Circular No. 04/2010/TT-NHNN dated February 11, 2010 of the State Bank of Vietnam providing for the merger, consolidation and acquisition of credit institutions

THE STATE BANK OF VIETNAM

Circular No. 04/2010/TT-NHNN of February 11, 2010, providing for the merger, consolidation and acquisition of credit institutions

Pursuant to the 1997 Law on the State Bank of Vietnam and the 2003 Law Amending and Supplementing a Number of Articles of the Law on the State Bank of Vietnam;

Pursuant to the 1997 Law on Credit Institutions and the 2004 Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions;

Pursuant to the 2005 Enterprise Law;

Pursuant to the 2005 Investment Law;

Pursuant to the 2004 Competition Law;

Pursuant to the Government’s Decree No. 96/2008/ND-CP of August 26, 2008, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

The State Bank of Vietnam (below referred to as the State Bank) provides for the merger, consolidation and acquisition of credit institutions as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. This Circular provides for the merger, consolidation and acquisition of the following credit institutions which are set up and operate in Vietnam:

- Commercial banks;

- Finance companies;

- Financial leasing companies;

- Cooperative credit institutions.

2. The merger and consolidation among cooperative credit institutions comply with the Regulation on the issuance and withdrawal of establishment and operation licenses of people’s credit funds; opening and termination of operation of transaction bureaus, branches, representative offices, transaction offices and transaction points of people’s credit funds; division, separation, consolidation and merger of people’s credit funds; and liquidation of people’s credit funds under the State Bank’s supervision, issued together with the State Bank Governor’s Decision No. 24/2006/QD-NHNN of June 6, 2006.

Article 2. Subjects of application

1. Credit institutions specified in Article 1 of this Circular.

2. Organizations and individuals related to the merger, consolidation and acquisition of credit institutions.

Article 3. Competence to approve merger, consolidation and acquisition of credit institutions

The Governor of the State Bank (below referred to as the Governor) shall approve the merger, consolidation and acquisition of credit institutions under this Circular and relevant laws.

Article 4. Interpretation of terms

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

1. Merger of credit institutions means a process in which one or several credit institutions (below referred to as merged credit institution(s) ) is or are merged into another credit institution (below referred to as merging credit institution) by transferring all lawful assets, rights, obligations and interests to the merging credit institution simultaneously with terminating the existence of the merged credit institution(s).

2. Consolidation of credit institutions means a process in which two or several credit institutions (below referred to as consolidated credit institutions) are consolidated to form a new credit institution (below referred to as consolidating credit institution) by transferring all lawful assets, rights, obligations and interests to the consolidating credit institution simultaneously with terminating the existence of the consolidated credit institutions.

3. Acquisition of credit institutions means a process in which a credit institution (below referred to as acquiring credit institution) acquires all lawful assets, rights, obligations and interests of another credit institution (below referred to as acquired credit institution). After being acquired, the acquired credit institution becomes an affiliate of the acquiring credit institution.

4. Credit institutions involved in a merger include the merging credit institution and the merged credit institutions.

5. Credit institutions involved in a consolidation include the consolidating credit institution and the consolidated credit institutions.

6. Credit institutions involved in an acquisition include the acquiring credit institution and the acquired credit institution.

7. The representing credit institution is a merged credit institution which is authorized by the remaining consolidated credit institutions to act as the focal point in settling matters related to the consolidation of credit institutions.

8. Competent body of a credit institution is the body which is competent to decide on the merger, consolidation or acquisition of the credit institution according to the credit institution’s charter and current law.

9. Parent credit institution is a foreign credit institution which owns over 50% of the charter capital of a wholly foreign owned credit institution operating in Vietnam.

10. Owner means shareholders (for joint-stock credit institutions), the State (for state-owned credit institutions), capital contributors (for joint-venture credit institutions), the parent credit institution and capital-contributing members (for wholly foreign owned credit institutions) and capital-contributing members (for cooperative credit institutions).

Article 5. Principles on the merger, consolidation and acquisition of credit institutions

1. The principle of agreement:

Credit institutions involved in a merger, consolidation or acquisition shall agree on the settlement of rights and obligations of involved parties in accordance with current law.

2. The principle of customer protection:

Credit institutions involved in a merger, consolidation or acquisition must ensure that the merger, consolidation or acquisition does not affect the interests of customers, especially the interests of depositors of each credit institution involved.

3. The principle of confidentiality:

Members of the Boards of Directors and the Control Boards, directors general and concerned organizations and individuals of credit institutions involved in a merger, consolidation or acquisition shall assure confidentiality so as to ensure stable operation of credit institutions before the merger, consolidation or acquisition scheme is ratified by competent bodies of credit institutions.

4. The principle of information provision:

a/ In the process of performing merger, consolidation or acquisition procedures, the Boards of Directors of involved credit institutions shall promptly, adequately, consistently, truthfully and accurately provide owners of all parties to the merger, consolidation or acquisition and other competent organizations with information on the process of merger, consolidation or acquisition, including information on the financial status, organization and operation of their credit institutions;

b/ Dossiers, documents and advertisements of credit institutions involved in a merger, consolidation or acquisition must be made in a prudent and accurate manner so as to avoid misunderstanding.

5. The principle of making decisions on merger, consolidation or acquisition:

a/ Competent bodies of credit institutions involved in a merger, consolidation or acquisition shall adopt decisions on the merger, consolidation or acquisition according to meeting and voting conditions and formalities prescribed by current law.

b/ Conditions and formalities for meeting and voting to pass decisions on matters related to organization of the consolidation of credit institutions shall be agreed upon by the consolidated credit institutions and specified in the consolidation scheme in accordance with current law.

Article 6. Forms of merger, consolidation and acquisition of credit institutions

1. Forms of merger

a/ A bank, a finance company or a cooperative credit institution is merged into a bank.

b/ A finance company is merged into a finance company.

c/ A financial leasing company is merged into a financial leasing company.

2. Forms of consolidation

a/ A bank is consolidated with another bank, a finance company or a cooperative credit institution to form a new bank.

b/ Several finance companies are consolidated to form a new one.

c/ Several financial leasing companies are consolidated to form a new one.

3. Forms of acquisition

a/ A bank acquires a finance company or a financial leasing company.

b/ A finance company acquires a financial leasing companies.

Article 7. Consultancy on merger, consolidation and acquisition of credit institutions

Credit institutions involved in a merger, consolidation or acquisition may use consultancy services. Consultancy service providers must satisfy the following conditions:

1. Being an organization licensed to provide finance and banking consultancy services;

2. Refraining from providing consultancy services for several credit institutions involved in a merger, consolidation or acquisition case;

3. Being certified by the Boards of Directors of credit institutions involved in a merger, consolidation or acquisition as having no financial relations which may lead to a conflict of interests with other credit institutions involved in the merger, consolidation or acquisition.

Article 8. Announcement of merger, consolidation or acquisition

1. Credit institutions involved in a merger, consolidation or acquisition under this Circular shall publish an announcement on at least 3 consecutive issues of a daily printed newspaper which is distributed nationwide.

The announcement must be concurrently posted up at the head offices, branches and transaction bureaus of credit institutions involved in the merger, consolidation or acquisition and on the websites of these credit institutions, the State Bank of Vietnam and the Vietnam Banks Association.

2. The announcement must contain essential information as prescribed in the form provided in Appendix 1 to this Circular (not printed herein).

3. Credit institutions involved in a merger, consolidation or acquisition may publish a joint announcement on newspapers.

4. The merger, consolidation or acquisition contract must be sent to debtors and notified to laborers within 15 days after obtaining the Governor’s in-principle approval of the merger, consolidation or acquisition of credit institutions.

Chapter II

MERGER OF CREDIT INSTITUTIONS

Article 9. Merger conditions

1. Not falling into cases of economic concentration which are banned under the Competition Law;

2. Having a merger scheme with essential contents prescribed in Article 12 of this Circular. The merger scheme must not contravene the merger contract;

3. The charter capital of the merging credit institution after the merger must be at least equal to the legal capital prescribed by current law.

Article 10. Merger order and procedures

1. Credit institutions involved in a merger shall jointly elaborate a merger scheme, a merger contract and the charter of the merging credit institution (for cases  in which, after the merger, the charter of the merging credit institution is to be revised). The charter of the merging credit institution after the merger, the merger scheme and the merger contract must be adopted by competent bodies of credit institutions involved. Chairpersons of the Boards of Directors of credit institutions involved shall sign, seal, and take responsibility for the content of, the merger scheme.

2. Credit institutions involved in a merger shall send a document to the competition administration agency to notify the merger or request entitlement to exemption, for cases in which merger is banned under the Competition Law.

3. In-principle approval of merger:

a/ Credit institutions involved in a merger shall jointly compile 5 sets of dossier as prescribed in Clause 1, Article 11 of this Circular to be sent by the merging credit institution to the State Bank (the Banking Inspection and Supervision Agency) for examination and decision;

b/ Within 5 working days after receiving complete dossier sets as prescribed in Clause 1, Article 11 of this Circular, the Banking Inspection and Supervision Agency shall send a document, enclosed with a dossier set, to:

(i) The State Bank’s branches in provinces or centrally run cities where credit institutions involved in the merger are headquartered for, on the basis of their management and supervision work in localities and the dossier of application for approval of the merger, evaluating the organization and operation of credit institutions involved and expressing their viewpoints on the merger;

(ii) People’s Committees of provinces and centrally run cities where credit institutions involved in the merger are headquartered for giving their opinions on impacts of the merger on the local socio-economic stability and expressing their viewpoints on the merger;

(iii) Departments under the State Bank whose functions and tasks are related to one or several contents of the dossier for expressing their viewpoints on the merger (when necessary).

c/ Within 15 working days after receiving the request of the Banking Inspection and Supervision Agency, the above units shall send their written opinions on consulted issues to the former.

d/ Within 15 working days after receiving written opinions of units stated at Point b, Clause 3 of this Article, the Banking Inspection and Supervision Agency shall appraise the dossier and propose its opinions to the Governor for considering and granting in-principle approval or refusing to grant in-principle approval of the merger. In case of refusal to grant in-principle approval, it shall clearly state the reason.

4. Approval of merger:

a/ Within 90 days after the Governor signs a document to grant in-principle approval of their merger, credit institutions involved in the merger shall:

(i) Consult their competent bodies to adopt modified contents of the merger scheme and other related issues (if any);

(ii) Jointly compile 2 dossier sets as prescribed in Clause 2, Article 11 of this Circular, which will be sent by the merging credit institution to the State Bank (the Banking Inspection and Supervision Agency) for examination and approval.

b/ Within 15 working days after the receipt of a complete dossier as prescribed in Clause 2, Article 11 of this Circular, the Banking Supervision and Inspection Agency shall appraise the dossier and propose its opinions to the Governor for approving or disapproving the merger of credit institutions. In case of disapproval, it shall clearly state the reason.

5. Within 15 working days after the effective date of the merger approval decision, the merged credit institution shall complete procedures for withdrawal of its establishment and operation license and publish an announcement under relevant regulations; and the merging credit institution shall complete business registration procedures and make a merger announcement under Article 8 of this Circular.

Article 11. Dossiers of application for merger

1. A dossier of application for in-principle approval of merger comprises:

a/ An application for in-principle approval of merger, made by the chairperson of the Board of Directors of the merging credit institution according to the form provided in Appendix 2 to this Circular (not printed herein);

b/ The merger scheme with essential contents as prescribed in Article 12 of this Circular;

c/ The audited financial statement, which is used for the elaboration of the merger scheme under the agreement of competent bodies of credit institutions involved in the merger;

d/ Copies of establishment and operation licenses; copies of documents approving the expansion of operational scope; and copies of business registration certificates of credit institutions involved in the merger, which are duly certified;

e/ Decisions of competent bodies of credit institutions involved in the merger as prescribed in Clause 1, Article 10 of this Circular. A decision of the merged credit institution authorizing the merging credit institution to propose the Governor to consider and approve the merger under this Circular;

f/ The written opinions of the competition management agency or the Industry and Trade Minister’s or the Prime Minister’s decision on the grant of exemption, in case credit institutions involved in the merger are eligible for exemption as prescribed in Clause 2, Article 10 of this Circular. In case these documents are not required, the merging credit institution shall give written explanations and commit to take responsibility for the truthfulness of its report on non-violation of the Competition Law’s provisions on economic concentration.

g/ The merger contract with principal contents as prescribed in the Enterprise Law.

h/ The draft charter of the merging credit institution (in case after the merger the charter of the merging credit institution is to be revised).

2. A dossier of application for approval of merger comprises:

a/ An application for approval of merger, made by the chairperson of the Board of Directors of the merging credit institution according to the form provided in Appendix 2 to this Circular (not printed herein);

b/ A report of the chairperson of the Board of Directors of the merged credit institution requesting withdrawal of the establishment and operation license;

c/ Decisions of competent bodies of credit institutions involved in the merger on matters prescribed at Point a, Clause 4, Article 10 of this Circular;

d/ A document of the merging credit institution, clearly stating modifications to the merger scheme already submitted to the Governor for in-principle approval of the merger (if any), signed by the chairperson of the Board of Directors of the merged credit institution;

e/ A report of the chairperson of the Board of Directors of the merging credit institution and the dossier of application for approval of contents which must be approved by the Governor as required by current law.

3. When necessary, the Governor may request credit institutions involved in the merger to make written explanation about contents of the dossier of application for approval of the merger.

Article 12. Merger schemes

A merger scheme must contain at least the following details:

1. Names, addresses and websites of credit institutions involved in the merger;

2. Names, addresses and telephone numbers of members of the Boards of Directors, members of the Control Boards and directors general of credit institutions involved in the merger;

3. A summary report on the financial status and operation of credit institutions involved in the merger up to the time prescribed at Point c, Clause 1, Article 11 of this Circular;

4. Reasons for the merger;

5. The charter capital of credit institutions involved in the merger and of the merging credit institution after the merger;

6. The list of shareholders holding dominant shares (for joint-stock credit institutions) or owners (for other credit institutions) of the merging credit institution after the merger;

7. Rights and obligations of credit institutions involved in the merger and concerned organizations and individuals (if any);

8. The merger roadmap;

9. The tentative plan on personnel, operational network and contents and other matters concerning the organization and operation of the merging credit institution after the merger;

10. The tentative business plan of the merging credit institution for the first 3 years after the merger. This business plan must contain at least an asset inventory and a report on expected business results; minimum capital safety ratios; operation efficiency criteria and explanations about the feasibility of the plan in each year;

11. Measures for converting and integrating the management information system, internal inspection, control and audit system and data transmission system so as to ensure smooth operation during and after the merger;

12. Methods and time of converting contributed capital/share capital; forms of converting contributed capital/share capital and corresponding conversion rates;

13. Liabilities of parties to the merger for expenses arising in the merger process;

14. Plans for dealing with the case in which one or several credit institutions involved in the merger unilaterally renounce(s) the merger agreement.

Chapter III

CONSOLIDATION OF CREDIT INSTITUTIONS

Article 13. Conditions for consolidation

1. Not falling into cases of economic concentration which are banned under the Competition Law;

2. Having a consolidation scheme with essential contents prescribed in Article 16 of this Circular. The consolidation scheme must not contravene the consolidation contract;

3. The charter capital of the consolidating credit institution must be at least equal to the legal capital prescribed by current law.

Article 14. Consolidation order and procedures

1. Consolidated credit institutions shall jointly elaborate a consolidation scheme, a consolidation contract and the charter of the consolidating credit institution. The consolidation scheme, the consolidation contract and the charter of the consolidating credit institution must be adopted by competent bodies of consolidated credit institution. Chairpersons of the Boards of Directors of consolidated credit institutions shall seal, sign, and take responsibility for the contents of, the consolidation scheme.

2. Consolidated credit institutions shall send a document to the competition administration agency to notify the consolidation or request entitlement to exemption, for cases in which consolidation is banned under the Competition Law.

3. In-principle approval of consolidation:

a/ Consolidated credit institutions shall jointly compile 5 sets of dossier as prescribed in Clause 1, Article 15 of this Circular to be sent by the representing credit institution to the State Bank (the Banking Inspection and Supervision Agency) for examination and decision;

b/ Within 5 working days after receiving complete dossier sets as prescribed in Clause 1, Article 15 of this Circular, the Banking Inspection and Supervision Agency shall send a document, enclosed with a dossier set, to:

(i) The State Bank’s branches in provinces or centrally run cities where consolidated credit institutions are headquartered for, on the basis of their management and supervision work in localities and the dossier of application for approval of the consolidation, evaluating the organization and operation of consolidated credit institutions and expressing their viewpoints on the consolidation;

(ii) People’s Committees of provinces and centrally run cities where consolidated credit institutions are headquartered for giving their opinions on impacts of the consolidation on the local socio-economic stability and expressing their viewpoints on the consolidation;

(iii) Departments under the State Bank whose functions and tasks are related to one or several contents of the dossier for expressing their viewpoints on the merger (when necessary).

c/ Within 15 working days after receiving the request of the Banking Inspection and Supervision Agency, the above units shall send their written opinions on consulted issues to the Banking Inspection and Supervision Agency.

d/ Within 15 working days after receiving written opinions of units stated at Point b, Clause 3 of this Article, the Banking Inspection and Supervision Agency shall appraise the dossier and propose its opinions to the Governor for considering and granting in-principle approval or refusing to grant in-principle approval of the consolidation. In case of refusal to grant in-principle approval, it shall clearly state the reason.

4. Approval of consolidation:

a/ Within 90 days after the Governor signs a document to grant in-principle approval of their consolidation, consolidated credit institutions shall:

(i) Consult their competent bodies to adopt modified contents of the consolidation scheme and other related matters (if any);

(ii) Jointly compile 2 dossier sets as prescribed in Clause 2, Article 15 of this Circular, which will be sent by the representing credit institution to the State Bank (the Banking Inspection and Supervision Agency) for examination and approval.

b/ Within 15 working days after the receipt of complete dossiers as prescribed in Clause 2, Article 15 of this Circular, the Banking Supervision and Inspection Agency shall appraise the dossier and propose its opinions to the Governor for approving or disapproving the consolidation. In case of disapproval, it shall clearly state the reason.

c/ Within 15 working days after the effective date of the consolidation approval decision, consolidated credit institutions shall complete all procedures for withdrawal of establishment and operation licenses and make an announcement under relevant regulations; the consolidating credit institution shall complete business registration procedures, make a consolidation announcement according to Article 8 of this Circular, and launch its operation according to current law.

Article 15. Dossiers of application for consolidation

1. A dossier of application for in-principle approval of consolidation comprises:

a/ An application for in-principle approval of consolidation, made by the  chairperson of the Board of Directors of the representing credit institution according to the form provided in Appendix 2 to this Circular (not printed herein);

b/ The consolidation scheme with essential contents as prescribed in Article 16 of this Circular;

c/ The audited financial statement which is used for the elaboration of the consolidation scheme under the agreement of competent bodies of consolidated credit institutions;

d/ Copies of establishment and operation licenses; copies of documents approving the expansion of operational scope; and copies of business registration certificates of consolidated credit institutions, which are duly certified;

e/ Decisions of competent bodies of consolidated credit institutions prescribed in Clause 1, Article 14 of this Circular. Decisions of consolidated credit institutions authorizing a representing credit institution to propose the Governor to consider and approve the consolidation under this Circular;

f/ The written opinions of the competition administration agency or the Industry and Trade Minister’s or the Prime Minister’s decision on the grant of exemption, in cases credit institutions involved in the consolidation are eligible for exemption as prescribed in Clause 2, Article 14 of this Circular. In case these documents are not required, credit institutions involved in the consolidation shall give written explanations and commit to take responsibility for the truthfulness of their reports on non-violation of the Competition Law’s provisions on economic concentration.

g/ The consolidation contract with principal contents as prescribed in the Enterprise Law.

h/ The draft charter of the consolidating credit institution.

2. A dossier of application for approval of consolidation comprises:

a/ An application for approval of consolidation, made by the chairperson of the Board of Directors of the representing credit institution according to the form provided in Appendix 2 to this Circular (not printed herein);

b/ Reports of chairpersons of the Boards of Directors of consolidated credit institutions requesting withdrawal of establishment and operation licenses;

c/ Decisions of competent bodies of consolidated credit institutions on matters prescribed at Point a, Clause 4, Article 14 of this Circular;

d/ A document of the representing credit institution clearly stating modifications to the consolidation scheme already submitted to the Governor for in-principle approval of the consolidation (if any), signed by chairpersons of the Boards of Directors of consolidated credit institutions;

e/ A report of the chairperson of the representing credit institution and a dossier of application for approval of contents which must be approved by the Governor as required by current law.

3. When necessary, the Governor may request consolidated credit institutions to make written explanations about contents related to the dossier of application for approval of the consolidation.

Article 16. Consolidation schemes

A consolidation scheme must contain at least the following details:

1. Names, addresses and websites of consolidated credit institutions;

2. Names, addresses and telephone numbers of members of the Boards of Directors, members of the Control Boards and directors general of consolidated credit institutions;

3. A summary report on the financial status and operation of consolidated credit institutions up to the time specified at Point c, Clause 1, Article 15 of this Circular;

4. Reasons for the consolidation;

5. Charter capital of consolidated credit institutions and the consolidating credit institution;

6. The list of shareholders holding dominant shares (for joint-stock credit institutions) or owners (for other credit institutions) of the consolidating credit institution;

7. Rights and obligations of consolidated credit institutions and concerned organizations and individuals (if any);

8. Conditions and formalities for meeting and voting on decisions related to the consolidating credit institution;

9. The consolidation roadmap;

10. The tentative business plan of the consolidating credit institution for the first 3 years after the consolidation. This business plan must contain at least an asset inventory and a report on expected business results and specify minimum capital safety ratios; operation efficiency criteria and explanations about the feasibility of the plan in each year;

11. The tentative plan on personnel, operational network and contents and other matters related to the organization and operation of the consolidating credit institution;

12. Measures for converting and integrating the management information system, internal inspection, control and audit system and data transmission systems so as to ensure smooth operation during and after the consolidation;

13. Methods and time of converting contributed capital/share capital; forms of converting contributed capital/share capital and corresponding conversion rates;

14. Plans for dealing with the case in which one or several consolidated credit institutions unilaterally renounce(s) the consolidation agreement.

Chapter IV

ACQUISITION OF CREDIT INSTITUTIONS

Article 17. Conditions for acquisition of credit institutions

1. Not falling into cases of economic concentration which are banned under the Competition Law;

2. Having an acquisition scheme with essential contents prescribed in Article 20 of this Circular. The acquisition scheme must not contravene the acquisition contract;

3. After the acquisition, the acquiring credit institution must have a charter capital at least equal to the legal capital and assure operation safety ratios prescribed by current law.

Article 18. Order of and procedures for acquisition of credit institutions

1. Credit institutions involved in an acquisition shall jointly elaborate an acquisition scheme and an acquisition contract. The acquisition scheme and the acquisition contract must be adopted by competent bodies of credit institutions involved in the acquisition. Chairpersons of the Boards of Directors of credit institutions involved in the acquisition shall sign, seal, and take responsibility for the contents of, the acquisition scheme;

2. The acquiring credit institution shall send a document to the competition administration agency to notify the acquisition or request entitlement to exemption, for cases in which acquisition is banned under the Competition Law;

3. In-principle approval of acquisition of credit institutions:

a/ Credit institutions involved in an acquisition shall jointly compile 5 sets of dossiers as prescribed in Clause 1, Article 19 of this Circular to be sent by the acquiring credit institution to the State Bank (the Banking Inspection and Supervision Agency) for examination and decision;

b/ Within 5 working days after receiving complete dossier sets as prescribed in Clause 1, Article 19 of this Circular, the Banking Inspection and Supervision Agency shall send a document, enclosed with a dossier set, to:

(i) The State Bank’s branches in provinces or centrally run cities where credit institutions involved in the acquisition are headquartered for, on the basis of their management and supervision work in localities and the dossier of application for acquisition, evaluating the organization and operation of credit institutions involved in the acquisition and expressing their viewpoints on the acquisition;

(ii) People’s Committees of provinces and centrally run cities where credit institutions involved in the acquisition are headquartered for giving their opinions on impacts of the acquisition on the local socio-economic stability and expressing their viewpoints on the acquisition;

(iii) Departments under the State Bank whose functions and tasks are related to one or several contents of the dossier for expressing their viewpoints on the acquisition (when necessary).

c/ Within 15 working days after receiving the request of the Banking Inspection and Supervision Agency, the above units shall send their written opinions on consulted issues to the Banking Inspection and Supervision Agency.

d/ Within 15 working days after receiving written opinions of units stated at Point b, Clause 3 of this Article, the Banking Inspection and Supervision Agency shall appraise the dossier and propose its opinions to the Governor for considering and granting in-principle approval or refusing to grant in-principle approval of the acquisition. In case of refusal to grant in-principle approval, it shall clearly state the reason.

4. Approval of acquisition:

a/ Within 90 days after the Governor signs a document to grant in-principle approval of their acquisition, credit institutions involved in the acquisition shall:

(i) Consult their competent bodies to adopt modified contents of the acquisition scheme and other related matters (if any);

(ii) Jointly comply 2 dossier sets as prescribed in Clause 2, Article 19 of this Circular, to be sent by the acquiring credit institution to the State Bank (the Banking Inspection and Supervision Agency) for examination and approval.

b/ Within 15 working days after the receipt of complete dossier sets as prescribed in Clause 2, Article 19 of this Circular, the Banking Supervision and Inspection Agency shall appraise the dossier and propose its opinions to the Governor for approving or disapproving the acquisition. In case of disapproval, it shall clearly state the reason.

5. Within 15 working days after the Governor issues a document to approve the acquisition of credit institutions, the acquiring credit institution shall complete procedures for modification of the establishment and operation license of the acquired credit institution due to change of owners, conduct business registration, and make an announcement according to Article 8 of this Circular and relevant laws.

Article 19. Dossiers of application for acquisition of credit institutions

1. A dossier of application for in-principle approval of the acquisition comprises:

a/ An application for in-principle approval of the acquisition, made by the chairperson of the Board of Directors of the acquiring credit institution according to the form provided in Appendix 2 to this Circular (not printed herein);

b/ The acquisition scheme with essential contents as prescribed in Article 20 of this Circular;

c/ The audited financial statement which is used for the elaboration of the acquisition scheme under the agreement of competent bodies of credit institutions involved in the acquisition;

d/ A document of the chairperson of the Board of Directors of the acquiring credit institution committing that after the acquisition, the acquiring credit institution will still assure operation safety ratios prescribed by current law;

e/ Copies of establishment and operation licenses, copies of documents on expansion of operational scope and business registration certificates of credit institutions involved in the acquisition as prescribed by current law;

f/ Decisions of competent bodies of credit institutions involved in the acquisition as prescribed in Clause 1, Article 18 of this Circular. A decision of the acquired credit institution authorizing the acquiring credit institution to propose the Governor to consider and approve the acquisition under this Circular;

g/ The written opinions of the competition administration agency or the Prime Minister’s or the Industry and Trade Minister’s decision on the grant of exemption as prescribed in Clause 2, Article 18 of this Circular. In case these documents are not required, credit institutions involved in the acquisition shall give written explanations and commit to take responsibility for the truthfulness of their reports on non-violation of the Competition Law’s provisions on economic concentration;

h/ The acquisition contract containing such principal details as name and address of the acquiring credit institution; name and address of the acquired credit institutions; procedures and conditions for the acquisition; mode of payment; plan on labor employment and time limit for the acquisition.

2. A dossier of application for approval of acquisition comprises:

a/ An application for approval of acquisition, made by the chairperson of the Board of Directors of the acquiring credit institution according to the form provided in Appendix 2 to this Circular (not printed herein);

b/ A report of the chairperson of the Board of Directors of the acquiring credit institution and an enclosed dossier, requesting the Governor to approve:

(i) The modification of the establishment and operation license of the acquired credit institution due to change of owners;

(ii) Other contents which must be approved by the Governor as required by current law (if any).

c/ Decisions of competent bodies of credit institutions involved in the acquisition on matters prescribed at Point a, Clause 4, Article 18 of this Circular;

d/ A document of the acquiring credit institution clearly stating modifications to the acquisition scheme already submitted to the Governor for in-principle approval of the acquisition (if any), signed by the chairperson of the Board of Directors of  the acquired credit institution;

3. When necessary, the Governor may request credit institutions involved in the acquisition to give written explanation about contents related to the dossier of application for approval of the acquisition.

Article 20. Acquisition schemes

An acquisition scheme must contain at least the following details:

1. Names, addresses and websites of credit institutions involved in the acquisition;

2. Names, addresses and telephone numbers of members of the Boards of Directors, members of Control Boards and directors general of credit institutions involved in the acquisition;

3. Reasons for the acquisition;

4. A summary report on the financial status and operation of credit institutions involved in the acquisition up to the time specified at Point c, Clause 1, Article 19 of this Circular;

5. Rights and obligations of credit institutions involved in the acquisition and concerned organizations and individuals (if any);

6. The tentative business plan of the acquiring credit institution for the subsequent 3 years after the acquisition. This business plan must contain at least an asset inventory and a report on expected business results and specify minimum capital safety ratios; operation efficiency criteria and explanations about the feasibility of the plan in each year;

7. The tentative plan on personnel, operational network and contents and other matters related to the organization and operation of the acquiring credit institution after the acquisition;

8. Measures for converting and integrating the management information system, internal inspection, control and audit system and data transmission system so as to ensure smooth operation during and after the acquisition;

9. The acquisition price, payment deadline and mode; and time limit for transferring the acquired credit institution;

10. Liabilities of credit institutions involved in the acquisition for expenses incurred in the process of acquisition;

11. Plans for dealing with the case in which one or several credit institutions involved in the acquisition unilaterally renounce(s) the acquisition agreement.

Chapter V

RESPONSIBILITIES OF CONCERNED UNITS

Article 21. Responsibilities of credit institutions

1. To comply with the merger, consolidation and acquisition principles specified in Article 5 of this Circular;

2. To coordinate with one another in elaborating merger, consolidation or acquisition schemes and completing relevant processes, procedures and dossiers according to this Circular;

3. To prohibit dispersal of assets in any forms. The Boards of Directors, the Control Boards and the directors general shall take responsibility for all operations and must ensure absolute safety for assets of credit institutions until completion of the merger, consolidation or acquisition process under approved schemes.

4. After obtaining the document on the grant of in-principle approval, the merged, consolidated and acquired credit institutions shall proactively prepare for the transfer and shall transfer all interests, obligations and organizational and operational matters right after the merger, consolidation or acquisition decision is issued by the Governor;

5. After the merger, consolidation or acquisition, if detecting any matters which are not reflected in accounting books or not yet transferred, members of the Boards of Directors, members of the Control Boards or directors general of merged, consolidated or acquired credit institutions shall take all responsibility before law.

Article 22. Responsibilities of provincial-level State Bank’s branches

1. To send their written opinions on the merger, consolidation or acquisition of credit institutions to the Banking Inspection and Supervision Agency as prescribed in this Circular.

2. To guide and supervise the merger, consolidation or acquisition of credit institutions located in their localities in strict accordance with this Circular and relevant laws.

Article 23. Responsibilities of the Banking Inspection and Supervision Agency

1. To act as the focal point in consulting concerned units about the merger, consolidation or acquisition of credit institutions under this Circular.

2. To examine merger, consolidation or acquisition dossiers for submission to the Governor for consideration and decision under this Circular.

3. To act as the focal point in advising the Governor in directing, supervising and providing guidance to credit institutions in the process of merger, consolidation or acquisition.

Article 24. Responsibilities of other departments under the State Bank

1. The Finance-Accounting Department shall provide detailed guidance on matters related to accounting regulations in the process of merger, consolidation or acquisition of credit institutions.

2. The Legal Department shall coordinate with the Banking Inspection and Supervision Agency in considering legal matters related to the process of merger, consolidation or acquisition of credit institutions.

3. Concerned departments under the State Bank shall, based on their functions and tasks, give their written opinions at the request of the Banking Inspection and Supervision Agency as prescribed in this Circular.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 25. Handling of violations

All violations of this Circular shall, depending on their nature and severity, be handled according to law.

Article 26. Effect

1. This Circular takes effect 45 days from the date of its signing and replaces the State Bank Governor’s Decision No. 241/1998/QD-NHNN5 of July 15, 1998, promulgating the Regulation on merger, consolidation and acquisition of Vietnamese joint-stock credit institutions.

2. In case legal documents referred to in this Circular are modified or superseded, new ones will apply.

3. In case a merging or acquiring joint-stock credit institution has been operating for less than 5 years, their founding shareholders shall transfer shares in accordance with the law on the grant of establishment and operation licenses of joint-stock credit institutions.

4. In case credit institutions involved in a merger, consolidation or acquisition are public companies, apart from this Circular, they shall also abide by relevant regulations on securities and securities market regarding merger, conso-lidation and acquisition of credit institutions.

Article 27. Organization of implementation

The Chief of the Office, the Chief Banking Inspector-Supervisor and heads of concerned units under the State Bank of Vietnam, directors of provincial-level subsidiaries of the State Bank and chairpersons of Boards and Directors and directors general (directors) of credit institutions shall implement this Circular.-

For the Governor of the State Bank of Vietnam
Deputy Governor
TRAN MINH TUAN