution in Vietnam or commitment that the country of origin of the foreign organization or individual does not ban or restrict the contribution of capital to a small-sized financial institution in Vietnam.

12. Order and time limit for consideration of licensing

12.1. Within 30 working days after receiving a dossier of application for a license prescribed in Clauses 10 and 11 of this Circular, the State Bank shall issue to the applicant a written certification of the validity of the dossier or notify the latter of other required papers and documents.

12.2. Within 60 days after receiving a complete and valid dossier, the State Bank shall consider and decide on the grant or non-grant of a license. In case of non-grant, the State Bank shall give a written reply stating the reason.

13. Contents of licenses and modification of licenses

13.1. Contents and form of licenses conform to the model provided for in Appendix 3 (not printed herein).

13.2. The modification of licenses is decided in writing by the State Bank. The State Bank's decision on modification of a license constitutes an integral part of that license.

14. Business registration

After being granted a license, a small-sized financial institution shall make business registration in accordance with current law on business registration. The institution will have the legal person status from the date it is granted a business registration certificate.

15. Conditions for inauguration of operation

15.1. Within 12 months after being granted a license, a small-sized financial institution must fill in necessary procedures in order to fully meet the following conditions for inaugurating its operation:

a/ Having its charter approved by the State Bank;

b/ Having a business registration certificate;

c/ Having sufficient charter capital as prescribed at Point 9.3, Clause 9 of this Circular and a head office meeting its operation requirements;

d/ Paying a licensing fee as prescribed by the Finance Ministry;

e/ At least 30 days before the inauguration date, depositing the charter capital amount in cash into an interest-free blockaded account opened at the State Bank's branch in the province or centrally run city where the institution locates its head office.

This provision does not apply to capital shares contributed from the own capital of an organization which has been providing small-sized financial services in Vietnam.

f/ Transferring other asset ownership rights contributed as capital or land use rights (if any) to the small-sized financial institution;

g/ Notifying in writing, at least 30 days before the expected inauguration date, the official date of operation inauguration to the State Bank, the business registration agency and the People's Committee of the province or city where the small-sized financial institution locates its head office.

h/ Publicizing, at least 20 days before the expected inauguration date, in three consecutive issues of a newspaper of the locality where the institution locates its head office or of a central newspaper in Vietnamese the following main contents:

- Full name and transaction name of the small-sized financial institution;

- Address of its head office; telephone number and other means of communication;

- Charter capital;

- Contents, scope, area and duration of operation;

- Serial number and date of the license; serial number and date of the business registration certificate; names of the granting agencies;

- Full names of the chairman and members of the Management Board, heads and members of the Control Board, and executive general director (director);

- Expected inauguration date;

- Other contents as deemed necessary by the small-sized financial institution.

15.2. At least 15 days before inaugurating it operations, the small-sized financial institution shall send to the State Bank the following documents:

a/ Document certifying that the amount of charter capital contributed in cash has been deposited into the blockaded account and the legal dossier certifying the transfer of asset ownership rights contributed as capital or land use rights (for assets being land) to the institution according to Vietnamese law.

This provision does not apply to capital shares contributed from the own capital of the organization that has been conducting small-sized financial operations in Vietnam. The small-sized financial institution shall send to the State Bank reports on capital sources of and capital use by its founding members at the end of the latest month; reports on its own capital and commitments of the chairman of the Management Board and the general director (director) regarding the truthfulness of these reports.

b/ Licensing fee receipt;

c/ Business registration certificate;

d/ Documents proving ownership right or use right over the institution's head office;

e/ Numbers of newspaper issues in which the announcement of its establishment is published.

The above documents may be originals or copies according to Decree No. 79/2007/ND-CP of May 18, 2007, on the grant of copies from the original book, certification of true copies and authentication of signatures.

15.3. Upon the expiration of the 12-month time limit prescribed at Point 15.1 of this Clause, if the small-sized financial institution fails to inaugurate its operation, its license will automatically be invalidated. The State Bank shall withdraw the granted license and carry out procedures to refund the amount deposited at the blockaded account (if any) after subtracting procedural charges as prescribed.

16. Extension of licenses

16.1. At least 60 days before the expiration of its license, a small-sized financial institution shall submit to the State Bank a dossier of application for license extension, which comprises:

a/ Application for extension, addressed to the Governor of the State Bank of Vietnam and signed by the chairman of the Management Board;

b/ Document of the Members' Assembly (owner) agreeing on the application for license extension;

c/ Resolution of the Management Board on license extension;

d/ Report on the operation over the last three years, signed by the chairman of the Management Board, clearly stating the operation results, the attainment of operation safety targets according to the State Bank's regulations, the operation network, major types of customer, quantity of member customers, assessment of social impacts of the institution's operation, summary of objectives already achieved or not achieved against the plan and the projected operation strategy for the next period;

e/ Operation plan for the first three years after the license is extended, covering issues prescribed in Clause 10, Point 10.3 of this Circular;

f/ Other documents (if necessary), clarifying contents specified at Point 16.1, Items a, b, c, d and e above.

16.2. Within 30 days after receiving a complete dossier of application for license extension as prescribed at Point 16.1 of this Clause, the State Bank shall consider and decide to extend or refuse to extend the license of the small-sized financial institution. In case of refusal, the State Bank shall give reasons in writing.

16.3. The State Bank shall consider the extension of operation duration on a case-by-case basis. Each extension shall be at most equal to the operation duration stated in the old license.

16.4. Within 15 working days after having its operation license extended, the small-sized financial institution shall publish on three consecutive issues of a central or local newspaper contents specified in Clause 15, Point 15.1, Item h of this Circular.

17. Licensing fee and operation duration extension fee

17.1. The levels of the fee for the grant of a license and the fee for extension of operation duration of a small-sized financial institution comply with regulations of the Finance Ministry.

17.2. Within 15 days after being licensed, a small-sized financial institution shall pay a fee at the transaction bureau of the State Bank.

17.3. In any case, the fees prescribed at Point 17.1 of this Clause may neither be subtracted from the charter capital nor refunded.

III. ORGANIZATIONAL STRUCTURE, MANAGEMENT, ADMINISTRATION AND CONTROL

18. Organizational structure of a small-sized financial institution with two or more members

18.1. The Members' Assembly consists of all capital-contributing members and is the highest decision-making body of a small-sized financial institution.

18.2. The small-sized financial institution is managed by a Management Board, which has full power, on behalf of the institution, to decide, exercise the rights and performs the obligations of the institution, except for issues falling under the competence of the Members' Assembly. The Management Board is composed of a chairman, vice chairmen and members. A term of office of the Management Board is at most 5 years.

18.3. The Management Board of a small-sized financial institution must have at least 3 members. The number of members of the Management Board is decided by the Members' Assembly and stated in the charter of the institution.

18.4. The Management Board of a small-sized financial institution must report to and take responsibility before the Members' Assembly for the institution's business results.

18.5. The Control Board is tasked to inspect financial operations, supervise the observance of the cost-accounting regime and safety in the operation of the small-sized financial institution, conducts internal audit in order to assess the actual business and financial situation of the institution. A term of office of the Control Board is at most 5 years.

18.6. The Control Board must have at least three members, including the head; at least half of the members shall work on a full-time basis. If the Control Board has only three members, at least one of them must work on a full-time basis. The number of members of the Control Board is decided by the Members' Assembly and stipulated in the charter of the small-sized financial institution. The head of the Control Board must reside in Vietnam throughout his/her term of office.

18.7. The Control Board shall report to the Management Board of the small-sized financial institution and takes responsibility before the Management Board and capital-contributing members for the exercise of its rights and performance of its tasks.

18.8. The general director (director) shall administer daily business activities of the small-sized financial institution. He/she shall report to and take responsibility before law and the Management Board of the small-sized financial institution. He/she must reside in Vietnam throughout his/her term of office.

18.9. One or some deputy general directors (deputy directors) shall assist the general director (director) in managing daily activities of the small-sized financial institution, and report and be answerable to the general director (director) for their assigned tasks. Deputy general directors (deputy directors) must reside in Vietnam throughout their terms of office.

18.10. The chief accountant shall assist the general director (director) in cost-accounting, bookkeeping and preserving accounting books, and take responsibility according to relevant laws. The chief accountant must reside in Vietnam through his/her term of office.

18.11. The small-sized financial institution must establish an internal inspection and control system and observe regulations on internal inspection and control according to Section 4, Chapter II of the Law on Credit Institutions.

19. Organizational structure of a small-sized financial institution being a one-member limited liability company

19.1. The owner of a small-sized financial institution shall appoint one or several authorized representatives in order to exercise the rights and perform the obligations in accordance with law. The owner may replace the authorized representative. In case two or more persons are appointed authorized representatives, the Members' Assembly shall have all authorized representatives.

19.2. Provisions of Points 18.2 thru 18.11, Clause 18 of this Circular, apply to one-member limited liability small-sized financial institutions. If the owner appoints one authorized representative, that representative has full power to exercise all rights stipulated at Point 18.1, Clause 18 of this Circular, as well as other common rights and obligations of capital-contributing members at the small-sized financial institution with two or more members.

20. At-law representative

The chairman of the Management Board or the general director (director) is the at-law representative of a small-sized financial institution according to its charter. The at-law representative of a small-sized financial institution must reside in Vietnam; in case of absence in Vietnam for more than 15 days, he/she must authorize in writing another person according to the small-sized financial institution's charter to exercise the rights and performs the obligations of the institution's at-law representative.

21. Cases in which holding of the same position is not allowed

21.1. The chairman of the Management Board of a small-sized financial institution may not:

a/ Participate in the Management Board, the Control Board or the executive apparatus of another small-sized financial institution or credit institution;

b/ Concurrently be the head or a member of the Control Board of the same small-sized financial institution;

c/ Concurrently be an executive of the same small-sized financial institution.

21.2. The head of the Control Board of a small-sized financial institution may not:

a/ Concurrently be the manager of the same small-sized financial institution;

b/ Be a direct relative of the manager of the same small-sized financial institution.

21.3. The general director (director) of a small-sized financial institution may not be the general director (director) or chairman of the Management Board of another small-sized financial institution or credit institution.

22. Professional qualifications of members of the Management Board the Control Board and managers

22.1. Members of the Management Board and Control Board of a small-sized financial institution must possess necessary skills, knowledge or experience to exercise their powers and fulfill their tasks efficiently.

22.2. At least one member of the Control Board of a small-sized financial institution must be an accounting and/or financial expert who is well knowledgeable about auditing, accounting and financial standards and regulations; have a university diploma on audit and/or accounting and/or finance and at least two years' experience of working in the relevant domain in the position of auditor and/or accountant and/or financial expert (if having no university diploma, he/she must have at least five years' experience of working in a managerial position related to the small-sized financial domain).

22.3. The general director (director), deputy general directors (deputy directors), the internal chief auditor (if any) and the chief accountant must possess necessary skills, knowledge, capabilities and experience to exercise their powers and fulfill their tasks effectively. The general director (director) must have a university or equivalent degree and at least three years' experience of working in a managerial position in the small-size financial domain.

23. Cases in which a person may not manage a small-sized financial institution

The following persons may not hold a managerial position at a small-sized financial institution:

23.1. Those defined in the Ordinance on Public Employees and Article 18 of Decree No. 28/2005/ ND-CP;

23.2. Borrowers, guarantors or re-guarantors for a loan of the very small-sized financial institution and their direct relatives;

23.3. Investors holding or having direct relatives holding or jointly with one or some direct relatives holding more than 10% of charter capital of an enterprise being a borrower, a guarantor or a re-guarantor for a loan of the small-sized financial institution;

23.4. Persons who fail to satisfy the State Bank's requirements on professional ethics, qualifications and skills according to Clause 22 of this Circular;

23.5. Persons who violate the charter of the small-sized financial institution.

24. Natural loss of eligibility status

24.1. The chairman or a member of the Management Board, the head or a member of the Control Board or the general director (director) of a small-sized financial institution will naturally lose his/her eligibility status in the following cases:

a/ He/she loses his/her civil act capacity or dies;

b/ He/she is prohibited from working as a member of the Management Board or the Control Board according to Clause 23 of this Circular;

c/ He/she is expelled by a competent court from the territory of the Socialist Republic of Vietnam;

d/ The establishment and operation license of the small-sized financial institution is withdrawn;

e/ The contract on the hiring of the general director (director) ceases to be valid; or

f/ Other cases as specified in the charter of the small-sized financial institution.

24.2. Right after identifying those who naturally lose their eligibility status under the provisions of Point 24.1, Items a, b, c, e and f of this Clause, the Management Board shall send a report enclosed with specific evidence to the State Bank and take responsibility before law for the accuracy and truthfulness of that report, and concurrently carry out procedures for election or appointment of vacant positions in accordance with law.

25. Term of office of members of the Management Board and the Control Board

25.1. A term of office of members of the Management Board does not exceed 5 years. A term of office of members of the Control Board does not exceed 5 years, based on decisions of the Members' Assembly (owner) and charter of the small-sized financial institution. Twelve months after being appointed, new members of the Management Board or the Control Board must be assessed by the Members' Assembly (owner) in terms of their performance.

25.2. Members of the Management Board or the Control Board may be re-appointed by the Members' Assembly (owner).

25.3. A term of appointment of members of the Management Board or the Control Board must be arranged to ensure the inheritance and continuity in the Board's membership.

26. Election, appointment and dismissal

26.1. The Members' Assembly (owner) shall appoint and dismiss members of the Management Board and the Control Board.

26.2. The Management Board shall appoint, dismiss, sign and terminate contracts on hiring of the general director (director) and a number of other important managerial positions prescribed by the charter.

26.3. Members of the Management Board shall elect one of them to be the chairman of the Management Board.

26.4. In case the chairman of the Management Board is absent, he/she must authorize in writing another member of the Management Board to exercise his/her rights and his/her tasks according to the principles set in the charter of the small-sized financial institution. If no one is authorized or the chairman of the Management Board does not work, the other members shall elect one of them to temporarily hold the position of Management Board chairman based on the principle of majority.

26.5. Members of the Control Board shall elect one of them to be the head of the Control Board.

26.6. In case the head of the Control Board is absent, he/she must authorize in writing another member of the Control Board to exercise his/her rights and performs his/her tasks according to the principles set in the charter of the small-sized financial institution. If no one is authorized or the head of the Control Board does not work, the other members shall elect one of them to temporarily hold the position of Control Board head based on the principle of majority.

26.7. The election and appointment of members of the Management Board and the Control Board, the general director (director) of a small-sized financial institution must be approved by the Governor of the State Bank.

26.8. The chairman and members of the Management Board, the head and members of the Control Board may be dismissed or relieved from office by the Members' Assembly (owner), or the general director (director) may be dismissed or relieved from office or have his/her hiring contract terminated by the Management Board in the following cases:

a/ Having his/her civil act capacity restricted;

b/ Applying for resignation;

c/ Not participating in meetings of the Management Board or the Control Board for six consecutive months without permission of the Management Board or the Control Board and the Management Board or the Control Board of which he/she is a member approves a resolution declaring the loss of his/her membership capacity;

d/ Committing serious violations of law or the charter of the small-sized financial institution;

e/ Other cases as specified in the charter of the small-sized financial institution.

26.9. With regard to persons elected or appointed to the positions of Management Board chairman or member. Control Board head or member, general director (director) and a number of other important managerial positions of a small-sized financial institution:

a/ They are vested with necessary powers to perform the assigned tasks;

b/After being relieved from office or dismissed or have their hiring contract terminated (for the general director or director), they shall still take personal responsibility for their decisions which are in contravention of law and the institution's charter or for deliberate wrong decisions made during their term of office.

26.10. In case the general director (director) of a small-sized financial institution is relieved from office or dismissed, has his/her hiring contract terminated or naturally loses his/her eligibility status, the small-sized financial institution shall immediately nominate another executive with full capacity and capability to undertake the general director's (director's) tasks and shall appoint or hire a new general director (director) within 6 months from the date of relief from office, dismissal or contract termination, and at the same time compile a dossier of request to the State Bank Governor for approval according to this Circular.

27. Suspension, temporary suspension from office

27.1. In case the chairman or a member of the Management Board, the head or a member of the Control Board or the general director (director) of a small-sized financial institution violates the provisions of this Circular, the provisions of law and the charter of the institution, the State Bank may suspend or temporarily suspend him/her from office.

27.2. A person suspended or temporarily suspended from office under the provisions of Point 27.1 of this Clause shall join in the handling of problems and violations related to his/her personal responsibility upon request of the small-sized financial institution or competent state agencies.

27.3. In case the general director (director) of a small-sized financial institution is suspended or temporarily suspended from office, the small-sized financial institution shall immediately nominate another leader with full capacity and qualifications to undertake the tasks of the general director (director) and notify such to the State Bank, and concurrently consider and decide on the appointment (hiring), relief from office (termination of the hiring contract) of the general director (director) within 6 months from the date of suspension or temporary suspension.

28. Remuneration

Remuneration for the chairman and members of the Management Board, and the head and members of the Control Board shall be approved by the Members' Assembly (owner).

A small-sized financial institution may not grant any personal loan or similar loans to the chairman and members of the Management Board or the head and members of the Control Board.

29. Publicization of personal interests

29.1. After being appointed, a member of the Management Board or the Control Board and the
general director (director) shall make detailed declaration to the small-sized financial institution if:

a/ He/she holds a capital share or equity representing 5% or more (covering also the right to acquire such ownership) of charter capital of another enterprise, which is under his/her name or the name of his/her mandate;

b/ He/she is a member of the Management Board or the Control Board or the general director (director) of another enterprise.

29.2. The declaration prescribed at Point 29.1 of this Clause must be made within 7 working days from the date of official appointment; in case of change and/or addition, it must be declared to the small-sized financial institution within 7 working days from the date of making the change or addition.

29.3. Declarations made under Points 29.1 and 29.2 of this Clause must be sent to the State Bank and preserved at the head office of the small-sized financial institution. Capital-contributing members, members of the Management Board or the Control Board, the general director (director) may examine contents of the declarations at any time they think necessary.

29.4. If members of the Management Board or the Control Board make investment through investment funds set up and operating lawfully, they will be exempt from complying with the provisions of Points 29.1 and 29.2 of this Clause.

30. Rights and obligations of capital-contributing members

30.1. Each capital-contributing member of a small-sized financial institution has the following rights:

a/To discuss and vote on issues falling under the competence of the Members Assembly;

b/ To be given priority to contribute more capital to the institution corresponding to his/her capital share at the institution when the institution increases its capital by increasing members' capital shares;

c/ To transfer his/her capital share according to law and the charter of the small-sized financial institution;

d/ To receive information on the operation and financial situation as well as business results of the small-sized financial institution;

e/ To examine the membership registration book, accounting books, annual financial statements and other documents of the small-sized financial institution and receive copies or excerpts of these documents;

f/ To nominate his/her representative to exercise any of his/her membership rights, including the right to directly participate in meetings of the Members' Assembly according to this Circular. The representative may not authorize another person to exercise the membership rights;

g/ To receive the remaining portion of assets of the small-sized financial institution in proportion to his/her capital share in case the institution is dissolved or bankrupt, unless otherwise provided for by the institution's charter;

h/ Other rights as prescribed by law and the charter of the small-sized financial institution.

30.2. Capital-contributing members of a small-sized financial institution have the following obligations:

a/ To contribute enough and on time the committed capital amounts and take responsibility for debts and other asset liabilities of the institution within the limit of their capital already contributed and committed to the institution;

b/ To observe the charter of the small-sized financial institution;

c/ To execute decisions of the Members' Assembly;

d/To perform other obligations in accordance with law and the charter of the institution.

30.3. The above rights and obligations arise from the date a member's name is registered in the membership registration book.

30.4. Capital-contributing members have a number of votes corresponding to their capital shares and shall exercise the rights provided at Point 30.1 of this Clause based on specific provisions of the charter of the small-sized financial institution.

31. Rights and obligations of the Members' Assembly (owner)

31.1. To approve the Management Board's proposals on amendment of the charter of the small-sized financial institution.

31.2. To decide on the initial capital contribution level or charter capital level and the Management Board's proposal to change this level.

31.3. To decide on re-organization and dissolution of the small-sized financial institution.

31.4. To approve the Management Board's proposals on restructuring and ownership transformation of the small-sized financial institution.

31.5. To appoint, relieve from office and dismiss members of the Management Board or the Control Board of the small-sized financial institution according to standards and conditions stipulated in this Circular; to nominate the chairman of the Management Board and head of the Control Board when necessary according to the charter of the small-sized financial institution.

31.6. To approve internal regulations of the Management Board and the Control Board.

31.7. To approve salaries, bonuses, remunerations and preferences for members of the Management Board and the Control Board.

31.8. To monitor and assess operations of the Management Board and the Control Board, including the chairman of the Management Board and the head of the Control Board before they are reappointed as members of either Board.

31.9. To decide on measures applicable to members of the Management Board and the Control Board who misuse their powers or tasks.

31.10. To approve the Management Board's proposals on selection of independent audit organizations.

31.11. To approve annual reports of the Management Board and annual financial statements.

31.12. To approve the Management Board's requests concerning the distribution of remaining profit after fulfilling financial obligations in accordance with law.

31.13. Other tasks and powers as prescribed by law and the charter of the small-sized financial institution.

32. Common obligations of the chairman and members of the Management Board, the head and members of the Control Board, and executives

32.1. To observe the law and charter, decisions of the Members' Assembly (owner) of the small-sized financial institution, in the exercise of vested powers and performance of assigned tasks.

32.2. To exercise the vested powers honestly, carefully and in the best interest of the small-sized financial institution and its owner.

32.3. The chairman and members of the Management Board, the head and members of the Control Board and executives of a small-sized financial institution may not:

a/ Compete with the small-sized financial institution;

b/ Create favorable conditions for a third party, which causes damage to the small-sized financial institution;

c/ Abuse information or business opportunities acquired from the small-sized financial institution for the benefit of their own or their relatives.

32.4. The chairman and members of the Management Board, the head and members of the Control Board or executives of a small-sized financial institution shall notify promptly, fully and accurately any existing or potential conflicts of interests and related information which may largely affect the institution. The Management Board shall decide on whether there is a conflict of interests without presence of relevant persons.

32.5. The chairman and members of the Management Board, the head and members of the Control Board or executives of a small-sized financial institution may not take part in discussion or decide on issues or transactions involving conflicts of interests with the small-sized financial institution.

33. Rights and obligations of the Management Board

The Management Board of a small-sized financial institution takes responsibility before capital-contributing members for business efficiency of the institution and has the following rights and obligations:

33.1. To manage the small-sized financial institution in accordance with law and its charter; to manage the institution in the interest of its own and its capital-contributing members;

33.2. To decide on issues related to the institution's objectives, strategies and business plans, according to the scope of operation defined in its charter;

33.3. To adopt the institution's business plans, sources of capital for operation and annual funding at the proposal of the general director (director);

33.4. To decide on the extension of the institution's operation network and scope;

33.5. To approve the organizational structure of the institution's transaction office, branches, representative offices and non-business units;

33.6. To appoint, dismiss, sign or terminate hiring contracts, discipline and decide on salary levels and other benefits of the general director (director), deputy general directors (deputy directors) at the proposal of the general director (director) and other executive positions, which fall under the deciding competence of the Management Board in accordance with the charter;

33.7. To make annual performance reports assessing the operation efficiency of the Management Board itself, its divisions (if any), each of its members and the general director (director);

33.8. To consider and re-evaluate, at least once a year, the internal inspection and control systems: to take responsibility for the rationality and efficiency of these systems;

33.9. To approve and promulgate internal regulations on organization and operation of the institution in accordance with law and its charter.

33.10. To consider, approve and publicize annual reports and financial reports of the institution in accordance with law;

33.11. To decide on selection of an independent audit organization at the proposal of the general director (director) and after it is approved by the Members' Assembly (owner);

33.12. To report, suggest and propose to the Members' Assembly (owner) issues falling under the deciding competence of the Members' Assembly (owner);

33.13. To submit to the State Bank Governor for acceptance or approval issues prescribed by law;

33.14. Other tasks and powers as prescribed by law and the charter of the institution.

34. Rights and obligations of the chairman of the Management Board

34.1.To prepare or organize the preparation of activity programs and plans of the Management Board; to organize the performance of tasks of the Management Board according to this Circular, relevant regulations and the charter of the small-sized financial institution;

34.2. To prepare or organize the preparation of programs, contents and materials for meetings of the Management Board or for the Board members' comment;

34.3. To convene and preside over meetings of the Management Board or organize the consultation of the Board's members;

34.4. To sign on behalf of the Management Board decisions, resolutions and reports of the Management Board; to supervise or organize the supervision of implementation of decisions, resolutions and reports of the Management Board;

34.5. To ensure that members of the Management Board receive full, objective, accurate and easy-to-understand information on issues to be considered by the Board; to ensure enough time before and during meetings of the Management Board for discussion of complicated or controversial issues;

34.6. To assign tasks to members in writing and supervise members in the performance of their assigned tasks as well as commons tasks and powers of the Management Board;

34.7. To supervise the general director (director) in the implementation of resolutions of the Management Board;

34.8. To ensure that laborers in the small-sized financial institution may report directly to the chairman or other members of the Management Board on irregularities in the financial situation, operation or other issues of the institution, including breaches of its professional principles;

34.9. To ensure effective information exchange between members of the Management Board and the Members' Assembly (owner);

34.10. To ensure that new members of the Management Board may participate in official and comprehensive introduction programs which are designed suitably to the understandings, skills, experience of and internal regulations applicable to members of the Management Board so that they may be familiar with the management, organization and operation of the small-sized financial institution;

34.11. To assess the performance of each member as well as the whole Management Board at least once a year;

34.12. To confirm with the Members' Assembly (owner) the results of assessment of satisfaction of each member before that member is re-appointed;

34.13. To authorize one of the members of the Management Board to perform his/her tasks in case he/she is absent in accordance with the internal authorization mechanism of the small-sized financial institution.

34.14. Other tasks and powers as prescribed by law and the charter of the small-sized financial institution.

35. Rights and obligations of members of the Management Board

35.1. To join other members of the Management Board in managing the small-sized
financial institution in accordance with law and its charter;

35.2. To perform tasks and powers of members of the Management Board according to internal regulations of the Management Board and assignment of its chairman in an honest, equal and fair manner and in the interest of the small-sized financial institution;

35.3. To elect and request the Members' Assembly to dismiss or relieve from office the chairman of the Management Board;

35.4. To request the chairman to convene irregular meetings of the Management Board in accordance with law and the charter of the small-sized financial institution;

35.5. To request leaders of the small-sized financial institution to supply information and documents on the organization, operation and financial situation of the institution;

35.6. To participate in meetings of the Management Board, discuss and vote on all issues specified in this Circular within the ambit of powers of the Management Board, except for cases of conflict of interests;

35.7. To explain to the Members' Assembly (owner), the Control Board and the Management Board the performance of assigned tasks upon request;

35.8. To implement decisions of the Members' Assembly (owner) and resolutions of the Management Board;

35.9. To take personal responsibility before the Members' Assembly (owners) and the Management Board for their activities;

35.10. Other tasks and powers as prescribed by law and the charter of the small-sized financial institution.

36. Rights and obligations of the Control Board

36.1. To supervise the general director (director) in the control of the small-sized financial institution;

36.2. To directly direct, administer and supervise the operation of the internal audit section (if any);

36.3. To examine the rationality, legality, honesty and carefulness in business management and administration; in cost accounting and statistical work and in the making of financial statements;

36.4. To examine, review, assess the rationality, efficiency, and observance of legal provisions on organization and operation of the internal inspection and control systems;

36.5. To appraise annual and periodical business reports and financial statements of the small-sized financial institution, to report on managerial work of the Management Board; to submit the appraised reports to the Members' Assembly (owner);

36.6. To approve the internal audit process; to approve and adjust annual internal audit plans;

36.7. To examine accounting books and other documents of the small-sized financial institution, the management and administration of operation of the small-sized financial institution at any time when necessary or at the request of the Management Board;

36.8. To conduct internal audit in each period and each domain so as to assess fully and accurately business activities and the financial situation of the small-sized financial institution; to take responsibility for the quality of internal audit and the accuracy of internal audit reports;

36.9. To refrain from interrupting the administration of operation of the small-sized financial institution while performing its tasks and exercising its powers;

36.10. To recommend and propose to the Management Board measures to amend, supplement or renovate the organizational structure for business management and administration of the small-sized financial institution:

36.11. To immediately report in writing to the Members' Assembly and the Management Board, upon detecting that a member of the Management Board or the general director (director) commits violations or acts beyond his/her powers and tasks prescribed by law and the charter of the small-sized financial institution, and concurrently request the violator to stop violations and take remedies;

36.12. To reconsider annually its internal regulations and internal audit policy;

36.13. To revise important policies on accounting and reporting;

36.14. To examine all transactions of the small- sized financial institution when necessary;

36.15. To review periodical financial statements of the small-sized financial institution;

36.16. To review annual financial statements made by an independent audit organization;

36.17. To review and independently assess the entire internal and control systems of the executive apparatus; to examine the organization of the internal inspection and control systems;

36.18. To supervise the independent auditor-hiring process; the performance of independent auditors; and assess their performance;

36.19. To ensure efficiency of the institution's processes in monitoring the observance of law and ethical rules; examine the organization, policies, procedures and system of monitoring of the observance of law and ethical rules;

36.20. To report, recommend and propose to the Members' Assembly (owner) issues falling under the deciding competence of the Members' Assembly (owner) in order to raise the organization and operation efficiency of the small-sized financial institution;

36.21. To access files and documents of the small-sized financial institution which are kept at its head office, branches or other sites; to visit working offices of managers and staff members of the small-sized financial institution in order to perform its tasks;

36.22. To request the Management Board and its members, the general director (director) and other managers/executives to supply full, accurate and timely information and documents on managerial, executive and business activities of the small-sized financial institution;

36.23. To prepare annual internal audit reports with the following main contents:

a/ Explanation of the mode of internal audit already applied in the current financial year and major changes (if any) in the internal audit policy compared with the previous financial year;

b/ Summary of the accounting policy and reports of the small-sized financial institution for the current financial year and major changes compared with the previous year;

c/ Details of irregular transactions in the current financial year;

d/ Details on special investigations;

e/ Description of the process of hiring, monitoring and assessing independent auditors;

f/ Details on violations of law and ethical rule's; measures taken to secure observance;

g/ Extent of participation of members in meetings of the Control Board;

h/ Outstanding problems, recommendations and proposals to increase the organization and operation efficiency of the small-sized financial institution.

36.24. Other rights and obligations as prescribed by law and the charter of the small-sized financial institution.

37. Rights and obligations of the head of the Control Board

37.1. To prepare agendas for meetings of the Control Board, taking into consideration issues and concerns of all members of the Board which are related to the contents specified in Clause 36 of this Circular;

37.2. To convene and chair meetings of the Control Board;

37.3. To convene on behalf of the Control Board and chair irregular meetings of the Management Board when the Management Board commits violations of law or the charter of the small-sized financial institution;

37.4. To sign on behalf of the Control Board documents falling under the competence of the Control Board;

37.5. To prepare work plans and assign tasks to members of the Control Board according to the internal regulations;

37.6. To ensure that members of the Control Board receive full, objective, accurate and easy-to-understand information on issues under consideration by the Board;

37.7. To ensure enough time before and during meetings of the Control Board for discussion of complicated or controversial issues;

37.8. To supervise members of the Control Board in the performance of assigned tasks as well as common tasks and powers;

37.9. To authorize a member of the Control Board to perform his/her tasks in case of his/her absence;

37.10. Other tasks and powers as prescribed by law and the charter of the small-sized financial institution.

38. Rights and obligations of members of the Control Board

38.1. To join other members of the Control Board in activities conformable with law and the charter of the small-sized financial institution;

38.2. To perform tasks and exercise powers of a member of the Control Board strictly according to the internal regulations, in an honest and careful manner in the interest of the small-sized financial institution;

38.3. To elect, and request the Members' Assembly to dismiss or relieve from office the head of the Control Board;

38.4. To request the head of the Control Board to convene irregular meetings of the Board;

38.5. To control business activities, examine accounting books, assets, reports, annual financial settlements and recommend remedies for violations, if any;

38.6. To ask officials and employees of the small-sized financial institution to supply data and explain business activities in order to perform the assigned tasks;

38.7. To report to the head of the Control Board on irregular financial events and take personal responsibility for their assessments and conclusions before the Management Board and capital-contributing members;

38.8. To report in writing to the head of the Control Board at least once a month on the situation and results of control with the ambit of assignment;

38.9. To attend meetings of the Control Board, contribute opinions and vote on issues specified in Clause 36 of this Circular; a member with voting right may not vote in case of a conflict of interests;

38.10. To attend meetings of the Management Board, contribute opinions, make recommendations, but have no right to vote unless they are members of the Management Board;

38.11. To request the recording of their opinions in minutes of meetings of the Management Board if those opinions are different from resolutions of the Management Board and to report them directly to the Members' Assembly;

38.12. To request the Management Board to convene irregular meetings in case members of the Management Board violate or the Management Board itself violates law or the charter of the small-sized financial institution;

38.13. To take responsibility before law and the Management Board and capital-contributing members for the accuracy and truthfulness of data and dossiers related to small-sized financial operations;

38.14. Other tasks and powers as specified in the charter of the small-sized financial institution.

39. Rights and obligations of the general director (director)

39.1. To run and decide on all issues related to routine work and business activities of the small-
sized financial institution in accordance with law and the charter of the institution, resolutions of the Management Board and decisions of the Members' Assembly;

39.2. To organize the implementation of decisions and resolutions of the Management Board;

39.3. To organize the implementation of business plans and investment plans of the small-sized financial institution after they are approved by the Management Board;

39.4. To establish, maintain and develop rational and effective internal inspection and control systems;

39.5. To formulate professional processes and procedures in order to operate the business administration and information-reporting systems;

39.6. To recruit laborers;

39.7.To appoint, relieve from office and dismiss holders of executive positions of the small-sized financial institution, except for positions decided by the Management Board or the Members' Assembly (owner); to decide on salaries and allowances (if any) for persons under his/her appointment and recruitment competence;

39.8. To sign on behalf of the small-sized financial institution contracts, except for cases falling under the competence of the Management Board;

39.9. To submit to the direction and control by the Management Board in the performance of management tasks;

39.10. To report to the Management Board, the Control Board, the Members' Assembly, the State Bank and competent state agencies on business operation, efficiency and results of the small-sized financial institution in accordance with law and the institution's charter;

39.11. To make internal inspection and control reports on results of self-inspection and assessment of the internal inspection and control systems;

39.12. To exercise the vested rights and perform assigned obligations honestly and dedicatedly for the benefit of the small-sized financial institution and its members.

39.13. In case the small-sized financial institution cannot pay all debts, asset liabilities and other payment liabilities when due:

a/ To notify all creditors of the institution's financial situation;

b/ Not to increase salaries or pay bonuses to laborers of the institution;

c/ To recommend measures to overcome financial difficulties of the institution;

d/ To bear personal responsibility for damage caused to creditors due to the institution's failure to settle the above liabilities.

39.14. To propose and suggest the Management Board to ratify or submit to the Members' Assembly for approval:

a/ Amendments to the institution's charter;

b/ Business plans, capital source estimates and annual capital use plans, and any important changes in those estimates or plans;

c/ The situation of realization of business targets and strategies of the institution and adjustments which have been made or suggested;

d/ The organizational structure of the head office, branches, representative offices and non-business units of the institution;

e/ The restructure or ownership transformation of the institution;

f/ The appointment, dismissal or relief from office of the deputy general directors, directors (deputy directors) of branches, representatives and non-business units in accordance with the charter;

g/ The application and enforcement of law related to operations of the institution;

h/ Internal regulations on internal control, risk management, organization and operation of branches, interest rates; commissions, charges and fines applicable to customers, appointment, transfer or sack of laborers and other necessary internal regulations;

i/ The selection of independent audit organizations.

39.15. Other tasks and powers prescribed by law, the charter of the institution and resolutions of the Management Board.

40. Members' Assembly

40.1. The Members' Assembly has all capital-contributing members. Institutional capital-contributing members shall each nominate a representative to participate in the Members' Assembly.

40.2. The Members' Assembly is convened annually or extraordinarily and at least once a year. The Members' Assembly must be held in the Vietnamese territory.

41. Competence to convene the Members' Assembly

41.1. The annual Members' Assembly is organized at the proposal of the Management Board not later than 2 months from the date the Management Board approves the financial statements which have been independently audited by an independent audit organization.

41.2. The Members' Assembly may be convened extraordinarily in the following cases:

a/ The Management Board deems it necessary for the benefit of the small-sized financial institution;

b/ At the lawful and legitimate request of capital-contributing members;

c/ At the request of the Control Board;

d/At the request of the State Bank;

e/ Other cases prescribed by law and the institution's charter.

41.3. Unless it is provided for by the charter of the small-sized financial institution, the Management Board shall convene the Members' Assembly within 30 days after receiving a request specified at Point 41.2 of this Clause. If the Management Board does not convene a Members' Assembly under regulations, its chairman and members shall take responsibility before law and pay arising damages to the small-sized financial institution.

41.4. If the Management Board fails to convene a meeting under Point 41.3 of this Clause, within the subsequent 30 days, the Control Board instead shall convene the meeting according to this Circular. If the Control Board fails to convene the meeting according to regulations, its head and members shall take responsibility before law and pay arising damages to the small-sized financial institution.

41.5. If the Control Board fails to convene a meeting under Point 41.4 of this Clause, the organization or individual requesting the convention of the meeting specified at Point 41.2 of this Clause may, instead of the Management Board and the Control Board, convene the meeting according to this Circular, and may request the State Bank to supervise the convention and organization of the meeting if deeming it necessary.

41.6. Rational expenses for convention and organization of meetings of the Members' Assembly shall be accounted as operation expenses of the small-sized financial institution.

42. Agenda and contents of a meeting of the Members' Assembly

42.1. The convener shall set agenda and contents of the meeting, prepare documents, identify the time and place of the meeting, and send invitations to all members according to this Circular.

42.2. A member may make recommendations on the agenda. A recommendation must be made in writing and sent to the head office of the small-sized financial institution at least one working day before the meeting. It must state the name of the member, issues recommended for inclusion into the agenda and reasons for recommendation.

42.3. The convener of a meeting of the Members' Assembly may reject a recommendation specified at Point 42.2 of tins Clause only if:

a/ The recommendation is sent not on time or is incomplete;

b/ The recommended issues fall beyond the deciding competence of the Members' Assembly;

c/ Other cases as specified by the charter of the small-sized financial institution.

42.4. Invitation to a meeting of the Members' Assembly

At least 7 working days before a meeting of the Members' Assembly, the convener shall send invitations, the form for nomination of authorized representatives, agenda, ballots, documents for discussion serving as bases for approving decisions to all members, unless the institution's charter specifies another earlier deadline. Invitations shall be sent through registered mails to addresses of the members, stating clearly the meeting time and place.

42.5. Right to attend meetings the Members' Assembly

a/A member may directly attend or authorize in writing another person to represent him/her to attend a meeting;

b/ Members shall notify in writing the authorization to attend a meeting to the small-sized financial institution according to the formalities and time specified by the Management Board. Authorized representatives have full powers of members, unless otherwise provided for by the written authorization document. An authorized representative may represent different members in a meeting of the Members' Assembly and vote separately for each member corresponding to that member's capital share. The nomination (or cancellation of nomination) of an individual to be an authorized representative shall take effect only after such has been notified in writing to the small-sized financial institution according to the formalities and time specified by the Management Board.

42.6. Conditions and formalities for conducting meetings of the Members' Assembly

a/ A meeting of the Members' Assembly shall be conducted when it is attended by members representing at least 75% of charter capital of the small-sized financial institution; the specific rate shall be set in the institution's charter,

b/ Past 30 minutes after the opening time of a meeting as stated in the invitation, if the number of attendants is still insufficient as required, the meeting shall not be conducted, unless otherwise provided for in the charter of the small-sized financial institution. The second convention shall start within 15 working days from the date planned for the first meeting. The second meeting shall be conducted when the members attending it represent at least 50% more of charter capital of the small-sized financial institution;

c/ If the second meeting cannot be convened according to Point 42.6. Item b of this Clause, the third meeting may be convened within 10 working days from the date planned for the second meeting. In this case, the meeting of the Members' Assembly may be conducted regardless of the number of attendants and the amount of charter capital they represent;

d/ Only the Members' Assembly may change the agenda of its meetings which has been sent to members together with invitations according to the provisions of this Circular.

43. Procedures for adoption of decisions at meetings of the Members' Assembly

43.1. The Members' Assembly shall adopt decisions falling under its competence by voting at its meetings or collecting written opinions.

43.2. Decisions of the Members' Assembly on the following issues must be adopted by voting at its meetings:

a/ Amendment or supplementation of the charter of the small-sized financial institution;

b/ Approval of development orientations of the small-sized financial institution:

c/Appointment, dismissal or relief from office of members of the Management Board or the Control Board;

d/ Investment decisions or sale of assets valued at 50% or more of own capital of the small-sized financial institution, unless otherwise specified by its charter;

e/ Approval of annual financial statements;

f/ Re-organization, dissolution of the small-sized financial institution.

43.3. A decision of the Members' Assembly is considered adopted when all the following conditions are met:

a/ It is voted for by members representing at least 75% of total contributed capital of all members attending the meeting, for decisions mentioned at Point 43.2, Items a. b, d and f of this Clause; the specific rate shall be set in the charter of the small-sized financial institution;

b/ The appointment of members of the Management Board and the Control Board shall be voted for on the principle of majority or representation of corresponding capital shares, or by the method of cumulative votes, under which each member has a total of votes corresponding to his/her/its total own capital multiplied by the number of to-be-appointed members of the Management Board or the Control Board and a member may give all of his/her/its votes to one or several candidates;

c/ Other decisions are adopted when the number of votes for them represents at least 65% of total contributed capital of members attending the meeting; the specific rate shall be set in the charter of the small-sized financial institution;

d/ Decisions of the Members' Assembly shall be adopted in the form of written consultation when they are voted for by members representing at least 75% of total contributed capital; the specific rate shall be set in the charter of the small-sized financial institution;

43.4. Any member being one party or having direct relatives being one party to a big transaction or a restricted transaction under consideration at the Members' Assembly may not vote on issues related to that transaction.

44. Competence and formalities for adoption of decisions of the Members' Assembly through written consultation

44.1. At any time when necessary and in the interest of the small-sized financial institution, the Management Board may, on behalf of the Members' Assembly, collect written opinions of capital-contributing members for the adoption of decisions of the Members' Assembly.

44.2. The Management Board shall prepare opinion sheets, draft decisions of the Members' Assembly and explanations on those decisions. Opinion sheets enclosed with draft decisions and explanations must be sent by registered mail to the address of each member.

44.3. An opinion sheet must have the following main contents:

a/ Purpose of the collection of opinions;

b/ Full name and contact details of the member or his/her/its authorized representative;

c/ Issues on which opinions are required for decision adoption;

d/ Voting options, including "Yes", "No" and "No idea";

e/ Deadline for sending opinions to the small-sized financial institution:

f/ Full name and signatures of the chairman of the Management Board and at-law representative of the small-sized financial institution.

44.4. Completed opinion sheets must be signed by members or their authorized or at-law representatives. They must be put into closed envelopes which must not be opened before the vote-count time. All opinion sheets sent to the small-sized financial institution in opened envelopes or after the deadline stated in the sheets are invalid.

44.5. The Management Board shall count votes and make a minutes thereon at the witness of the Control Board. A vote-count minutes must have the following principal contents:

a/ Purpose of the opinion collection and issues on which opinions are collected for decision adoption;

b/ Number of members and total voting sheets, indicating the numbers of valid sheets and invalid sheets;

c/ Total numbers of "yes", "no" and "no idea" votes on each issue;

d/ Adopted decisions;

e/ Full names and signatures of the chairman of the Management Board or person authorized by the chairman and the vote-count supervisor.

44.6. The vote-count minutes must be sent to all members within 15 days from the date vote-count results are released.

44.7. Completed opinion sheets, sheet-counting minutes, full texts of adopted resolutions and related documents must be kept at the head office of the small-sized financial institution.

45. Minutes of meetings of the Members' Assembly

45.1. Meetings of the Members' Assembly must be recorded in the minutes book of the small-sized financial institution. A minutes must be written in Vietnamese and have the following principal contents:

a/ Time and place of the meeting;

b/ List of full names of and capital shares represented by each capital-contributing member present at the meeting (him/her/itself or his/her/ its authorized representative);

c/ List of full names of members of the Management Board and the Control Board present at the meeting, and the capital amounts owned by each member;

d/ List of full names and positions of executives of the small-sized financial institution who are present at the meeting;

e/ Agenda and contents of the meeting;

f/ Chairperson and secretary;

g/ Summary of proceedings of the meeting, opinions raised on each issue and contents of the meeting;

h/ Total of votes on each issue, stating the numbers of votes for and against as well as blank votes;

i/ Adopted decisions;

j/ Full names and signatures of the chairperson and secretary of the meeting.

45.2. Minutes of a meeting of the Members' Assembly must be made and adopted before the conclusion of the meeting.

45.3. The chairperson and secretary of a meeting are jointly responsible for the truthfulness and accuracy of the contents of minutes.

46. Request for annulment of decisions of meetings of the Members' Assembly

Within 30 days after the conclusion of a meeting of the Members' Assembly or after receiving the vote-count minutes prescribed at Point 44.6, Clause 44 of this Circular, members of the Members' Assembly, members of the Management Board, members of the Control Board or the general director (director) may request a court or an arbitration to consider and annul decisions of that meeting in the following cases:

a/ The order and procedures for convening the meeting of the Members' Assembly fail to comply with this Circular and/or the charter of the small-sized financial institution;

b/ The order and procedures for issuing decisions and contents of decisions adopted at the meeting violate the provisions of law and/or the charter of the small-sized financial institution.

47. Meetings of the Management Board

47.1. The Management Board may meet regularly or irregularly. Places of meetings of the Management Board must be within the Vietnamese territory.

47.2. The Management Board's meetings are convened by its chairman at least once every quarter.

47.3. The Management Board's chairman shall convene a meeting of the Board upon the request of:

a/ Members of the Members' Assembly;

b/ Members of the Management Board;

c/ Head of the Control Board or at least two thirds of members of the Control Board;

d/ The general director (director) or at least five other managers;

e/ The State Bank; or

f/ Other cases as specified in the charter of the small-sized financial institution.

Request for convention of a meeting made by subjects defined at Point 47.3, Items a, b, c, d, e and f of this Clause, must be made in writing, stating the purpose of discussion, issues to be discussed and decided within the competence of the Management Board.

47.4. The Management Board's chairman shall convene a meeting of the Board within 15 days after receiving a request prescribed at Point 47.3 of this Clause. If the chairman fails to convene the requested meeting, he/she shall take responsibility for damage caused to the small-sized financial institution; in this case, the requester may convene another meeting of the Management Board according to the procedures specified at Point 47.5 of this Clause.

47.5. The Management Board's chairman shall send invitations and materials together with voting cards to the Board's members at least 5 working days before the meeting, unless otherwise provided for by the charter of the small-sized financial institution. A meeting invitation must state the time and place of the meeting, agenda, issues to be discussed and decided. Meeting invitations may be sent by post, fax, email or otherwise but must eventually arrive at the address of each member of the Management Board as registered with the small-sized financial institution.

47.6. A meeting of the Management Board may be conducted only when it is attended by at least three fourths of the total members of the Board. Members who cannot directly attend the meeting may still vote using their voting cards. Voting cards must be put in closed envelopes and sent to the chairman of the Management Board at least one hour before the meeting. Voting cards may be opened only in the witness of all meeting participants.

47.7. If the number of participants is not enough to conduct a meeting of the Management Board, the chairman of the Management Board shall convene another meeting within 10 subsequent working days. If the second meeting still has not enough members as required, the chairman of the Management Board shall convene an irregular meeting of the Members' Assembly within thirty (30) working days from the date projected for the second meeting so that members may reconsider the membership regulation and eligibility of members of the Management Board.

47.8. The Management Board may invite members of the Control Board, executives, auditors and other persons to its meetings when necessary in order to supply information on issues to be discussed by the Management Board, who may discuss but not vote unless they are members of the Management Board.

48. Resolutions of the Management Board

48.1. The Management Board shall adopt resolutions by voting openly at its meetings.

48.2. A decision of the Management Board is adopted when it is voted for by a majority of members attending the Board's meeting. The charter of the small-sized financial institution may specify issues which must be adopted with a higher percentage of votes for. In case the votes for and against are equal, final decision shall be based on the opinion of the chairman of Management Board or his/her authorized representative who chairs that meeting (in case the chairman of the Management Board is absent).

48.3. The Management Board may use the seal of the small-sized financial institution in the course of performance of its tasks.

49. Minutes of meetings of the Management Board

49.1. Meetings of the Management Board must be recorded in the minutes book. A minutes must be written in Vietnamese and may also be in a foreign language with the following main contents:

a/ Purpose, agenda and contents of the meeting;

b/ Time and place of the meeting;

c/ Full name of each member attending the meeting or his/her/its authorized representative; full names of members not attending the meeting, reasons;

d/ Issues discussed and voted at the meeting;

e/ Summary of opinions given by each attendant in the course of the meeting;

f/ Voting results, indicating members who had voted for, against or had no idea;

g/ Adopted decisions;

h/ Full names and signatures of all members or their authorized representatives.

49.2. The chairperson and secretary shall take responsibility for the truthfulness and accuracy of minutes of meetings of the Management Board.

49.3. Minutes of meetings of the Management Board and documents used at these meetings must be kept at the head office of the small-sized financial institution.

49.4. Minutes made in Vietnamese and foreign languages are equally valid.

50. Meetings of the Control Board

50.1. The Control Board shall meet at least once every quarter and may convene irregular meetings upon the request of:

a/ Members of the Members' Assembly;

b/ Members of the Control Board;

c/ Chairman of the Management Board or at least two thirds of the total members of the Management Board;

d/ The State Bank;

e/ Other cases as specified in the charter of the small-sized financial institution.

50.2. The head of the Control Board shall convene meetings of the Control Board. Procedures for convening and organizing meetings of the Control Board are specified in the internal regulation of the Control Board of the small-sized financial institution.

50.3. A meeting of the Control Board may be conducted only when it is attended by at least two thirds of the Board's total members.

50.4. If the number of attendants is not enough to conduct a meeting of the Control Board, the head of the Control Board shall convene another meeting within 10 subsequent working days. If the second meeting still has not enough members as required, the head of the Control Board shall report such to the chairman of the Management Board, who shall convene an irregular meeting of the Members Assembly within thirty (30) working days so that members may reconsider the membership regulation and eligibility of members of the Control Board.

50.5. The Control Board shall invite members of the Management Board, executives, auditors and other persons to its meetings when necessary to supply information on issues to be discussed by the Control Board.

51. Resolutions of the Control Board

51.1. The Control Board shall adopt resolutions by voting openly at its meetings.

51.2. A decision of the Control Board is adopted when it is voted for by more than half of members attending the Board's meeting. The charter of the small-sized financial institution may specify issues which must be approved with a higher percentage of votes for. In case the votes for and against are equal, final decision shall be based on the opinion of the head of Control Board or his/her authorized person who chairs that meeting (in case of absence of the head of the Control Board).

52. Minutes of meetings of the Control Board

Meetings of the Control Board must be recorded in the minutes book. The chairperson and secretary of a meeting of the Control Board are responsible for the truthfulness and accuracy of contents of the minutes of that meeting.

IV. OPERATIONS OF SMALL-SIZED FINANCIAL INSTITUTIONS

53. General provisions on operation of small-sized financial institutions

53.1. A small-sized financial institution may only conduct operations in Vietnam dong. Loans and aid provided by foreign organizations or individuals in foreign currencies must comply with legal provisions on management of foreign exchange.

53.2. A small-sized financial institution shall maintain the total outstanding debts of its small-sized credits at a minimum of 65% of the total outstanding debts of its credits.

53.3. The content and scope of operations of a small-sized financial institution are stipulated in its license granted by the State Bank, Decree No. 28/2005/ND-CP, Decree No. 165/2007/ND-CP and guiding documents of the State Bank.

54. Raising of capital and grant of credits

Small-sized financial institutions may raise capital and giant credits according to Article 22 (already amended according to Clause 9, Article 1 of Decree No. 165/2007/ND-CP) and Article 23 of the Government's Decree No. 28/2005/ND-CP as well as the State Bank's guiding documents on these operations.

55. Other operations

55.1. A small-sized financial institution may open accounts and deposit money at the State Bank, commercial banks and other credit institutions.

55.2. A small-sized financial institution may provide the following payment services:

a/ Money transfer for small-sized financial customers;

b/ Authorized collection and payment for small-sized financial customers.

The above payment services shall be provided according to regulations of the small-sized financial institution and in accordance with the regulations of the State Bank.

55.3. A small-sized financial institution may accept entrusted capital lending; entrust and accept entrusted operations which are related to the small-sized financial domain in accordance with law as well as guidelines of the State Bank.

55.4. A small-sized financial institution may act as an insurance agent according to the insurance law and in other domains related to small-sized financial operations.

55.5. A small-sized financial institution may provide consultancy services to support its customers in the efficient management and use of capital.

V. CHANGES SUBJECT TO APPROVAL

56. Small-sized financial institutions must get written approval from the State Bank before making changes in one of the contents specified in Clause 1, Article 28 of Decree No. 28/2005/ND-CP.

57. Dossiers of request for the State Bank's approval of changes

57.1. A dossier of request for renaming of a small-sized financial institution:

a/ Exposition of the chairman of the Management Board (or the authorized person), requesting the renaming of the small-sized financial institution. The exposition must state the reasons for and necessity of the renaming:

b/ Written consent of the Members' Assembly (owner) regarding the renaming of the small-sized financial institution:

c/ Resolution of the Management Board approving the renaming of the small-sized financial institution; and

d/ Other documents (if necessary) to clarify contents specified at Point 57.1, Items a. b and c of this Clause.

57.2. Dossier of request for adjustment of the charter capital level:

a/ Exposition of the chairman of the Management Board (or the authorized person), requesting the adjustment of the charter capital level of the small-sized financial institution, stating the adjustment reasons and plan;

b/ Written consent of the Members' Assembly (owner) regarding the adjustment of the charter capital level of the small-sized financial institution;

c/ Resolution of the Management Board approving the adjustment of the charter capital level of the small-sized financial institution;

d/ Written agreement on distribution of capital shares among capital-contributing members;

e/ Report on its organization and operation by the time before submitting the request for adjustment of the charter capital level of the small-sized financial institution; the audited financial statement of the latest year;

f/ Other documents (if necessary) to clarify contents mentioned at Point 57.2, Items a, b, c, d and e of this Clause.

57.3. Dossier of request for relocation of the head office or a branch:

a/ Exposition of the chairman of the Management Board (or authorized person), requesting the relocation of the head office or a branch of the small-sized financial institution, stating the reasons for relocation and cash safety at the new location;

b/ Written consent of the Members' Assembly regarding the relocation of the head office;

c/ Resolution of the Management Board approving the relocation of the head office or branch of the small-sized financial institution;

d/ Document of the provincial/municipal People's Committee permitting the small-sized financial institution to locate its head office or branch (in case of relocation to another province or city). If this document is not available, the small-sized financial institution shall state reasons in the exposition for the State Bank to consider;

e/ Written certification of the lawful ownership rights or use rights to the location of the head office or branch of the small-sized financial institution for at least 3 (three) years; and,

f/ Other documents (if necessary) to clarify contents specified at Point 57.3, Items a, b, c, d and e of this Clause.

57.4. Dossier of request for changes in operation contents:

a/ Exposition of the chairman of the Management Board (or authorized person) requesting changes in operation contents of the small-sized financial institution, stating the necessity of and reasons for changes and measures to solve problems (if any) in case changes are approved;

b/ Written consent of the Members' Assembly regarding changes in operation contents;

c/ Resolution of the Management Board approving changes in operation contents of the small-sized financial institution;

d/ Report on organization and operation of the small-sized of financial institution by the end of the latest month; and.

e/ Other documents (if necessary) to clarify contents mentioned at Point 57.4, Items a, b, c and d of this Clause.

57.5. Dossier of request for transfer of capital shares of capital-contributing members in a small-sized financial institution:

a/ Exposition of the chairman of the Management Board (or authorized person) requesting the State Bank to approve the transfer of capital shares between a transferor and a transferee, stating the legal status of the transferee, reasons for the transfer and transfer plan in case of approval;

b/ Written consent of the Members' Assembly regarding the transfer of capital shares;

c/ Resolution of the Management Board of the small-sized financial institution approving the transfer of capital shares;

d/ Written notice of the transferor to the State Bank regarding the transfer of part or the whole of his/her/its capital shares in the small-sized financial institution;

e/ Written notice of the transferee to the State bank, requesting the buy-back of a part or the whole of capital shares of the transferor in the small-sized financial institution;

f/ Report on organization and operation of the small-sized financial institution by the end of the latest month;

g/ Audited financial statements of the latest year; and

h/ Other documents (if necessary) to clarify contents mentioned at Point 57.5, Items a, b, c, d, e, f and g of this Clause.

If the transferor is not a party to the small-sized financial institution, the dossier must also contain documents and papers prescribed at Point 10.5 of this Circular.

57.6. Dossier of request for amendment or supplementation of the charter of a small-sized financial institution:

a/ Exposition of the chairman of the Management Board (or authorized person) requesting the amendment or supplementation of the charter of the small-sized financial institution, stating the reasons;

b/ Written consent of the Members' Assembly regarding the amendment or supplementation of the charter of the small-sized financial institution;

c/ Resolution of the Management Board approving the amendment of the charter of the small-sized financial institution;

d/ The draft of the amended or supplemented charter; and

e/ Other documents (if necessary) to clarify contents stated at Point 57.6, Items a, b, c and d of this Clause.

57.7. Dossier of request for approval of members of the Management Board or the Control Board and the general director (director):

a/ Exposition of the chairman of the Management Board (or authorized person) requesting the Governor to approve the appointment or removal of positions. The exposition must ascertain that the nominees have adequate capabilities, conditions and qualifications as prescribed by law;

b/ Document of the Members' Assembly (owner) appointing, dismissing or removing positions (for members of the Management Board and the Control Board);

c/ Resolution of the Management Board (for the position of general director/director);

d/ Resume and notarized copies of necessary diplomas and certificates of the nominee;

e/ Original application for resignation of the person holding one of the above positions (in case of relief from office);

f/ Other documents (if necessary) to clarify contents specified at Point 57.7. Items a. b, c, d and e of this Clause.

58. Order and procedures of request for the State Bank's approval of changes of a small-sized financial institution

58.1. Within 20 working days after receiving a dossier of request for amendment or supplementation according to Clause 57 of this Circular, the State Bank shall issue a written certification of the completeness and validity of the dossier or notify the small-sized financial institution of papers or documents which must be added.

58.2. Within 30 working days after sending the written certification of the dossier as prescribed, the State Bank Governor shall consider and approve changes of the small-sized financial institution. In case of disapproval, the State Bank shall reply in writing, clearly stating the reasons.

58.3. After getting the written approval from a State Bank, the small-sized financial institution shall:

a/ Carry out business registration procedures with a competent state agency (and notify the provincial/municipal People's Committee of the province or city where it locates its head office or branch) for cases mentioned at Point 57.3, Clause 57 of this Circular) within at least 10 working days;

b/ Publish the approved changes in Vietnamese in three consecutive issues of a central or local newspaper in the locality where it locates its head office;

c/ Amend or supplement related contents in the charter and submit it to the State Bank Governor for approval.

59. Changes subject to notification

Within 30 working days after making the following changes, the small-sized financial institution shall notify such in writing to the State Bank:

59.1. Replacement of capital-contributing members that own more than 10% of its charter capital, the executive general director (director) of institutional capital-contributing members.

59.2. Change in the names or addresses of capital-contributing members.

59.3. Division, split, merger, consolidation, dissolution or bankruptcy of institutional capital-contributing members.

59.4. All irregular changes which largely affect the organization, operation or financial situation of capital-contributing members.

VI. INSPECTION, AUDIT, COMMENDATION, AND HANDLING OF VIOLATIONS

60. Inspection

60.1. Small-sized financial institution are subject to inspection and supervision by the State Bank's Inspectorate under the provisions of Section 1, Chapter IX of the Law on Credit Institutions and other provisions of law.

60.2. Organizations engaged in small-sized financial operations which apply for licenses or contribute capital to the establishment of a small-sized financial institution in accordance with this Circular shall be inspected and examined by the State Bank in terms of:

a/ Their satisfaction of the conditions for being granted licenses according to this Circular,

b/ Their own capital amounts to be contributed to the charter capital of the small-sized financial institution;

c/ The operation situation and operation efficiency of their branches which are expected to be permitted by the State Bank to continue operation after they get licenses (for organizations with branch networks).

60.3. If the State Bank obtains information that an organization involved in small-sized financial operations violates the provisions of Clause 64 of this Circular, the Bank's inspectors may:

a/ Inspect, examine places where the concerned organization is suspected of conducting small-sized financial operations without a license and/or where it keeps accounting books, dossiers and reports;

b/ Examine, duplicate or keep books, dossiers and reports of the inspected organization in order to accurately determine its violations of law in the financial or banking domain.

Acts of refusing or obstructing banking inspectors to access places or books or dossiers mentioned at this Point shall be considered the first evidence on violations of the concerned subject.

61. Audit

Small-sized financial institutions shall conduct audit under the provisions of Section 2. Chapter IX of the Law on Credit Institutions and other provisions of law.

62. Commendation and handling of violations

The commendation, and the handling of violations of law on small-sized financial operations comply with the provisions of Chapter X of the Law on Credit Institutions and relevant provisions of law.

VII. ORGANIZATION OF IMPLEMENTATION

63. This Circular takes effect 15 days after its publication in "CONG BAO."

64. Within 12 months after the Government's Decree No. 165/2007/ND-CP takes effect, small-sized financial institutions shall submit applications and dossiers of application for licenses according to this Circular if:

64.1. They are mobilizing voluntary deposits of organizations and individuals other than small-sized financial customers; and/or,

64.2. They are keeping savings (both compulsory and voluntary) of small-sized financial customers which represent 50% or more of their own capital. This own capital amount includes the components specified at Point 5.2, Clause 5 of this Circular and is the own capital of a small-sized financial program or project.

65. After the deadline specified in Clause 64 of this Circular, if organizations, programs or projects involved in small-sized financial operations submit no applications for licenses or fail to meet all the licensing conditions, they shall concurrently do the following:

65.1. Immediately stop the mobilization of voluntary deposits of customers other than small-sized financial customers and, at the same time, refund to those customers their deposits when they come due;

65.2. Reduce the amount of savings mobilized from small-sized financial customers as prescribed at Point 64.2, Clause 64 of this Circular to under 50% of their own capital; and, at the same time, deposit this savings amount at a bank operating lawfully in Vietnam. This deposit amount may be withdrawn only for the purpose of refund to depositing customers.

In special cases, organizations, programs or projects shall report the extension of implementation to the State Bank for submitting to the Prime Minister for consideration and decision.

66. The director of the Office, the director of the Department for Banks and Non-Bank Credit Institutions, heads of concerned units of the State Bank, directors of the State Bank's provincial/ municipal branches, chairmen of Management Boards, general directors (directors) of small-sized financial institutions, and concerned organizations and individuals shall implement this Circular.

Problems arising in the course of implementation should promptly be reported to the State Bank for guidance and settlement.

FOR THE STATE BANK GOVERNOR
DEPUTY GOVERNOR

Tran Minh Tuan

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