Circular No. 30/2015/TT-NHNN dated December 25, 201 of the State Bank of Vietnam on regulations on issuing the licenses, organization and operation of non-bank credit institutions

THE STATE BANK OF VIETNAM

Circular No.30/2015/TT-NHNN dated December 25, 201 of the State Bank of Vietnam on regulations on issuing the licenses, organization and operation of non-bank credit institutions

Pursuant to the Law on the State bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

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

Pursuant to the Law on Enterprise No. 68/2014/QH13 dated November 26, 2014;

Pursuant to the Government s Decree No. 156/2013/ND-CP dated November 11, 2013 defining the functions, tasks, entitlements and organizational structure of the State bank of Vietnam;

Pursuant to the Government’s Decree No. 39/2014/ND-CP dated May 07, 2014 on operation of finance companies and finance leasing companies;

At the request of chief inspector and supervisor of the banks;

Governor of the State Bank of Vietnam promulgates the Circular providing regulations on issuance of licenses, organization and operation of non-bank credit institutions

Chapter I

GENERAL PROVISIONS

Article 1. Scope of adjustment

This Circular regulates issuance of establishment and operation licenses to non-bank credit institutions (hereinafter referred to as ‘licenses’), organization and operation of non-bank credit institutions.

Article 2. Subject of application

1. Finance companies

2. Finance leasing companies;

3. Organizations, individuals in connection with issuance of licenses, organization and operation of non-bank credit institutions;

Article 3. Interpretation of terms

In this Circular, some terms are construed as follows:

1.Home countrymeans the country where foreign credit institutions are established and headquartered.

2.Non-bank credit institutionsinclude finance companies and finance leasing companies.

3.Foreign credit institutions participating in contribution of capital for the establishment of non-bank credit institutions (hereinafter referred to as ‘foreign credit institutions’)include banks, finance companies, financial corporations, finance leasing companies established and operating abroad according to foreign laws, foreign credit institutions as finance leasing companies eligible for contribution of capital for the establishment of finance leasing companies in Vietnam.

4.Vietnamese commercial banksmeans commercial banks established and operating in Vietnam

5.Founding shareholdersmean shareholders who own at least one ordinary share and sign their names on the list of founding shareholders of joint stock non-bank credit institutions

6.Capital contributing membersmean Vietnamese enterprises, Vietnamese commercial banks, foreign credit institutions that contribute capital to multi-member limited liability non-bank credit institutions.

7.Founding membersmean members who contribute capital and sign their names on the list of founding members of multi-member limited liability non-bank credit institutions.

8.Ownersinclude Vietnam’s commercial banks or foreign credit institutions that own entire charter capital of single-member limited liability non-bank credit institutions.

9.Founding conferencesmean conferences of founding shareholders, founding members and other capital contributing members having following duties:

a) Pass draft Charter of non-bank credit institutions; projects on the establishment of non-bank credit institutions; list of chairpersons and members of the Board of Directors, the Board of Members, heads and members of the Control Board, General Director (Director) of non-bank credit institutions expected to be elected and appointed for the first tenure;

b) Elect preparatory committees, heads of preparatory committees;

c) Make decisions on other issues on the establishment of non-bank credit institutions;

10.The preparatory committeeincludes persons in the list of chairpersons and members of the Board of Directors, the Board of Members, heads and members of the Control Board, General Director (Director) of non-bank credit institutions expected to be elected and appointed for the first tenure who will carry out activities relating requests for issuance of licenses on behalf of founding shareholders, owners, founding members and capital contributing members. The preparatory committee should comprise at least two members of which one member is the head.

11.Founding general meetingsmeans general meetings by founding shareholders, capital contributing shareholders, founding members and capital contributing members after the State Bank of Vietnam grants approval for establishment principles, having following duties:

a) Pass Statute of non-bank credit institutions;

b) Elect and appoint members of the Board of Directors, the Board of Members, members of the Control Board for the first tenure according to the planned list approved by the State Bank of Vietnam;

c) Pass regulations on organization and operation of Board of Directors, the Board of Members and the Control Board;

d) Make decisions on other issues on the establishment of non-bank credit institutions;

12.Leased assetsmean machinery, equipment, means of transport (except ships, boats and airplanes) outsidethe lists of goods banned from trading, importation and exportation as prescribed.

13.The lessor (including sub-lessor)includes finance leasing companies, finance companies eligible for performing finance lease activities according to law provisions.

14.The lessee (including sub-lessee)includes organizations and individuals operating in Vietnam including legal and natural persons and other civil subjects according to civil laws who have the use of the leased assets for their own purposes.

15.Rentalsmean an amount of money paid to the lessor by the lessee under the finance lease agreement or operating lease agreement.

16.Operating leasemeans the lease mode by which the finance leasing company shall rent an asset to the operating lessee for a specified period of time on the principle that the lessee shall return the asset after the lease duration.  Finance leasing company shall be the legal owner of the asset during the lease. The lessee shall have the use of the asset and pay the rents throughout the lease duration as stated in the operating lease agreement.

17.The operating lesseemeans organizations and individuals operating in Vietnam including legal and natural persons and other civil subjects according to civil laws.

18.Finance lease durationmeans the period of time when the lessee acknowledges receipt of debts until all rentals for the use of the asset are completely paid to the finance companies under the finance lease agreement.

19.Rental payment time limitsmeans periods of time within the finance lease duration agreed by the lessor and the lessee

20.Rental reschedulingmeans the lessor agrees to make adjustments to rental payment time limits for finance lease liabilities that the lessee is unable to fulfill according to the finance lease contract as follows:

a) Adjustments to rental payment time limits mean the lessor agrees to extend time limits for the lessee to pay part or whole of the principals and/or interests within the lease duration as agreed.

b) Extension of rentals means the lessor agrees to give the lessee an extension for paying the principals and/or interests beyond the lease duration as agreed.

Article 4. Non-bank credit institution’s organization

1. Domestic non-bank credit institutions are established and organized as follows:

a) Joint-stock companies established by shareholders as organizations and individuals in the form of capital contribution;

b) Single member limited companies owned by a Vietnamese commercial bank;

c) Multi-member limited liability companies capitalized by a Vietnamese commercial bank and a Vietnamese enterprise (of which a Vietnamese commercial bank owns at least 30% of total charter capital of the non-bank credit institutions) or by Vietnamese commercial banks;

2. Joint-stock non-bank credit institutions that are established and organized in the form of multi-member limited liability companies with capital contributed by Vietnamese side (including one or more Vietnamese commercial banks, Vietnamese enterprises) and foreign side (including one or more foreign credit institutions) based on a joint-venture contract.

3. Foreign-capitalized non-bank credit institutions are established and organized in the form of single member limited companies owned by a foreign credit institution or multi-member limited liability companies capitalized by foreign credit institutions.

Article 5. Operation duration

1. Operation duration of a non-bank credit institution is prescribed in the license (no more than 50 years to the maximum).

2. Sequence, procedures for modifications to the operation duration of non-bank credit institutions are prescribed by the State Bank.

Article 6. Charter capital

1. Charter capital of non-bank credit institutions is the capital which is actually contributed by the owner or by shareholders and members as stated in the statute of the non-bank credit institution and at least equal to level of legal capital as prescribed.

2. Increase or decrease in charter capital of non-bank credit institutions and handling of cases when actual value of charter capital is lower than level of legal capital are instructed in law provisions.

3. Percentage of the charter capital contributed by capital contributing members or owned by shareholders in non-bank credit institutions is instructed in law provisions.

Chapter II

REGULATIONS ON LICENSING

Section 1. GENERAL PROVISIONS

Article 7. Licenses

1. The State Bank shall detail banking or other business activities in licenses issued to non-bank credit institutions on the basis of specimen licenses in proportion to each type of non-bank credit institutions as prescribed in Appendixes No. 09A, 09B, 09C, 09D hereof.

2. Non-bank credit institutions shall use licenses as prescribed in Article 27 of the Law on credit institutions.

3. In case licenses are lost, torn, burned or destroyed in other forms, non-bank credit institutions should deliver a written request in person or by post to the State Bank for issuance of a copy of the license from master register according to law provisions.

Within five working days since receipt of the request, the State Bank shall issue a copy of the license from master register to non-bank credit institutions.

Article 8. Process and procedures on licensing

1. The preparatory committee shall establish an application for issuance of licenses as prescribed in Articles 13, 14, Clauses 1, 2, 3, Article 15, Clauses 1, 2, 3, 4, 5, 6, Article 16 hereof and deliver in person or by post to the State Bank.

Within 30 days since receipt of the application, the State Bank shall issue a written notice to the preparatory committee about acknowledgment of the application for consideration and approval in principle.  In case the application is found inadequate, the State Bank shall issue a written request to the preparatory committee for supplements.

2. Within 90 days since the application is confirmed as adequate, the State Bank shall issue a written approval in principle for the establishment of non-bank credit institution. Otherwise, the State Bank shall issue a written notice specifying reasons for disapproval.

3. Within 60 days since receipt of the written approval in principle for the establishment of non-bank credit institution, the preparatory committee shall prepare and deliver supplements as prescribed in Clause 4, Article 15, Clause 7, Article 16 in person or by post to the State Bank. The written approval in principle shall become invalid if the State Bank receives no or inadequate supplements after the time limit as mentioned above.

Within five working days since receipt of adequate supplements, the State Bank shall issue a written confirmation of receipt of the supplements.

4. Within 30 days since receipt of adequate supplements, the State Bank shall carry out issuance of license as prescribed. Otherwise, the State Bank shall issue a written notice specifying reasons for not licensing.

Article 9. Licensing fees

1. Level of licensing fees is prescribed in the Law on Fees and Charges.

2. Within 15 days since receipt of the license, the non-bank credit institution shall pay the fees for issuance of the license to the State Bank.

Article 10. Opening of operation

1. Licensed non-bank credit institutions shall officially start operation as of the day of operation opening.

2. To be eligible for the day of operation opening, the licensed non-bank credit institutions should meet requirements as prescribed in Clause 2, Article 26 of the Law on credit institutions.

3. Licensed non-bank credit institutions should deliver a written notice of satisfaction of requirements for opening as prescribed in Clause 1 of this Article at least 15 days prior to expected opening day in person or by post to:

a) The Department of banking inspection and supervision if licensed non-bank credit institutions are headquartered in the vicinity of the Department;

b) Provincial and municipal branches of the State Bank if licensed non-bank credit institutions are not headquartered in proximity of the Department of banking inspection and supervision;

4. Non-bank credit institutions should carry out operation opening within 12 months since the license is granted; otherwise the State Bank shall revoke the license.

Section 2. REQUIREMENTS FOR LICENSING

Article 11. Requirements for licensing joint stock non-bank credit institutions

1. Requirements as prescribed in Clause 1, Article 20 of the Law on credit institutions;

2. Requirements for founding shareholders;

a) At least two founding shareholders as organizations;

b) Responsible for legality of sources of contributed capital;

c) Undertake to provide financial support to non-bank credit institutions for difficulties in capital, creditworthiness and liquidity;

d) Not being strategic shareholders, founding shareholders, owners or founding members of other credit institutions established and operating in Vietnam;

dd) Have financial capacity for establishment of non-bank credit institutions; not allowed to use entrusted loans, mobilization loans or loans provided by foreign credit institutions, branches of foreign banks, other organizations or individuals as contributed capital;

e) Apart from requirements as prescribed in Points b, d, d, dd of this Clause, founding shareholders as individuals should meet following requirements:

(i) Being a Vietnamese citizen capable of civil acts as prescribed;

(ii) Not among subjects banned from establishing enterprises according to the Law on Enterprise, the Law on Cadres and Civil Servants;

g) Apart from requirements as prescribed in Points b, d, d, dd of this Clause, founding shareholders as organizations should meet following requirements:

(i) Established under laws of Vietnam;

(ii) Have a profitable business for three straight years preceding the year of submission of applications for licensing;

(iii) Fulfill obligations for tax and social insurance as prescribed to the time of submission of applications for licensing;

(iv) For organizations as Vietnamese enterprises (except Vietnamese commercial banks):

- Have at least VND 500 billion in equity capital and at least VND 1,000 billion in total assets for three straight years preceding the year of submission of applications for licensing; For enterprises operating in the areas requiring levels of legal capital, ensure that the amount remaining after taking the legal capital from the equity capital according to the financial statement audited in the year preceding the submission of applications for licensing is at least equal to the capital undertaken for contribution;

- For enterprises licensed and operating in the areas of securities, insurance, contribution of capital should be in compliance with law provisions;

(v) For Vietnamese commercial banks:

- Have at least VND 100,000 billion in total assets; comply fully with regulations on risk management and establishment of provisions at the time of submission of applications for licensing;

- Do not violate limits or ratio of operation safety assurance according to regulations of the State Bank in the year preceding the year of submission of applications for licensing and to the time of submission of supplements for consideration and issuance of licenses;

- Ensure minimum capital adequacy ratio after contributing capital for establishment of non-bank credit institutions;

- Not being penalized for administrative violations in the areas of currencies and banking activities for two straight years preceding the year of submission of applications for licensing and to the time of submission of supplements for consideration and issuance of licenses;

Article 12. Requirements for licensing limited liability non-bank credit institutions

1. Requirements as prescribed in Clause 1, Article 20 of the Law on credit institutions;

2. For founding members as Vietnamese enterprises (except Vietnamese commercial banks), following requirements should be met:

a) Requirements as prescribed in Points b, c, d, dd, g(i), g(iii), Clause 2, Article 11 hereof;

b) Have at least VND 1,000 billion in equity capital and at least VND 2,000 billion in total assets for three straight years preceding the year of submission of applications for licensing; For enterprises operating in the areas requiring levels of legal capital, ensure that the amount remaining after taking the legal capital from the equity capital according to the financial statement audited in the year preceding the submission of applications for licensing is at least equal to the capital undertaken for contribution;

c) For enterprises licensed and operating in the areas of securities, insurance, contribution of capital should be in compliance with law provisions;

3. For owners, founding members as Vietnamese commercial banks, requirements as prescribed in Points b, c, d, dd, g(ii), g(iii), g(v), Clause 2, Article 11 hereof should be satisfied.

4. For owners, founding members as foreign credit institutions:

a) Requirements as prescribed in Clause 2, Article 20 of the Law on credit institutions;

b) Requirements as prescribed in Points g(ii), Clause 2, Article 11 hereof;

c) Have at least US$ 10 billion in total assets at the end of the year preceding the year of submission of applications for licensing;

d) Do not seriously violate regulations on banking activities and other provisions of the home country for five straight years preceding the year of submission of applications for licensing and to the time of submission of supplements for consideration and issuance of licenses;

dd) Have experience in international activities, rated by international credit rating agencies as capable for ensuring financial commitments and normal operation even though economic situations and conditions change for the worse;

e) Rated by competent agencies of the home country as capable of ensuring capital adequacy ratio, other safety ratios, comply fully with regulations on risk management and establishment of provisions as prescribed by the home country in the year preceding the year of submission of applications for licensing and to the time of submission of supplements for consideration and issuance of licenses;

g) Not being strategic shareholders, owners or founding members of other credit institutions established and operating in Vietnam;

h) In case foreign credit institutions are finance leasing companies, the lease balance and loans must make up at least 70% of its assets.

5. Within five years since receipt of the license, owners and founding members shall together own 100% of charter capital of non-bank credit institutions as limited liability companies.

Section 3. APPLICATIONS FOR LICENSING

Article 13. Principles of establishing applications

1. Documents of applications for licensing should be signed by head of the preparatory committee unless otherwise as regulated. Documents signed by head of the preparatory committee should carry following headings: Preparatory committees to be established and name of non-bank credit institutions

2. Applications for licensing domestic non-bank credit institutions shall be made into an original copy in Vietnamese.

3. Applications for licensing non-bank credit institutions as joint-venture companies, foreign-invested companies shall be made into two original copies (one in Vietnamese and one in English), in which:

a) The copy of application in English must be consularly legalized as prescribed except following documents:

(i) Documents from competent agencies of the home country sent to the State Bank;

(ii) Financial statements;

b) Translations from English into Vietnamese should have signatures of translators certified according to law provisions;

c) Translations of financial statement should be confirmed by organizations or individuals eligible for practicing in translation according to law provisions;

4. Copies of papers, diplomas should be made from master register or certified true copy, or copies accompanied by originals for comparison;

5. A list of documents should be included in each application.

Section 14. Applications for licensing

1. A written request for licensing shall be signed by founding shareholders, owners, founding members according to form in Appendix 01 hereof.

2. Draft Charter of non-bank credit institutions shall be passed by founding conferences or approved by owners.

3. The project on the establishment of non-bank credit institutions passed by founding conferences or owners shall comprise at least:

a) Necessity for establishment;

b) Name of non-bank credit institutions under requests for establishment, forms, name of provinces/cities where they are headquartered, operation duration, charter capital, activities and capacity to meet requirements for operation according to the Government s Decree No. 39/2014/ND-CP dated May 07, 2014 on activities of finance companies and finance leasing companies (hereinafter referred to as Decree No. 39/2014/ND-CP), this Circular and the State Bank s regulations;

c) Financial capacity of founding shareholders, capital contributing shareholders, owners, founding members and capital contributing members;

d) Organizational chart and operational network expected for the first three years;

dd) Planned lists of personnel with detailed description of professional level, experience in finance, banking and risk management of individual members:

(i) Chairpersons, members, independent members of Board of Directors, the Board of Members; heads of committees belonging to Board of Directors, the Board of Members;

(ii) Heads, members, full-time members of the Control Board;

(iii) General Director (Director), deputy general directors (deputy directors), Chief accountant and heads of affiliated units;

e) Risk management policies: Identify, measure, prevent, manage and control credit risks, operational risks, market risks, liquidity risks and other risks during the operation process;

g) Information technology:

(i) Plans for investment in IT system accompanied by explanations about capacity for meeting requirements for risk management of non-bank credit institutions and regulations of the State Bank;

(ii) Time for investment in technology; type of technology expected to apply; personnel capacity in IT; capacity for connection and integration with the management system of the State Bank for provision of information on request, ensuring IT system support management information system effectively;

(iii) Document of IT system;

(iv) Solutions to ensure safety and confidentiality in accordance with activities expected to develop;

(v) Identify, measure and manage risks for the technology expected to apply;

(vi) Planned assignments on controlling and making reports on operation of IT system;

h) Capacity for sustainable development in markets:

(i) Conduct analysis and assessment of markets with emphasis on current conditions, challenges and prospects;

(ii) Capacity and advantages of participation and competition in the market;

(iii) Strategy for development, expansion of operational network, banking activities, clients, detailed analysis of satisfaction of requirements for conditional operation;

i) Internal control and audit system:

(i) Operating principles of internal control system;

(ii) Draft of internal fundamental regulations on organization and operation of non-bank credit institutions at least comprises internal regulations as prescribed in Clause 2, Article 93 of the Law on credit institutions and following regulations:

- Regulations on organization and operation of Board of Directors, the Board of Members, the Control Board and managers;

- Regulations on organization and operation of headquarters, branches and other affiliates;

(iii) Content and operation process of internal audit;

k) Business plan for the first three years comprising at least the followings: Market, strategy, objective and business plan analysis; financial statements planned for each year (the Balance sheet, business performance reports, currency circulation reports, minimum capital adequacy targets...)

4. Documents proving capacity of expected management and control apparatus:

a) Resumes according to forms in Appendix 02 hereof, police record No. 2 according to law provisions;

b) Copy of diplomas proving professional levels;

c) Other documents proving capacity for meeting requirements and standards as prescribed in the Law on credit institutions and other relevant law provisions;

d) If a person who is expected to be elected as member of the Board of Directors, the Board of Members, the Control Board, General Director has no Vietnamese nationality, apart from the abovementioned documents, written commitments to meeting requirements for residence and working in Vietnam should be included.

5. The written record of ratification or approval for the draft Charter, project on the establishment of non-bank credit institutions by the founding conferences or owners, lists of expected managers, preparatory committees, and heads of preparatory committees.

Article 15. Applications for licensing joint-stock non-bank credit organizations

1. Composition of applications is instructed in Article 14 hereof.

2. Lists of founding shareholders, capital contributing shareholders are made according to forms in Appendix 03 hereof.

3. Applications submitted by capital contributing shareholders:

a) For individuals:

(i) Share purchase form according to forms in Appendix 04A enclosed hereof;

(ii) Written declaration of relevant persons according to forms in Appendix 05 enclosed herewith;

b) For individuals as founding shareholders:

(i) Applications as prescribed in Point a of this Clause;

(ii) Resumes according to forms in Appendix 02 hereof, police record No. 2 according to law provisions;

(iii) Written declaration of individuals’ past credit relationship according to forms in Appendix 06 enclosed herewith;

(iv) Written commitments to providing financial support to non-bank credit institutions for difficulties in capital, creditworthiness and liquidity;

c) For organizations:

(i) Share purchase form according to forms in Appendix 04B hereof;

(ii) Written declaration of relevant persons according to forms in Appendix 05 enclosed herewith;

(iii) Copy of establishment license or Certificate of Enterprise registration or equivalent documents;

(iv) Written authorization by representatives of contributed capital in non-bank credit institutions according to law provisions;(v) Copy of Charter of organization and operation;

(vi) Copy of identity card or passport of legal representatives, representatives of the contributed capital in non-bank credit organizations;

(vii) Written approval granted by competent authorities to organizations for contribution of capital for establishment of non-bank credit organizations;

(viii) Financial statements from years preceding the year of submission of applications for licensing and financial statements audited by independent audit organization from the time of submission of applications for licensing; In case the financial statements are not audited at the time of submission of applications, unaudited financial statements may be submitted but should be companied by audited financial statements immediately after the audit organization issues the audit report;

(ix) Reports on financial resources for organizations not as commercial banks according to forms in Appendix 08 enclosed herewith;

(x) Written confirmations from tax, insurance agencies on fulfillment of tax and social insurance obligations by organizations;

d) For organizations as founding shareholders:

(i) Applications as prescribed in Point c of this Clause;

(ii) Resumé (See forms in Appendix 02 enclosed herewith), police record No. 2 of legal representatives, representatives of the contributed capital in non-bank credit organizations

(iii) Written declaration of organizations’ past credit relationship according to forms in Appendix 07 enclosed herewith;

(iv) Written commitments to providing financial support to non-bank credit institutions for difficulties in capital, creditworthiness and liquidity;

(v) Financial statements for three years preceding the year of submission of applications for licensing audited by independent audit organization; In case the financial statements are not audited at the time of submission of applications, unaudited financial statements may be submitted but should be companied by audited financial statements immediately after audit organization issues the audit report;

4. Upon receipt of the written approval in principle, the preparatory committee shall submit supplemental documents for consideration and issuance of following licenses:

a) Charter of non-bank credit institutions passed by founding conferences;

b) Written record and resolution of founding conferences on ratification of the Charter, election of members of Board of Directors, the Control Board, regulations on organization and operation of Board of Directors, the Control Board;

c) Written record of Board of Directors’ meetings on election of Chairman of Board of Directors; written record of the Control Board’s meetings on election of Head of the Control Board and full-time members of the Control Board;

d) Decision by Board of Directors on appointment of General Director (Director), deputy general directors (deputy directors), chief accountants;

dd) Written confirmations of the capital contributed by shareholders issued by a Vietnamese commercial bank where the preparatory committee opens the account;

e) Written proof of ownership or right to enjoyment of locations where the non-bank credit institution is headquartered;

g) Internal provisions on organization and operation of non-bank credit institutions as prescribed in Point i(ii), Clause 3, Article 14 hereof passed by founding conferences, Board of Directors;

h) Reports by founding shareholders as Vietnamese commercial banks, Vietnamese enterprises on satisfaction of requirements as prescribed in Point g, Clause 2, Article 11 hereof from the time of submission of applications for licensing to the time of submission of written supplements for consideration and issuance of licenses;

Article 16. Applications for licensing non-bank credit institutions as limited liability companies

1. Composition of applications is instructed in Article 14 hereof.

2. Lists of founding shareholders, capital contributing shareholders are made according to forms in Appendix 03 hereof.

3. Joint-venture contract covering main information according to law provisions and including at least followings:

a) Name and address of non-bank credit institutions as joint-venture companies;

b) Name and address of parties involved in joint-ventures and legal representatives of the parties;

c) Operation duration of joint-ventures;

d) Charter capital, capital contribution ratio, level of capital contributed by each party, progress of charter capital contribution;

dd) Rights and obligations of joint-venture parties;

e) Number and ratio of members of the Board of Members, the Control Board and the Board of Directors from each party;

g) Planned number of departments and staff from each party for initial stage (number of persons of Vietnamese nationality, persons of foreign nationality);

h) Principles on accounting, reporting, establishment and use of funds; division of profits and handling of losses in business;

i) Procedures on settlement of disputes between parties arising from the implementation of joint-venture contracts, procedures on liquidation, dissolution, merger and amalgamation of non-bank credit institutions as joint-ventures;

k) Conditions for making amendments and supplements to joint-venture contracts;

A joint-venture contract should have each page initialed on and last page signed in by legal representatives of each party.

4. Capital contribution agreement between founding members for non-bank credit institutions as limited liability companies;

5. For owners, founding members as Vietnamese commercial banks, Vietnamese enterprises:

a) Applications as prescribed in Point d, Clause 3, Article 15 hereof except share purchase form;

b) Reports on the process of establishment, operation and vision for development to the time of submission of applications for licensing;

6. For owners, founding members as foreign credit institutions:

a) Applications prescribed in Clause 5, this Article except c(ii), c(ix), c(x), Clause 3, Article 15 hereof;

b) Written approval granted by competent agencies of the home country to foreign credit institutions for establishment of non-bank credit institutions as joint-ventures and non-bank credit institutions as 100% foreign-invested companies in Vietnam; In case competent agencies are not authorized to grant such documents according to laws of the home country, any proof of confirmations by competent agencies or any relevant legal documents from the home country should be included;

c) Documents providing information about foreign credit institutions issued by competent agencies of the home country as follows:

(i) Activities licensed in the home country at the time of submission of applications;

(ii) Compliance with laws on banking activities and other regulations for five straight years preceding the year of submission of applications for licensing;

(iii) Capital adequacy ratio and other safety assurance ratio according to the regulations by the home country in the year preceding submission of applications for licensing;

(iv) Compliance with the regulations made by the home country on risk management and establishment of provisions in the year preceding submission of applications for licensing;

d) Credit rating document or papers issued by international credit rating organization within six months before the time of submission of applications;

dd) Written commitments of competent agencies of the home country to ensuring consolidated supervision of foreign credit institutions in line with international practices;

e) Written commitments of owners, founding members to:

(i) Providing supports in finance, technology, management to non-bank credit institutions as joint-ventures, 100% foreign-invested credit institutions;

(ii) Ensuring actual value of charter capital of non-bank credit institutions as limited liability companies is not smaller than level of legal capital and meeting all regulations on operation safety made by the State Bank;

7. Upon receipt of the written approval in principle, the preparatory committee shall submit supplemental documents for consideration and issuance of following licenses:

a) Charter of non-bank credit institutions passed by the Board of Members;

b) Written confirmations of the capital contributed by owners, founding shareholders issued by a Vietnamese commercial bank where the preparatory committee opens the account;

c) Documentary evidence of ownership or right to enjoyment of locations where the non-bank credit institution is headquartered;

d) Internal provisions on organization and operation of non-bank credit institutions as prescribed in Point i(ii), Clause 3, Article 14 hereof passed by the Board of Members;

dd) Reports by Vietnamese commercial banks, Vietnamese enterprises on satisfaction of requirements as prescribed in Point g, Clause 2, Article 11 hereof from the time of submission of applications for licensing to the time of submission of written supplements for consideration and issuance of licenses;

e) Written evaluation of foreign credit institutions as satisfaction of requirements as prescribed in Points b, d, e, Clause 4, Article 12 hereof by competent agencies of the home country from the time of submission of applications for licensing to the time of submission of written supplements for consideration and issuance of licenses;

g) Apart from components of applications as prescribed in Points a, b, c, d, dd, e, this Clause, the preparatory committee for the establishment of single-member limited liability non-bank credit institutions should provide additional documents as follows:

(i) Decision by owners on appointment of Chairman of the Board of Members, members of the Board of Members, the Control Board, General Director (Director), deputy general directors (deputy directors), Chief accountant;

(ii) Written record of the Control Board’s meetings on election of Head of the Control Board and full-time members of the Control Board;

h) Apart from components of applications as prescribed in Points a, b, c, d, dd, e, this Clause, the preparatory committee for the establishment of single-member limited liability non-bank credit institutions should provide additional documents as follows:

(i) Written record and resolution of founding general meetings on ratification of the Charter, election or appointment of members of Board of Directors, the Control Board, regulations on organization and operation of Board of Directors, the Control Board;

(ii) Written record of the Board of Members’ meetings on election of Chairman of Board of Members; written record of the Control Board’s meetings on election of Head of the Control Board and full-time members of the Control Board;

(iii) Decision by the Board of Members on appointment of General Director (Director), deputy general directors (deputy directors), chief accountants;

Section 4. RENEWAL OF LICENSES, ISSUANCE OF SUPPLEMENTARY LICENSES

Article 17. Principles on renewal of licenses, issuance of supplementary licenses

1. The State Bank shall not renew licenses for activities that non-bank credit institutions are not permitted to perform according to law provisions at the time of renewal; and at the same time make adjustments to activities in accordance with the Law on credit institutions and Appendixes 09A, 09B, 09C, 09D enclosed herewith. New licenses shall supersede all the licenses, written approvals (concerning amendments and supplements made to the licenses) issued by the State Bank to non-bank credit institutions before the time of renewal.

2. Issuance of supplementary licenses for foreign exchange activities is instructed in separate regulations by the State Bank and other relevant law provisions.

3. Non-bank credit institutions may perform other additional credit activities only if being approved by the State Bank; sequence, procedures, conditions and applications for addition of these activities to the licenses are instructed in separate regulations by the State Bank and other relevant law provisions.

Article 18. Requests for renewal of licenses, issuance of supplementary licenses

1. Non-bank credit institutions that need to apply for renewal of licenses or issuance of supplementary licenses should prepare and send applications as prescribed in Article 19 hereof in person or by post to the State Bank.

2. Within 40 days since receipt of adequate applications, the State Bank shall carry out renewal of licenses or issuance of supplementary licenses to non-bank credit institutions; In case of rejection, the State Bank shall issue a written notice specifying reasons.

3. After receiving new licenses or supplementary licenses issued by the State Bank, non-bank credit institutions should:

a) Perform procedures with business registration agencies on changes to the licenses according to law provisions;

b) Make public announcement of changes of the license on the State Bank’s media or a daily newspaper for three consecutive issues, or on Vietnam’s online newspapers within seven working days since the State Bank issues new licenses or supplementary licenses;

c) Make amendments or supplements to the Charter in accordance with new licenses or supplementary licenses and register with the State Bank according to Clause 4, Article 22 hereof;

Article 19. Applications for renewal of licenses, issuance of supplementary licenses

1. In case of renewal of licenses:

a) Application form signed by legal representatives of non-bank credit institutions specifying activities expected to be implemented;

b) Lists of activities according to current licenses, other written approvals issued by the State Bank accompanied by copy of current licenses and these written approvals;

2. In case of issuance of supplementary licenses:

a) Application form for addition of activities to current license signed by legal representatives of non-bank credit institutions specifying activities to be supplemented; For non-bank credit institutions as 100% foreign-invested companies, the owners or capital contributing members thereto should undertake in the application form that such additional activities are eligible in the home country unless otherwise as regulated by the international agreements to which the Socialist Republic of Vietnam is a signatory;

b) Resolution adopted by Board of Directors, the Board of Members of non-bank credit institutions requesting addition of activities to current licenses;

c) Apart from components as prescribed in Points a, b, this Clause, finance companies that add banking activities should provide additional documents as follows:

(i) Internal regulations for performance of additional activities;

(ii) Reports on staff, material base, technology, means, and equipment accompanied by written commitments to meeting requirements for performance of additional activities as prescribed in Decree No. 39/2014/ND-CP, this Circular and other relevant law provisions;

d) Apart from components as prescribed in Points a, b, c, this Clause, finance companies established and operating before the effective date of Decree No. 39/2014/ND-CP and requesting addition of factoring activities should provide additional documents as follows:

(i) Factoring operation plan as prescribed in Point g(vi), Clause 1, Article 29 hereof;

(ii) Financial statements of the year preceding the year of submission of written requests for addition of factoring activities audited by independent audit organization; In case the financial statements are not audited at the time of submission of applications, unaudited financial statements may be submitted but should be companied by audited financial statements later;

d) Apart from components as prescribed in Points a, b, c, this Clause, finance companies established and operating before the effective date of Decree No. 39/2014/ND-CP and requesting addition of activities of issuance of credit cards (hereinafter referred to as ‘credit card activities’) and finance lease should provide additional documents as follows:

(i) Operation plan as prescribed in Point e(iii), Clause 1, Article 30, Point g(ii), Clause 1, Article 31 hereof;

(ii) Financial statements for two straight years preceding the year of submission of written requests for addition of credit card activities and finance lease audited by independent audit organization; In case the financial statements are not audited at the time of submission of applications, unaudited financial statements may be submitted but should be companied by audited financial statements later;

3. In case of both renewal of licenses and issuance of supplementary licenses:

a) Application form for renewal of licenses and issuance of supplementary licenses signed by legal representatives of non-bank credit institutions in which activities proposed for implementation, addition and activities undertaken as prescribed in Point a, Clause 2, this Article should be specified.

b) Documents as prescribed in Point b, Clause 1, and Points b, c, d, dd, Clause 2, this Article;

Chapter III

ORGANIZATION, MANAGEMENT AND CONTROLLING

Article 20. Name and head office of non-bank credit institutions

1. Name of non-bank credit institutions should:

a) Be in compliance with the Law on Enterprise and other relevant law provisions;

b) Be in compliance with legal manner and types as follows:

(i) Joint-stock financial companies and private name;

(i) Joint-stock finance leasing companies and private name;

(iii) Single-member limited liability finance company and private name;

(iv) Single-member limited liability finance leasing company and private name;

(v) Limited liability finance company and private name (for multi-member limited liability finance companies;

(vi) Limited liability finance leasing company and private name (for multi-member limited liability finance leasing companies);

2. Head offices of non-bank credit institutions should meet requirements for head offices of enterprises as prescribed in the Law on Enterprise and following conditions:

a) Head offices should be stated in the license and business registration certificate according to law provisions and the working place for Board of Directors, the Board of Members, the Control Board and Steering Committee;

b) Head offices should be based within Vietnam’s territory with definite addresses including phone numbers and e-mails (if any);

c) Ensure safety for assets and compliance with operational requirements of non-bank credit institutions;

d) Have management information system being connected with branches and business departments of non-bank credit institutions meeting requirements of non-bank credit institutions and the State Bank;

Article 21. Establishment of branches and representative offices of non-bank credit institutions

1. Non-bank credit institutions may establish their branches and representative offices at home and abroad after being approved in writing by the State Bank.

2. Conditions, dossiers, procedures on establishment, termination and dissolution of branches and representative offices of non-bank credit institutions are instructed by the State Bank.

Article 22. Charter of non-bank credit institutions

1. Charter of non-bank credit institutions should include main information as prescribed in Clause 1, Article 31 of the Law on credit institutions and should not go against provisions prescribed in the Law on credit institutions and other relevant law provisions. Non-bank credit institutions shall be responsible to the law for contents of the Charter, supplements or amendments made to the Charter.

2. Charter, amendments and supplements made to the Charter shall take effect since being adopted by Shareholder general assembly, the Board of Members.

3. Upon issuance of the license, the State Bank shall confirm registration of the Charter by non-bank credit institutions; In case of making amendments or supplements to the Charter, non-bank credit institutions should register such amendments and supplements to the State Bank within 15 days since they are adopted.

4. Non-bank credit institutions shall deliver one application in person or by post to the State Bank for certification of amendments or supplements. The application comprises:

a) Request form by President of the Board of Directors, Chairman of the Board of Members of non-bank credit institutions or representatives of such persons specifying reasons, necessities of amendments and supplements to the Charter (accompanied by detailed Appendixes of current Charter, amendments and supplements being made, legal foundations for such amendments and supplements);

b) Resolution of Shareholder general assembly, Resolution of the Board of Members adopting amendments and supplements made to the Charter; The Resolution should specify the amendments and supplements;

c) The Charter that includes all amendments and supplements;

d) Other documents as requested by the State Bank to clarify amendments and supplements (if any);

5. Within three working days since receipt of adequate applications, the State Bank shall issue a written confirmation of the amendments and supplements.

6. Upon finding contents of the Charter, amendments and supplements to the Charter are not in compliance with laws, the State Bank shall issue a written request to non-bank credit institutions for appropriate amendments and supplements.

Article 23. Internal regulations

1. Non-bank credit institutions should establish internal regulations as prescribed in Article 93 of the Law on credit institutions. Internal regulations, amendments and supplements to internal regulations shall be adopted by Board of Directors, the Board of Members.

2. Right after adoption, non-bank credit institutions should deliver the internal regulations, amendments and supplements to the State Bank (Bank Supervision and Inspection Agency) for inspection and supervision.

Article 24. Organizational and management structure of non-bank credit institutions

1. Non-bank credit institutions should have an organizational structure, an apparatus of management, internal audit, risk management and internal control in accordance with types of operation as prescribed in the Law on credit institutions and other relevant law provisions.

2. Organizational and management structure of joint-stock non-bank credit institutions comprises: Shareholder general assembly, Board of Directors, the Control Board, General Director (Director);

3. Organizational and management structure of limited liability non-bank credit institutions comprises: The Board of Members, the Control Board, General Director (Director);

Article 25. Risk management committee and personnel committee

1. Board of Directors, the Board of Members should establish the risk management committee and personnel committee and promulgate the statute on organization of operation including mechanism of judgment on proposals made by these two committees. Within ten days since promulgation, non-bank credit institutions shall deliver these internal regulations to the State Bank (Bank Supervision and Inspection Agency).

2. Each committee shall have at least three members including the head as members of the Board of Directors, the Board of Members and members appointed by Board of Directors, the Board of Members according to the Charter of non-bank credit institutions. Each member of the Board of Directors, the Board of Members shall act as head of only one committee.  For joint-stock non-bank credit organizations, the risk management committee should have at least one member as independent members of Board of Directors.

3. The Statute on organization and operation of the committees comprise at least followings:

a) Working statute:

(i) Number of members of the committees and responsibility of each member:

(ii) Regular meetings by the committees

(iii) Extraordinary meetings by the committees;

(iv) Decision-making by the committees;

b) Duties and functions of the committees:

(i) Risk management committee:

- Act as advisor for Board of Directors, the Board of Members in the adoption of processes, policies within competence of the committees in connection with risk management according to law provisions and the Charter of non-bank credit institutions;

- Conduct analysis and give warnings about potential risks and measures faced by non-bank credit institutions, long-term and short-term measures of prevention against such risks.

- Review and assess conformity and efficiency of current processes, policies on risk management of non-bank credit institutions to make proposals to Board of Directors, the Board of Members for the necessity of changing current processes and policies, operational strategy;

- Act as advisor for Board of Directors, the Board of Members in making decisions on investments, relevant transactions, management policies and risk handling methods within duties and functions tasked by Board of Directors, the Board of Members;

(ii) Personnel committee:

- Act as advisor for Board of Directors, the Board of Members on scale and structure of Board of Directors, the Board of Members, managers in accordance with operational scale and development strategy of non-bank credit institutions;

- Act as advisor for Board of Directors, the Board of Members in handling potential issues in connection with procedures on election, appointment and dismissal of members of Board of Directors, the Board of Members, members of the Control Board and managers of non-bank credit institutions according to law provisions and the Charter of non-bank credit institutions;

- Study and act as advisor for Board of Directors, the Board of Members in promulgating internal regulations of non-bank credit institutions within competence of Board of Directors, the Board of Members on pay, remuneration, bonuses, recruitment, training and other benefits to managers, officers, staff;

Article 26. Re-purchase of shares at the request of shareholders or under decision of joint-stock non-bank credit institutions

1. Re-purchase of shares from shareholders of joint-stock non-bank credit institutions should ensure full compliance with laws.

2. Joint-stock non-bank credit institutions shall be permitted to re-purchase shares from the shareholders if they ensure that adequacy ratio in banking activities, actual value of charter capital is not smaller than level of legal capital after payments for re-purchase of all shares are completely made; in case re-purchase of shares results in a decrease in charter capital of non-bank credit institutions, a written approval by the State Bank should be obtained.

3. Sequence, procedures and applications for re-purchase of shares those results in decrease in charter capital of joint-stock non-bank credit institutions are instructed by the State Bank.

Article 27. Transfer, re-purchase of stakes of limited liability non-bank credit institutions

1. Transfer or re-purchase of stakes should ensure compliance with provisions of the Law on Enterprise.

2. Transfer of stakes should ensure compliance with provisions on organization of non-bank credit institutions as prescribed in Article 4 hereof.

3. Within five years since the license is granted, founding members shall transfer stakes to other founding members.

4. Transfer of stakes should ensure charter capital contribution ratio as prescribed in Clause 3, Article 6 hereof and satisfaction of following requirements:

a) Transferees of stakes as Vietnamese enterprises should meet requirements as prescribed in Clause 2, Article 12 hereof;

a) Transferees of stakes as Vietnamese commercial banks should meet requirements as prescribed in Clause 3, Article 12 hereof;

c) Transferees of stakes as foreign credit institutions should meet requirements as prescribed in Clause 4, Article 12 hereof;

5. Requirements for re-purchase of stakes:

a) Requirements for re-purchase of stakes from contributing members, payment terms are instructed in the Law on Enterprise.

b) Non-bank credit institutions should ensure that other financial obligations are fulfilled, adequacy ratio in banking activities, actual value of charter capital not smaller than level of legal capital after all payments for re-purchase of stakes are completely made.

c) Comply fully with regulations on risk management and establishment of provisions as prescribed to the time of submission to the State Bank for acceptance of re-purchase of stakes;

d) Make profitable business for five straight years preceding the year of submission for re-purchase of stakes and have no cumulative loss;

dd) Not being penalized by the State Bank for administrative violations in the areas of currency and banking activities for five straight years preceding the year of submission for re-purchase of stakes;

6. Transfer or re-purchase of stakes should be approved in writing by the State Bank. Sequence, procedures and applications for transfer or re-purchase of stakes are prescribed by the State Bank.

Chapter IV

OPERATION OF FINANCE COMPANIES

Article 28. Operation of finance companies

Finance companies that meet requirements as prescribed in Articles 5, 6, 7, 8, 9, 10, 11, 12, 13, 15 of Decree No.  39/2014/ND-CP, Articles 29, 30, 31, 32, 33, 35, 36 hereof and relevant law provisions shall be eligible for performing activities as prescribed in Articles from 108 – 111 of the Law on credit institutions.

Article 29. Conditions for performance of factoring activities

1. Finance companies shall be eligible for performing factoring activities when meeting following conditions:

a) Factoring activities must be stated in the license;

b) Staff must obtain professional qualifications in factoring operation, have knowledge of laws on commerce, payment and foreign exchanges;

c) Have material base, technology, means, equipment and internal regulations on factoring activities of credit institution, branches of foreign banks according to regulations by the State Bank;

d) For factoring activities concerning foreign exchange transactions, finance companies should comply with laws on foreign exchange management;

dd) Have internal regulations on processes, procedures and principles of identifying clients for tightening control and prevention of acts of laundering, terrorism financing and other crimes;

e) Comply with the State Bank’s regulations on factoring activities of credit institutions, branches of foreign banks;

g) The finance companies established and operating before the effective date of Decree No. 39/2014/ND-CP shall be eligible for addition of factoring activities when meeting requirements as prescribed in Points a, b, c, d, dd, e, this Clause and following requirements:

(i) Run profitable business at least in the year preceding the year of submission of applications;

(ii) At least three years in operation;

(iii) Comply with regulations on adequacy ratio in banking activities, classification of rentals and establishment of provisions throughout the year preceding the year of submission of applications for addition of activities;

(iv) Bad debt ratio below 3% throughout the year preceding the year of submission of applications for addition of activities;

(v) Not being penalized for administrative violations in the areas of currency and banking for one year calculated from the time of submission of applications for addition of activities and earlier;

(vi) Have a factoring operation plan which comprises at least following information: Necessities of factoring activities; risk management and control measures in factoring activities; implementation organization plan, efficiency of factoring operation and measures to ensure compliance with regulations on safety in banking activities after addition of factoring activities is approved;

2. Finance companies shall be eligible for performing factoring activities after being approved by the State Bank. Applications, sequence and procedures on addition of these activities are prescribed in Article 18, Points a, b, c, d, Clause 2, Article 19 hereof.

Article 30. Requirements for performing credit card activities

1. Finance companies shall be eligible for performing credit card activities when meeting following requirements:

a) Credit card activities must be stated in the license;

b) Requirements prescribed in Point dd, Clause 1, Article 29 hereof;

c) Professionally qualified staff, material base, technology, means, equipment and internal regulations according to the State Bank’s regulations on bank cards;

d) For credit card activities concerning foreign exchange transactions, finance companies should comply with laws on foreign exchange management;

dd) Comply with the State Bank’s regulations on bank cards;

e) The finance companies established and operating before the effective date of Decree No. 39/2014/ND-CP shall be eligible for addition of credit card activities when meeting requirements as prescribed in Points a, b, c, d, dd, this Clause and following requirements:

(i) Requirements prescribed in Points g(ii), g(iii), g(iv), g(v), Clause 1, Article 29 hereof;

(ii) Run profitable business for at least two straight years preceding the year of submission of applications;

(iii) Have operation plan which comprises at least followings: Necessities of credit card activities; risk management and control measures in credit card activities; implementation organization plan, efficiency of credit card activities and measures to ensure compliance with regulations on safety in banking activities after addition of credit card activities is approved;

2. Finance companies shall be eligible for performing credit card activities after being approved by the State Bank. Applications, sequence and procedures on addition of these activities are prescribed in Article 18, Points a, b, c, d, Clause 2, Article 19 hereof.

Article 31. Conditions for performing finance lease activities

1. Finance companies shall be eligible for performing finance lease activities when meeting following requirements:

a) Finance lease activities must be stated in the license;

b) Requirements prescribed in Point dd, Clause 1, Article 29 hereof;

c) Staff must obtain professional qualifications in finance lease, domestic and international commerce including knowledge of commercial laws and professional competence in finance lease and foreign exchanges;

d) Have material base, technology, means and equipment for performance of finance lease activities;

dd) Have internal regulations on finance lease and ensure the mechanism for internal controls, audits, risk management in finance lease activities; These regulations should comprise at least followings:

(i) Criteria for identifying a client, a client and relevant persons as prescribed, policies on finance lease for a client, a client and relevant persons, regulations on the process of assessing and granting approval for finance lease, principles of decentralization of power and responsibility of each individual, department in assessment, decision and approval for finance lease, and rescheduling of rentals ;

(ii) Requirements for eligibility for finance lease, cases of ineligibility for finance lease or eligibility for limited finance lease according to law provisions, types of assets ineligible for finance lease; interest rates and interest calculation method; applications for finance lease sent to the lessor by the lessee and relevant documents in conformity with characteristics of the asset and clients; collection of rentals; conditions for consideration of rental rescheduling and transfer of overdue debts;

(iii) Regulations on risk spreading in finance lease activities; method of monitoring and management; approvals and decisions on finance lease for a client at least 1% of the lessor’s internal finance, ensuring public disclosure, transparency in the examination of eligibility for finance lease and rental rescheduling, preventing conflict of interests between those who are involved.

(iv) Principles and criteria for assessment and determination of level of risks in finance lease, areas receiving priority or restrictions to provision of credits as foundations for establishment of annual business plan, risk management measures;

(v) Processes of inspection and supervision of finance lease, use of the asset and rental payment including controlling before, during and after the finance lease; decentralization of power and responsibility of individuals, departments in the inspection and supervision;

(vi) Examination and granting approval for finance lease and rental rescheduling (including extension of rentals and re-adjustments to rental payment time limits) shall be carried out on the principle that the person who decides rental rescheduling is not the person who decides finance lease unless the finance lease is passed by Board of Directors, the Board of Members;

(vii) Termination and settlement of the finance lease agreement terminated ahead of time; exemptions and remission of interests, fees;

(viii) Identification of risks that may arise during the finance lease; the process of monitoring, assessing and controlling risks; risk management methods;

e) Comply with regulations on finance lease activities as prescribed in Article 35 hereof;

g) The finance companies established and operating before the effective date of Decree No. 39/2014/ND-CP shall be eligible for addition of finance activities when meeting requirements as prescribed in Points a, b, c, d, dd, e, this Clause and following requirements:

(i) Requirements prescribed in Points e(i), e(ii), Clause 1, Article 30 hereof;

(ii) Have a finance lease operation plan which comprises at least followings: Necessities of finance lease activities; risk management and control measures in finance lease activities; implementation organization plan, efficiency of finance lease operation and measures to ensure compliance with regulations on safety in banking activities after addition of finance lease activities is made;

2. Finance companies shall be eligible for performing finance lease activities after being approved by the State Bank. Applications, sequence and procedures on addition of these activities are prescribed in Article 18, Points a, b, c, d, Clause 2, Article 19 hereof.

Article 32. Activities of factoring companies

Any factoring company that meets requirements as prescribed in Articles 5, 6, 7, 8, 11, Clause 1, Article 15 of Decree No. 39/2014/ND-CP, requirements as prescribed in Points a, b, c, d, dd, e, Clause 1, Article 29 hereof and other relevant law provisions shall be eligible for performing activities as prescribed in Clause 2, Article 15 of Decree No. 39/2014/ND-CP.

Article 33. Activities of consumer credit companies

Any consumer credit company that meets requirements as prescribed in Articles 5, 6, 7, 8, 9, 12, Clause 3, Article 15 of Decree No. 39/2014/ND-CP, requirements as prescribed in Points a, b, c, d, dd, Clause 1, Article 30 hereof and other relevant law provisions shall be eligible for performing activities as prescribed in Clause 4, Article 15 of Decree No. 39/2014/ND-CP.

Chapter V

ACTIVITIES OF FINANCE LEASE COMPANIES

Article 34. Activities of finance lease companies

1. Finance lease companies shall be eligible for performing activities as prescribed in Articles from 112 – 116 of the Law on credit institutions, Article 16 of Decree No. 39/2014/ND-CP, this Circular and relevant law provisions.

2. Finance leasing companies that meet requirements as prescribed in Points a, b, c, d, dd, e, Clause 1, Article 31 hereof shall be eligible for performing finance lease activities.

Article 35. Finance lease activities

1. The lessee should satisfy following conditions:

a) Have adequate civil legal capacity according to law provisions;

c) Have an effective and feasible plan for production and business; a feasible plan for use of capital and use of the leased asset for the implementation of such plan in accordance with laws;

c) Have financial resources for fulfillment of obligations undertaken in the finance lease agreement;

d) For domestic and foreign organizations, duration of a finance lease should not exceed the remaining operation duration according to the Establishment Decision or Operation License in Vietnam; for foreign individuals, duration of a finance lease should not exceed the remaining residence validity period in Vietnam.

2. Finance lease agreement:

a) The finance lease agreement is the agreement between the lessor and lessee on a finance lease according to laws on finance lease activities, this Circular and other relevant law provisions. The finance lease agreement is an irrevocable contract.

b) The finance lease agreement should be made in writing in accordance with laws on civil contracts and comprise at least following information:

(i) Name and address of the lessor and lessee;

(ii) Conditions for eligible for a finance lease;

(iii) Name, technical features, categories, prices, period of delivery, receipt, installation and maintenance of the asset, quality of the asset, other terms and conditions in relation to the asset;

(iv) Purposes of use of the asset;

(v) Rentals, time of acknowledgement receipt of debts, interest rates, principles and factors of determining interests, time of determining interest rates in case of application of adjustable interest rates; fees and level of fees; other fees as prescribed;

(vi) Finance lease duration and rental payment time limits;

(vii) Negotiations on transfer of overdue principals, notifications of transfer of overdue principals, interest rates for outstanding principals, interest rates for delayed interests;

(viii) Rights and obligations of the parties for settlement of the finance lease agreement being terminated ahead of time according to laws on finance lease;

(ix) Other terms and conditions of the agreement as agreed by the lessor and lessee;

c) The finance lease agreement shall take effect since it is agreed by the parties.

3. Rentals shall comprise principals determined on the basis of asset purchase price, other relevant costs relating to the purchase of the asset plus interests determined according to the State Bank’s regulations.

4. Interest rates and fees concerning finance lease activities:

a) Interest rates shall be negotiated between the lessor and lessee. Interest rates are calculated on the basis of annual percentage rate;

b) In case the lessee violates obligations for rental payment that is due, it shall pay the interests as follows unless otherwise as regulated in Clause 9 of this Article:

(i) Interests for overdue principals as agreed the two parties in the finance lease agreement but not in excess of 150% of the interests within the lease duration immediately before such principals are transferred to overdue debts.

(ii) In case the lessee delays payment of interests, the lessee shall pay to the lessor interests of the delayed interests according to the interest rate as agreed by the two parties but not in excess of 10%/year over the amount of delayed interests during the delayed period;

c) The lessor may conduct negotiations with the lessee on collection of fees for arrangement of a syndicated finance lease agreement and other fees as detailed in relevant legislative documents.

d) The lessor should provide accurate information about finance lease interests, interests of overdue principals; principles, factors and time of determining interests in case of application of adjustable interest rates, fees and level of fees to the lessee for consideration and decision on execution of the finance lease agreement.

5. Rental rescheduling:

The lessor shall consider and decide rental rescheduling at the request of the lessee, assess creditworthiness of the lessee and financial resources of its own as follows:

a) The lessee shall be considered by the lessor for extension of rental payment time limits if it is found to be able to pay all principals and/or interests according to the time limits as adjusted.

b) The lessee shall be considered by the lessor for extension of finance lease duration if it is found to be able to pay all principals and/or interests within a certain period of time after the lease duration.

c) Rental rescheduling may be carried out before or in the last day of lease duration, rental payment time limits.

6. Currency used in finance lease:

The lessor shall perform finance lease activities in Vietnam dong unless otherwise as regulated in Clause 7 of this Article.

7. Finance lease in foreign currencies:

Apart from requirements as prescribed in Points a, b, c, d, dd, e, Clause 1, Article 31 hereof, finance lease activities in foreign currencies should meet following conditions:

a) For the lessor:

(i) Grant finance lease in foreign currencies according to laws on foreign exchange;

(ii) Pay the expenses for importation of the leased asset to the supplier in foreign currencies;

b) For imported asset;

c) For the lessee:

(i) Use the asset for production and business;

(ii) Have sufficient sources of foreign currency collected from production and business for paying rentals;

(iii) Acknowledge receipt of debts and pay rentals in foreign currencies;

8. Penalties for violations and compensation for losses:

a) Both parties may conduct negotiations on penalties for violations, compensations for losses according to law provisions in case either of the parties fails to comply with terms and conditions under the finance lease agreement (unless otherwise as regulated in Point b, Clause 4 hereof);

b) Both parties may negotiate that the offending party shall incur penalty without compensations for losses or both penalty and compensation.

Where both parties agree to penalty but refuse to agree on combination of penalty and compensation, the former shall prevail.

9. Termination of the finance lease agreement ahead of time:

a) Termination of finance lease agreement ahead of time is instructed in Article 21 of Decree No. 39/2014/ND-CP;

a) Settlement of finance lease agreement ahead of time is instructed in Article 22 of Decree No. 39/2014/ND-CP and laws on recovery and handling of leased assets;

c) In case the finance lease agreement is terminated ahead of time as prescribed in Points a, b, Clause 1, Article 21 of Decree No. 39/2014/ND-CP, the lessee shall pay all remaining rentals including:

(i) Remaining principals;

(ii) Remaining interests payable from the time of termination ahead of time to the time the agreement is closed according to agreement. In case the finance lease agreement does not provide such regulations or the two parties have no other agreements, the remaining interests payable shall be based on ordinary interest rates at the most recent time before the time of termination of the agreement ahead of time.

(iii) Unpaid ordinary and overdue interests up to the time of termination of the agreement ahead of time;

(iv) Interests of delayed interests to the time of termination of the agreement ahead of time;

d) In case the lessee is unable to pay the remaining principals as prescribed in Point c of this Clause, the lessor shall also incur interests of the delayed payments as prescribed below:

A = B - C

Where:

A: Interests of delayed remaining principals as prescribed in Point c of this Clause

B: Interests of the remaining principals on the basis of the interest rate agreed between the two parties but not in excess of 150% of the ordinary interest rate at the most recent time before the time of termination of the agreement ahead of time (from the time of termination of the agreement ahead of time to the time all principals are paid.)

C: Remaining interests payable under the finance lease agreement as prescribed in Point c(ii) of this Clause from the time of termination of the agreement ahead of time to the time all principals are paid. In case the lessee is unable to pay all principals before the time of closing the agreement according to the agreement, C shall be all equivalent to all the remaining interests payable under the agreement as prescribed in Point c(ii) of this Clause.

Article 36. Purchase and sublease

1. Principles of purchase and sublease:

a) Purchases and subleases should be carried out through the asset purchase agreement and finance lease agreement between the party that purchases and sublets the asset (hereinafter referred to as ‘the buyer’) and the party that sells and rents back the asset (hereinafter referred to as ‘the seller’)  The asset purchase agreement shall take effect since the finance lease agreement takes effect;

b) In purchase and sublease transactions, the buyer shall be the legal owner of the asset that is purchased and sublet (hereinafter referred to as ‘the sublet asset’) in the form of finance lease according to regulations on finance lease as prescribed hereof. Transfer of ownership of the sublet asset from the seller to the buyer is carried out according to laws;

{2. The sublet asset:

Upon transactions of purchase and sublease, the sublet asset should meet following conditions:

a) Legally owned by the seller;

b) No dispute;

c) Not be used as a guarantee for other obligations;

d) Working normally;

dd) The sublet asset is the leased asset as prescribed in Clause 12, Article 3 hereof.

3. Asset purchase agreement:

The asset purchase agreement should include following information: Name and address of the parties; purpose of the purchase; description of the sublet asset; price; payment terms; time and venue of signing the contract; rights and obligations of the parties; penalties for violations and other information in accordance with laws on purchase and sale of assets;

4. Rights and obligations of the parties in transactions of purchase and sublease:

a) Rights and obligations of the buyer:

(i) Request the seller to provide asset-related information;

(ii) Request the seller to issue the invoice and hand over originals of legal papers and other documentary evidence in connection with the asset;

(iii) Request the seller to make compensations for damage caused by disputes arising in connection with the asset and ownership of the seller;

(iv) Make payment to the seller as agreed in the asset purchase agreement.

(v) Comply fully with terms and conditions under the asset purchase agreement;

b) Rights and obligations of the seller:

(i) Receive the payment made by the buyer as agreed in the asset purchase agreement;

(ii) Provide adequate, accurate and authentic information and materials in connection with the asset at the request of the buyer;

(iii) Issue the invoice and hand over originals of legal papers and other documentary evidence in connection with the asset;

(iv) Make compensations to the buyer for damage caused by disputes arising in connection with the asset and ownership of the seller;

(v) Comply fully with terms and conditions under the asset purchase agreement;

c) Apart from rights and obligations as prescribed in Points a, b of this Clause, the buyer and seller also have rights and obligations as prescribed in Articles from 17 - 20 of Decree No. 39/2014/ND-CP and relevant law provisions;

5. Currencies used in purchase and sublease:

The buyer shall perform activities of purchase and sublease in Vietnam dong unless otherwise as regulated in Clause 6 of this Article.

6. Purchase and sublease in foreign currencies:

Purchase and sublease in foreign currencies shall be accepted when following requirements are met:

a) Apart from requirements as prescribed in Points a, b, c, d, dd, e, Clause 1, Article 31, Point a(i), c, Clause 7, Article 35, Points a, b, d, dd, Clause 2 of this Article, activities of purchase and sublease in foreign currencies should also meet following conditions:

(i) The sublet asset is the imported goods;

(ii) The seller is having outstanding loan balance in foreign currencies at the bank for importation of the asset.

b) Make payment for the purchase of the sublet asset in foreign currency:

(i) The buyer shall carry out purchase and sublease of the asset when the seller provides sufficient legal documents in connection with the asset. In case the bank or a foreign supplier holds and keeps the records of the asset, the buyer shall make the payment after negotiations with the bank or the foreign supplier for provision of the records have been done.  

(iii) The buyer shall make payment to the bank or the foreign supplier in foreign currency in proportion to value of the asset. In case the price for purchase of the asset is larger than the outstanding loan balance at the bank, the buyer shall pay the seller the difference in Vietnam dong according to exchange rate of commercial banks agreed by the two parties at the date of payment.

(iii) After the buyer makes payment for the purchase of the sublet asset, the seller shall acknowledge the receipt of debt and pay rentals in foreign currency according to applicable regulations on finance lease.

Article 37. Provision of loans as additional working capital

1. The finance leasing company shall provide loans to the lessee as additional working capital for serving management, operation and use of the leased asset.

2.Provision of loans as additional working capital by the finance leasing company to the lessee is instructed in the State Bank’s regulations on loans provided by credit institutions, branches of foreign banks.

Article 38. Operating lease activities

1. Operating lease assets include machinery, equipment, means of transport, other movable assets and real estate as prescribed in Clause 2, Article 132 of the Law on credit institutions.

2. The finance leasing company that performs operating lease activities should comply with regulations on lease of assets in the Civil Code and other relevant law provisions.

3. Operating lease agreement:

a) The operating lease agreement is an agreement between the finance leasing company and the lessee for the lease of one or a number of assets as prescribed in Clause 1 of this Article. The finance lease agreement shall take effect since it is agreed by the parties.

b) The operating lease agreement should comprise at least following information:

(i) Name, address and tax codes of the finance leasing company, the lessee;

(ii) Name, type, codes (if any) of the leased asset and necessary information for determination of the leased asset;

(iii) Lease duration;

(iv) Rentals;

(v) Responsibility of the parties for insurance, maintenance, assessment, repairs, replacement and other responsibilities for the leased asset as agreed during the lease term;

(vi) Rights and obligations of the finance leasing company and the lessee for operation lease activities, termination of the operating lease agreement ahead of time in accordance with civil laws and relevant law provisions;

Chapter VI

TRANSITIONAL PROVISIONS

Article 39. Transitional provisions

1. Since this Circular takes effect, any finance company that violates provisions set out in Points a, b, c, d, dd, Clause 1, Article 29, Points a, b, c, d, Clause 1, Article 30, Points a, b, c, d, dd, Clause 1, Article 31 hereof; any finance leasing company that violates provisions set out in Points a, b, c, d, dd, Clause 1, Article 31 hereof shall be handled as follows:

a) Not allowed to sign new contracts for factoring, issuance of credit cards and finance lease until all requirements as prescribed hereof are met;

b) Board of Directors, the Board of Members of finance companies, finance leasing companies should put forward the handling measure at least comprising followings:

(i) Specific requirements that finance companies and finance leasing companies are unable to meet as prescribed;

(ii) Specific measures and handling plan to ensure satisfaction of all requirements as prescribed within six months since this Circular takes effect;

2. Finance leasing companies that have the contracts for loans, finance lease, purchase and sublease in the form of finance lease, the contracts for operating lease signed before the effective date of this Circular and in accordance with law provisions at the time of signing shall be eligible for keeping the execution of such contracts until their validity expires. Amendments, supplements and extensions to the abovementioned contracts shall be made if they are in compliance with this Circular and relevant law provisions.

3. For assets other than the leased asset as prescribed in Clause 12, Article 3 hereof in the finance lease agreements signed before the effective date of this Circular and terminated ahead of time as prescribed in Points a, b, c, Clause 1, Article 21 of Decree No. 39/2014/ND-CP, the lessor may continue to perform finance lease activities for such assets according to provisions as prescribed hereof and laws on recovery and handling of leased assets.

4. Within 40 days since the effective date of this Circular, finance companies, finance leasing companies should deliver the handling measure in person or by post to the State Bank (Bank Supervision and Inspection Agency) according to Clause 1 of this Article.

Finance companies and finance leasing companies shall be responsible for making amendments, supplements and adjustments to the handling measure and implementation progress at the request of the State Bank.

Article 40. Post-transition handling

After maximum transitional period as prescribed in Clause 1, Article 39 hereof or after maximum duration as requested by the State Bank, the State Bank shall take necessary measures including re-structuring according to law provisions, restricting operation, recovering licenses of finance companies or finance leasing companies that fail to overcome violations made.

Chapter VII

RESPONSIBILITY OF AFFILIATES OF THE STATE BANK

Article 41. Responsibility of affiliates of the State Bank

1. Bank Supervision and Inspection Agency:

a) Act as a central role in cooperating with relevant agencies, departments of the State Bank, provincial and municipal branches of the State Bank in assessment of applications for licensing; make submission to the State Bank for authorities to collection suggestions from People’s committees of central-affiliated cities and provinces where non-bank credit institutions are expected to be headquartered and the Ministry of Public Security (if necessary);

b) Act as a central role in receiving, assessing and applications for licensing and addition of banking activities to the license and making the submission to Governor of the State Bank for consideration;

c) Submit registrations for the Charter, amendments and supplements to the Charter to the State Bank for certification;

d) The Banking Inspection and Supervision Agency where non-bank credit institutions are headquartered shall inspect and suspend opening of non-bank credit institutions that fail to meet requirements as prescribed in Clause 2, Article 10 hereof;

dd) Inspect and supervise compliance with provisions prescribed hereof by non-bank credit institutions;

e) Handle violations committed by non-bank credit institutions according to law provisions;

2. Finance – Accounting Agency:

Provide instructions on accounting for non-bank credit institutions as prescribed hereof;

3. Forecast and Statistics Agency:

Provide instructions on statistical reporting on activities of non-bank credit institutions as prescribed hereof;

4. Provincial and municipal branches of the State Bank:

a) Within 30 days since Bank Supervision and Inspection Agency issues a written request, provincial and municipal branches of the State Bank where non-bank credit institutions are headquartered shall examine applications for licensing;

b) Provincial and municipal branches of the State Bank where non-bank credit institutions are headquartered shall inspect and suspend opening of non-bank credit institutions that fail to meet requirements as prescribed in Clause 2, Article 10 hereof (for administrative divisions without Banking Inspection and Supervision Agency);

c) Inspect, supervise and handle violations committed by non-bank credit institutions according to regulations on functions, tasks, powers and organizational structure of provincial and municipal branches of the State Bank.

Chapter VIII

IMPLEMENTARY PROVISIONS

Article 42. Effect

1. This Circular takes effect on February 08, 2016.

2. Since this Circular takes effects, following provisions and documents shall become invalid:

a) Clauses 2, 3, 4, 5, 6, 7, 8, 9 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43 of the State Bank’s Circular No. 06/2002/TT-NHNN dated December 23, 2002 providing guidance on the implementation of Decree No. 79/2002/ND-CP;

b) Clauses 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 of Circular No. 06/2005/TT-NHNN dated October 12, 2005;

c) Decision No. 40/2007/QD-NHNN dated November 02, 2007 by Governor of the State Bank regulating issuance of establishment and operation licenses to joint-stock non-bank credit organizations;

d) The State Bank’s Circular No. 05/2006/TT-NHNN dated July 25, 2006;

d) The State Bank’s Circular No. 07/2006/TT-NHNN dated September 07, 2006;

e) The State Bank’s Circular No. 02/2007/TT-NHNN dated May 21, 2007;

g) Decision No. 731/2004/QD-NHNN dated June 15, 2004 by Governor of the State Bank providing temporary regulations on operating lease of finance leasing companies;

h) Articles 5, 6, 7 of the State Bank’s Circular No. 24/2011/TT-NHNN dated August 31, 2011 implementing the scheme of administrative procedure simplification in banking establishment and operation under the resolutions of the government on the simplification of administrative procedures within the jurisdiction of the State Bank;

Article 43. Implementation

Chief Officer, Banking Chief Inspector, heads of units affiliated to the State Bank, directors of provincial and municipal branches of the State Bank, presidents and members of the Board of Directors, the Board of Members, heads and members of the Control Board, General Director (Director) of non-bank credit institutions shall be responsible for executing this Circular ./.

For the Governor

The Deputy Governor

Nguyen Kim Anh