Circular No. 209/2013/TT-BTC dated December 27, 2013 of the Ministry of Finance on guiding the financial regulations applicable to Vietnam Asset Management Company for credit institutions

THE MINISTRY OF FINANCE

Circular No. 209/2013/TT-BTC dated December 27, 2013 of the Ministry of Finance on guiding the financial regulations applicable to Vietnam Asset Management Company for credit institutions

Pursuant to the Law on Enterprises No.60/2005/QH11 dated November 29, 2005;

Pursuant to the Law on Credit Institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Government’s Decree No. 53/2013/ND-CP dated May 18, 2013,on establishment, organization and operation of Vietnam asset Management Company for credit institutions;

Pursuant to the Government’s Decree No. 71/2013/ND-CP dated July 11, 2013, onInvestment of state capital in enterprises and financial management of enterprises of which 100% charter capital is owned by the state;

Pursuant to the Government’s Decree No. 118/2008/ND-CP dated November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the proposal of Director of Department of Finance of Banks and Financial Institutions;

The Minister of Finance promulgates the Circular guiding the financial regulations applicable to Vietnam Asset Management Company for credit institutions.

Article 1. Scope of regulation and subjects of application

1. This Circular guides the financial regulations applicable to Vietnam Asset Management Company for credit institutions (hereinafter abbreviated to VAMC).

2. The financial regulations of VAMC shall comply with legislations applicable to the one-member limited liability companies of which 100% of charter capital is owned by State, the Government’s Decree No. 53/2013/ND-CP dated May 18, 2013, on establishment, organization and operation of Vietnam asset Management Company for credit institutions (hereinafter abbreviated to the Decree No. 53/2013/ND-CP), specific contents and guides in this Circular and other relevant legal documents.

Article 2. Operational capital of VAMC

1. Investment capital of the owner includes:

Charter capital of VND 500 billion;

1.2. Fund for development investment which is deducted and set up according to the prescribed regime;

1.3. Other equity sources as prescribed by law applicable to the One-member limited liability companies of which 100% of charter capital is owned by State.

2. Mobilized capital:

2.1. Special bonds which are issued by VAMC in accordance with regulations of the State Bank of Vietnam;

2.2. Other mobilized capital sources as prescribed by law applicable to the One-member limited liability companies of which 100% of charter capital is owned by State.

Article 3. Use of capital and assets

1. VAMC shall be responsible for managing, using, monitoring all existing assets and capital, make accounting in accordance with the current accounting regulations; reflect fully, exactly, timely the situation of use, change of capital and assets during business; determine the responsibilities and forms of dealing with each division, individual in case of causing damages, loss of assets and capital of VAMC.

2. VAMC shall be entitled to use operational capital to serve for business operation as prescribed at Decree No. 53/2013/ND-CP, specific guides at this Circular and relevant legislation in the principles of ensuring security and capital development:

2.1. Special bonds shall only be used for purchasing bad debts of credit institutions as prescribed at Clause 1 Article 7 of Decree No. 53/2013/ND-CP.

2.2. VAMC may use its lawful capital sources, exclusive of special bonds, in order to buy bad debts at the market price as prescribed at Clause 2 Article 7 of Decree No. 53/2013/ND-CP. Debts which are purchased by VAMC at the market price shall be determined as an invested amount upon turning into equity capital, share capital. VAMC shall monitor and account this investment as prescribed in this Law.

2.3. VAMC may use capital for investment, procurement of fixed assets in serve of activities of VAMC in the principle of equipping in line with the operational need of VAMC, efficiency, thrifty and observance with provisions of state applicable to the one-member limited companies of which 100% of charter capital is owned by State regarding investment in fundamental construction and procurement of fixed assets.

2.4. VAMC shall be only used capital for outside investment (Do not through the purchase and sale of debts and assets) under the following forms:

a) Sending money at the State commercial banks;

b) Participating in capital contribution, share purchase as prescribed at Point g, Clause 1, Article 2 of the Decree No.53/2013/ND-CP.

2.5. To repair, upgrade the security assets which VAMC has collected from debts as prescribed at Point d, Clause 1, Article 12 of Decree No. 53/2013/ND-CP, with the aim to increase value, facilitate for handling assets for recovery of debts.

2.6. VAMC may use capital for investment, or provide loans to customers in order to handle temporary financial difficulties and recovery of production and business as prescribed at Clause 3 Article 17 Decree 53/2013/ND-CP.

3. VAMC shall deduct and set up risk provisions in its operational costs as prescribed in Article 4 of this Circular.

Article 4. Setting up and use of provisions

1. For bad debts purchased at the market price: VAMC shall set up and use provisions in accordance with regulations of the State Bank of Vietnam.

2. For guarantees defined at Clause 4 Article 17 of the Decree 53/2013/ND-CP, invested capitals, financial provisions to borrowers under form of guarantee and loaning: VAMC shall perform the setting up and use of provisions in accordance with regulations of the State bank of Vietnam on classification of debts, setting up and use of risk provisions in banking operation of credit institutions.

3. For provisions for devaluation of inventories, loss of financial investments, bad receivable debts (except for receivable amounts from credit institutions): VAMC shall set up and use provisions in accordance with general regulations applicable to enterprises.

4. For other financial supply amounts: VAMC shall set up and use provisions like financial invested amounts.

Article 5. Management, use and refund of advance payments from credit institutions selling bad debts

1. VAMC shall be received an advance payment in money from credit institutions when purchasing debts with special bonds in order to have funding to pay relevant costs involving handling of bad debts. The Governor of the State Bank of Vietnam shall specify the advance payment level after unifying with the Minister of Finance.

2. VAMC must monitor separately each advance payment to refund to the credit institutions selling debt.

3. VAMC shall use lawful revenues to refund the advance payments received from the credit institutions selling debt when debts have been handled or when the special bonds have been matured.

Article 6. Revenue, expenses

1. Contents of revenue, expenses of VAMC shall comply with Clause 1 and Clause 2 Article 23 of the Decree No. 53/2013/ND-CP.

2. Revenues and expenses of VAMC must have reasonable and valid invoices or vouchers and must be accounted fully, timely in accordance with legislation on accounting.

3. The entries of revenues and expenses must observe the principle of conformity between revenues and expenses; the conformity with legislations on enterprise income tax.

Article 7. Principles of revenue entry

1. The accounting into revenue for charges which VAMC may enjoy due to recovery of debts, sale of debts or sell of guarantee assets for debts purchased by special bonds: VAMC shall account into revenue at time of receiving the charges mentioned above.

2. The accounting into revenue for the amounts which have been collected by it or paid to it by the borrowers, for debts which have purchased at market price: VAMC shall account into revenue at time of collecting debts or time the borrowers pay debts.

3. The accounting into revenue for the amount obtained from sale of debts, guarantee assets, for debts which have purchased at market price: VAMC shall account into revenue at time of collecting such amounts from sale of debts, guarantee assets.

4. For revenues from activities of capital contribution, share purchase: Revenue is the divided interests upon having Resolution or Decision on division.

5. For revenues from other activities (including activities of advisory, brokerage of purchase, sale, handling of debts and assets; revenues from activities of lease and use of assets; revenues from financial operation; revenues from activities of asset auction and other revenues): Revenues are all amounts which have been accepted for payment by customers regardless of whether it has received such amounts or not.

6. For receivable revenues which have accounted into revenue but fail to receive at the time of collection, VAMC shall make accounting to reduce revenues in case of same fiscal year or account into expenses in case of different fiscal year and monitor at the off-balance-sheet in order to urge collection. When receive such amount, it shall account into revenue of business operation.

Article 8. Principles of expense entry

1. Expenses purchased from bad debts at the market price may be accounted upon arising revenues from handling of such bad debts as follows:

In case where debts are recovered many times:

a) If revenues in the period, from handling of debts (Collecting amounts from borrowers; sale of debts; use, sale of guarantee assets of debts) are more than or equal to expenses for buying such debts: All expenses for purchasing debts shall be carried forward for the expenses in the period.

b) If revenues in the period, from handling of debts (Collecting amounts from borrowers; sale of debts; use, sale of guarantee assets of debts) are less than expenses for buying such debts:

- To carry forward a part of expenses for purchase of such debts into the expense in the period with level equal to the amounts recovered practically from handling of debts;

- When debts are further recovered, part of expenses for purchase of such debts shall be further carried forward into expenses in the principle mentioned above:

- When the last remaining part of debt is recovered, to carry forward entire remaining part of expenses for purchase of the remaining debt into the expense in the period.

1.2. In case where debts are recovered once: All expenses for purchasing debts shall be carried forward for the expenses in the period at time of debt recovery.

2. For expenses for repair, upgrading of assets:

2.1. In case where bad debts are purchased at the market price: VAMC shall be permitted to account the expenses for advance payment (Detailed under each debt) corresponding to expenses for repair, upgrading of assets. After selling assets or collecting bad debts in association with assets or receiving amounts from use of assets, the received amounts must be accounted into revenue, concurrently the final settlement of the expenses for advance payment corresponding to expenses which have been used by VAMC for repair, upgrading of assets shall comply with Clause 1 this Article;

2.2. In case where bad debts are purchased by special bonds: VAMC shall be permitted to account the expenses for advance payment (detailed under each debt) corresponding to expenses for repair, upgrading of assets. After selling assets or collecting bad debts in association with assets or receiving amounts from use of assets, VAMC shall make the final settlement of the receivable amounts gradually corresponding to expenses which have been used by VAMC for repair, upgrading of assets;

3. For other expenses (including expenses for collection of debts, expenses for advisory, brokerage of purchase, sale, handling of debts and assets; expenses for activities of debt sale, share sale and transfer of contributed capital; expenses for appropriation of risk provisions; salaries,bonuses,allowances of managers, employees; expenses for asset auction; expenses for company management; expenses for paying loan interests; expenses involving assets and other expenses):VAMC shall only make entries into expenses for expenses arising practically, based on reasonable, valid invoices and vouchers of each expense.

4. Company shall be not allowed to include in expense the following amounts:

4.1. Fines on administrative violations which individuals must pay as prescribed by law;

4.2. Expenses which do not relate to business operation of VAMC;

4.3. Expenses which do not have valid vouchers;

4.4. Amounts which have been accounted into expense but not used for payment in reality;

4.5. Amounts which have been financed by other funding sources;

4.6. Other unreasonable and invalid expenses.

Article 9. Distribution of profit and appropriation of funds

1. Profit of VAMC shall be equal to total revenues arising in the period minus total reasonable expenses arising in the period in accordance with regulations.

2. Distribution of profit and appropriation of funds by VAMC.

Profit of VAMC shall, after finishing financial duties to State as prescribed by law, be distributed as follows:

2.1. Offsetting losses of previous years;

2.2. The remaining profit after offsetting losses as prescribed at point 2.1 this Clause (if any) shall be assumed as 100% and distributed as follows:

a) Being appropriated 30% into fund for development investment;

b) Being appropriated into fund for awarding managers of VAMC, the commendation and welfare funds. The appropriation of fund for awarding managers of VAMC, the commendation and welfare funds of VAMC shall comply with legislations on appropriation of fund for awarding managers of VAMC, the commendation and welfare funds applicable to the One-member limited liability Companies of which charter capital is owned by State;

c) The remaining profit (if any) after appropriation as prescribed at item a, b this point shall be submitted to the Support Fund for arrangement and development of enterprises.

Article 10. Handling of special cases

In case where ending fiscal year, VAMC suffers losses; and in that fiscal year, it has the matured special bonds, total expenses for amounts collected from debts in which VAMC is beneficiary is less than amounts which VAMC has received advance payments from credit institutions and must refund in year, VAMC shall report to the Ministry of Finance, the State bank of Vietnam, to report to the Prime Minister to be allowed handling the part which must refund for advance payments from credit institutions in direction VAMC shall make entries into revenues and credit institutions shall make entries into expenses.

Article 11. Responsibilities of the management agencies

1. Responsibilities of the Ministry of Finance:

To perform function of state management on finance of VAMC as prescribed by law;

1.2. To coordinate with the State bank of Vietnam in handling matters on finance of VAMC.

2. Responsibilities of the State bank of Vietnam:

2.1. To perform function of state management over all activities of VAMC as prescribed by law; Quarterly, annually (within 30 days after the ending day of quarter, year), the state bank of Vietnam shall notify the Ministry of Finance about financial situation of VAMC and violations on financial regulations of VAMC which are detected during checks, inspections and supervision (if any) in order to have measures to timely coordinate in handling;

2.2. To perform function of state owner with respect to VAMC:

a) To decide and take responsibilities for its decision within authority of state owners as prescribed by law;

b) To assume the prime responsibility for, and coordinate with the Ministry of Finance in submitting to the Prime Minister for consideration and decision on financial matters falling beyond its competence.

2.3. Quarterly, annually, the State Bank of Vietnam shall assess the operation efficiency of VAMC and notify the Ministry of Finance, the Ministry of Planning and Investment (Within 30 days after the ending day of quarter, year) in order to execute the supervision function.

Article 12. Regulations on accounting, audit, report and financial disclosure

1. VAMC shall apply the accounting regulations as prescribed by law, make entries of initial vouchers sufficiently, update accounting book and reflect fully, honestly, exactly, objectively activities of business and finance.

2. The fiscal year of VAMC shall begin from January 01 and end on December 31 of calendar year.

3. VAMC shall do financial settlements, make and send financial statements to the State bank of Vietnam and the Ministry of Finance as prescribed by law applicable to the One-member limited liability companies of which 100% of charter capital is held by State.

4. VAMC shall send the annual financial statements already been audited by State (audited statements) to the Ministry of Finance, the State bank of Vietnam and publish this statements on website of VAMC after ending audit.

Article 13. Implementation provisions

1. This Circular takes effect on February 15, 2014 and shall be applied from 2013 fiscal year.

2. In the course of implementation, any arising problems should be reported to the Ministry of Finance for study, consideration and settlement.

For The Minister of Finance

Deputy Minister

Tran Xuan Ha