Circular No. 38/2014/TT-NHNN dated December 08, 2014 of the State Bank of Vietnam on dossier, order and procedures for approving the foreign investor’s purchase of Vietnamese credit institution’s shares

THE STATE BANK OF VIETNAM

Circular No. 38/2014/TT-NHNN datedDecember 08, 2014 of the State Bank of Vietnamon dossier, order and procedures for approving the foreign investor’s purchase of Vietnamese credit institution’s shares

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

Pursuant to the Securities Law No. 70/2006 / QH11 dated June 29, 2006 and the Law No. 62/2010 / QH12 dated November 24, 2010 amending and supplementing a number of articles of the Securities Law;

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

Pursuant to Decree No. 01/2014 / ND-CP dated January 03, 2014 of the Government providing for the foreign investor’s purchase of Vietnamese credit institution’s shares;

At the request of the Head of banking inspection and supervision agency;

The Governor of State Bank of Vietnam issues Circular providing for dossier, order and procedures for approving the foreign investor’s purchase of Vietnamese credit institution’s shares

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation

This Circular provides for:

1. Dossier, order and procedures and procedures for approving the foreign investor’s purchase of Vietnamese credit institution’s shares under the provisions in Decree No. 01/2014/ND-CP dated January 01, 2014 of the Government on the foreign investor’s purchase of Vietnamese credit institution’s shares (hereafter referred to as Decree), including:

a) Foreign investor ‘s purchase of shares which make the ownership of share from 5% of charter capital or more or additional purchase when the foreign investor owns 5% or more of charter capital of a Vietnamese credit institution, except for cases specified at Point b and c of this Clause;

b) Foreign investor‘s purchase of shares which make the ownership of share from 10% of charter capital or more of a Vietnamese credit institution;

c) Foreign investor purchases shares and becomes the foreign strategic investor of a Vietnamese credit institution;

2. Dossier shall be sent to the State Bank of Vietnam (hereafter referred to as State Bank) for review, assessment and submission to the Prime Minister for deciding the percentage of shareholding of a foreign investor, a foreign strategic investor and the total shareholding of foreign investors at a weak credit institution which has been re-structured exceeding the limit specified in Clause 2, 3, 5, Article 7 of this Decree.

Article 2. Subjects of application

1. Joint stock credit institution and credit institution with conversion of legal form into joint stock credit institution (hereafter referred to as Vietnamese credit institution).

2. Foreign investor

3. Other institutions and individuals related to the foreign investor’s purchase of Vietnamese credit institution’s shares.

Article 3.Interpretation of terms

1.Trading representative in Vietnam is the individual in Vietnam who is authorized by the foreign investor to buy shares at the Vietnamese credit institution under regulations of law on securities and securities market.

2.Legal representative of Vietnamese credit institution or foreign institution is the Chairman of Executive Board, Board of members, company, General Director (Director) or other individuals specified in the Charter or other legal documents in accordance with regulations of law.

3.Person concerned means organization or individual having direct or indirect relation with the foreign investor under the provisions in Clause 28, Article 4 of the Law on credit organizations and other relevant legal regulations;

4.Country of origin is the country where the foreign institution is established and headquartered.

5.Weak credit institution includes Vietnamese credit institution placed under the special control, the Vietnamese credit institution ranked as a weak credit institution as stipulated by the State Bank.

Article 4. Principles and requirements

1. Dossier to request the State Bank to approve the foreign investor’s purchase of Vietnamese credit institution’s shares and dossier for the State Bank’s review and assessment to be submitted to the Prime Minister for decision on percentage of shareholding are made into a set in Vietnamese, in which the dossier components translated into foreign language is made by the following principles:

a) Consular legalization under the Vietnamese law, except for the following documents:

(i) Documents of competent authorities of the country of origin shall be sent directly to the State Bank;

(ii) Papers and documents which are exempted from consular legalization under international agreements in which Vietnam and the countries concerned are members or in the principle of reciprocity;

(iii) Papers and documents which are exempted from consular legalization under Vietnam law.

(iv) Financial statements independently audited of the year preceding the year of dossier submission are made directly in English;

(v) Documents of international credit rating agency of the credit rating result closest to the time of dossier submission of foreign institution;

b) Translator’s signature must be certified under the regulations on certification of Vietnamese law.

2. Where the papers are the copies without being certified or issued from the original book, the originals must be presented for comparison. The person making comparison must sign on the copies and take responsibility for the accuracy of the copies compared with the originals.

Chapter II

SPECIFIC PROVISIONS

Section 1. DOSSIER TO REQUEST THE APPROVAL FOR THE PURCHASE OF SHARES OF VIETNAMESE CREDIT INSTITUTION HAVING BEEN LISTED AND REGISTERED FOR STOCK TRADING

Article 5. Dossier to request the approval for the purchase of share as specified at Point a, Clause 1, Article 1 of this Circular.

1. Application for approving the purchase of Vietnamese credit institution’s shares under the form specified in Annex 01 of this Circular.

2. Copy of document of issuance of securities trading code which the Vietnam Securities Depository has issued to the foreign investor;

3. Written confirmation of the bank on the deposit balance of the foreign investor’s deposit account or other documents proving the foreign investor has sufficient legal financial sources to purchase shares;

4. Declaration about the shareholding of foreign investor and related persons of foreign investor in Vietnam at Vietnamese credit institutions up to the time of dossier submission under the form prescribed in Annex 02 of this Circular.

5. Curriculum vitae under the form specified in Annex 03 of this Circular, copy of passport or other legal personal identity of the foreign investor as individual, of the foreign investor’s legal representative and the authorized person to be the representative of the foreign investor’s capital as the institution at the Vietnamese credit institution.

6. Where the foreign investor authorizes the trading representative in Vietnam to purchase the Vietnamese credit institution’s shares, the dossier must have additional components:

a) Authorization contract, entrustment contract, investment designation contract or other documents in accordance with regulations of law between the foreign investor and the trading representative in Vietnam;

b) Written confirmation of the State Securities Commission concerning the trading representative or change of the foreign investor’s trading representative in Vietnam (if any).

7. Where the Vietnamese credit institution issues separate stocks to the foreign investor to increase its charter capital, the dossier must have additional components:

a) Registration of separate stock offering under regulation;

b) Resolutions of the General Meeting of Shareholders of Vietnamese credit institution approving the policy on issuance of separate shares to increase its charter capital and plans for using the proceeds from the offering;

c) Written agreement of sale and purchase of shares between Vietnamese credit institution and foreign investor;

d) Written approval of the State Bank on the increase of charter capital and issuance of separate stocks to the foreign investor;

8. Where the foreign investor is an institution, the dossier must have additional components:

a) Decision of competent authorities of the foreign investor on the purchase of the Vietnamese credit institution’s shares;

b) Copy of establishment and operation license or equivalent documents of the foreign investor;

c) Charter or other legal documents defining the legal representative in case the legal representative of the foreign investor is not the Chairman of Executive Board, Board of members, Company, General Director (Director).

9. List of documents

Article 6. Dossier to request the approval for purchase of stocks as stipulated at Point b, Clause 1, Article 1 of this Circular

1. Components of dossier specified in Article 5 of this Circular.

2. Documents of international credit rating agency of the credit rating result nearest to the time of dossier submission of foreign institution;

3. Document of competent authorities of the country of origin providing information on the compliance with law on areas of money, banking activities, securities and securities market of the foreign investor in the country where the foreign investor ‘s head office is located within 12 months by the time of dossier submission.

4. Financial statements independently audited of the year preceding the year of dossier submission.

Article 7. Dossier to request the approval for share purchase as stipulated at Point c, Clause 1 of this Circular

1. Components of dossier specified in Article 6 of this Circular.

2. Brief report on the history of formation and development of foreign investor.

3. Written partnership agreement between the foreign investor and the Vietnamese credit institution includes at least the following contents:

a) Commitment to own 10% or more of charter capital of the Vietnamese credit institution by the time of dossier submission in case the foreign investor has not owned 10% or more of charter capital of the Vietnamese credit institution of which the foreign institution requests to purchase shares to become the strategic investor;

b) Commitment to long-term benefits attached to the Vietnamese credit institution  and provision of assistance to the Vietnamese credit institution in application of modern technologies, development of products, banking services and improvement of capacity of administration and operation;

c) Plans for assisting the Vietnamese credit institution in application of modern technologies, development of products, banking services and improvement of capacity of administration and operation, including at least the following contents:

(i) Detailed contents and roadmap for implementation for each specific assistance measure;

(ii) Rights and obligations of foreign investor and credit institution in Vietnam.

Section 2. DOSSIER TO REQUEST THE APPROVAL FOR PURCHASE OF SHARES OF VIETNAMESE CREDIT INSTITUTIONNOT HAVING BEEN LISTED AND REGISTERED FOR STOCK TRADING

Article 8. Dossier to request the approval for purchase of shares as stipulated at Point a, Clause 1 of this Circular

1. Components of dossier prepared by the Vietnamese credit institution include:

a) Written request of Vietnamese credit institution for approving the foreign investor’s shares;

b) List and percentage of shareholding of stockholders as foreign investor of the Vietnamese credit institution before and after transfer of shares;

c) In case the Vietnamese credit institution issues separate stocks to foreign investor to increase its charter capital, the dossier needs additional components specified in Clause 7, Article 5 of this Circular;

d) List of documents.

2. Components of dossier prepared by foreign investor includes:

a) Components of dossier specified in Clauses 1, 2, 3, 4, 5, 6, 8, Article 5 of this Circular;

b) Written agreement upon transfer of shares between the parties in case the foreign investor purchases shares of the Vietnamese credit institution’s stockholders.

Article 9. Dossier to request the approval for purchase of shares as stipulated at Point b, Clause 1, Article 1 of this Circular

1. Components of dossier specified in Article 8 of this Circular.

2. In addition to the components of dossier specified in Clause 1 of this Article, the foreign investor must add the components of dossier as stipulated in Clauses 2, 3 and 4, Article 6 of this Circular.

Article 10. Dossier to request the approval for purchase of shares as stipulated at Point c, Clause 1, Article 1 of this Circular

1. Components of dossier specified in Article 9 of this Circular.

2. In addition to the components of dossier specified in Clause 1 of this Article, the foreign investor must add the components of dossier as stipulated in Clauses 2, 3, Article 7 of this Circular.

Section 3. DOSSIER TO BE SENT TO THE STATE BANK FOR REVIEW, ASSESSMENT AND SUBMISSION TO THE PRIME MINISTER FOR DECISION ON PERCENTAGE OF SHAREHOLDING OF WEAK CREDIT INSTITUTION

Article 11. Dossier as specified in Clause 2, Article 1 of this Circular

1. Components of dossier specified in Article 8 of this Circular.

2. In addition to the components of dossier specified in Clause 1 of this Article, the foreign investor must add the following components of dossier:

a) Commitment to long-term benefits attached to the weak credit institution  and provision of assistance to the weak credit institution in application of modern technologies, development of products, banking services and improvement of capacity of administration and operation;

b) Plan for purchase of shares and re-structuring of weak credit institution including at least the following contents:

(i) Detailed contents and roadmap for implementation for each specific assistance measure, including the re-structuring of network, improvement of financial capacity, settlement of bad debts, governance and operation, application of modern technologies, development of products and services and other measures to deal with the shortcomings of weak credit institution.

(ii) Rights and obligations of foreign investor and weak credit institution.

Section 4. ORDER AND PROCEDURES FOR APPROVING THE FOREIGN INVESTOR’S PURCHASE OF VIETNAMESE CREDIT INSTITUTION’S SHARES

Article 12. Order and procedures for approving the purchase of shares specified in Clause 1, Article 1 of this Circular

1. The Vietnamese credit institution ( in case of purchase of shares of the Vietnamese credit institution not having been listed and registered for stock trading on the Stock Exchange) or foreign investor (in case of purchase of shares of the Vietnamese credit institution having been listed and registered for stock trading on the Stock Exchange) shall prepare dossier to be sent directly or by post to the State Bank to request the approval for the foreign investor’s purchase of the Vietnamese credit institution’s share as stipulated by the provisions of this Circular.

2. Within 05 working days from the date of receipt of dossier, the State Bank shall issue a written confirmation of completeness and validity of dossier or issue a written requirement for addition in case of incompleteness and invalidity. Within 05 working days from the date of full receipt of additional documents, the State Bank shall issue a written confirmation of such receipt.

3. Within 40 days from the date of full receipt of valid dossier, the State Bank shall review the dossier for approval or disapproval in writing concerning the foreign investor’s purchase of shares. In case of disapproval, the State Bank must specify the reasons in writing.

Article 13. Submission of dossier to the State Bank for review, assessment and submission to the Prime Minister for decision on the percentage of shareholding

1. The weak credit institution shall prepare dossier to be sent directly or by post to the State Bank forreview, assessment and submission to the Prime Minister for decision on the percentage of shareholding of the foreign investor under the provisions of this Circular.

2. Within 05 working days from the date of receipt of dossier, the State Bank shall issue a written confirmation of completeness and validity of dossier or issue a written requirement for addition in case of incompleteness and invalidity. Within 05 working days from the date of full receipt of additional documents, the State Bank shall issue a written confirmation of such receipt.

3. Within 40 days from the date of full receipt of valid dossier, the State Bank shall review, assess and submit it to the Prime Minister for decision on the percentage of shareholding of a foreign investor, a foreign strategic investor and the total shareholding of foreign investors at a weak credit institution which has been re-structured exceeding the limit specified in Clause 2, 3, 5, Article 7 of this Decree.

Chapter III

ORGANIZATION IMPLEMEMENTATION

Article 14. Foreign investor’s responsibilities

1. Coordinating with the Vietnamese credit institution to prepare components of dossier as stipulated in Articles 8, 9, 10, 11 of this Circular.

2. Within 30 days from the date the competent authorities accept in writing the foreign investor’s purchase of Vietnamese credit institution’s shares, the foreign investor must transfer all amount of money registered for purchase of shares to the blocked indirect investment account in Vietnam dong at a credit institution or branch of foreign bank with permitted foreign exchange activities or supply of foreign exchange services under the Vietnamese law and only use this amount for the purpose of buying the Vietnamese credit institution’s shares with the approval from the competent authorities. In case of purchase of shares of the credit institution which has been listed on the stock market, before placing the trading order, the foreign investor must have adequate money in account for the trading under regulation.

3. Notifying in writing the Vietnamese credit institution of which the foreign investor has purchased shares within 10 days from the time of change of representative, address, name, nationality and other relevant contents.

4. Publicizing information under regulations of law.

5. Transferring shares at the Vietnamese credit institutions under Vietnamese law.

Where the foreign investor as a shareholder owning 5% or more of charter capital of a Vietnamese credit institution transfer its shares as stipulated in Article 29 of the Law on credit institutions and under the guidelines of the State Bank on transfer of shares for major shareholder.

6.Where a foreign investor owning shares of 10% or more of the charter capital and as a foreign strategic investor must meet the  obligations specified in Clause 5, 6, Article 4 of this Decree.

Article 15. Vietnamese credit institution’s responsibilities

1. Coordinating with the foreign investor to prepare dossier as specified in Article 5, 6 and 7 of this Circular.

2. Within 10 days after receipt of a written approval of the Governor of State Bank (for cases specified in Clause 1, Article 1 of this Circular) concerning the foreign investor’s purchase of the Vietnamese credit institution’s shares, the Vietnamese credit institution must publish the contents of written approval on its website and in the central and local newspapers.

3. Notifying the State Bank within 15 days after the foreign investor has changed its percentage of shareholding and the contents specified in Clause 3, Article 14 of this Circular.

4.Publicizing information under regulations of law.

Article 16. Re-structured weak credit institution’s responsibilities

1. Preparing dossier as stipulated in Article 11 of this Circular.

2. Notifying the State Bank within 15 days after the foreign investor has changed its percentage of shareholding and the contents specified in Clause 3, Article 14 of this Circular.

Article 17. Consultation of the State Bank from the Ministry of Finance

1. Within 15 days after fully receiving valid dossier as stipulated in Section 1, 2, 3, Chapter II of this Circular, the State Bank shall consult the Ministry of Finance in writing about the request of the foreign investor.

2. The contents of the State Bank’s consultation from the Ministry of Finance include:

a) Information about violation of securities law which has been handled under regulations of the Ministry of Finance on guidance on operation of foreign investor on Vietnam’s securities market and other relevant regulations of law.

b) Information about shareholding of foreign investors and their related persons (if any) at the Vietnamese credit institution whose share the foreign investor has requested to purchase.

c) Information about identification of foreign investor in accordance with regulations of the Ministry of Finance on guiding the foreign investor’s activities in the Vietnamese stock market and other relevant laws.

Article 18. Unit’s responsibilities under the management of State Bank

1. The banking inspection and supervision agency is responsible for:

a) Being in charge of and coordinating with the related Departments to assess dossiers to purchase shares at the Vietnamese credit institutions from foreign investor and send them to the Ministry of Finance for consultation concerning the contents specified in Clause 2, Article 17 of this Circular for submission to the Governor of State Bank for approval or disapproval.

b) Being in charge of and coordinating with the related Departments to assess dossiers to purchase shares at the weak credit institutions from foreign investor and send them to the Ministry of Finance for consultation concerning the contents specified in Clause 2, Article 17 of this Circular.

c) Submitting these dossier to the Governor of State Bank to request the Prime Minister to review and make a decision for cases specified in Clause 2, Article 1 of this Circular.

2. The Department of forecast and statistics shall advise and request the Governor of State Bank to stipulate the report and statistics of foreign investor’s purchase of shares at the Vietnamese credit institutions which have not been unlisted and unregistered for trading.

Article 19.Implementation effect

1. This Circular takes effect on February 01, 2015.

2. From the effective date of this Circular, the following provisions and documents shall be invalid:

a) Circular No. 07/2007/TT-NHNN dated November 29, 2007 of the State Bank guiding the implementation of some contents of Decree No. 69/2007/ND-CP dated April 20, 2007 of the Government on the foreign investor’s purchase of shares from the Vietnamese commercial banks.

b) Article 10 of Circular No. 24/2011/TT-NHNN dated August 31, 2011 of the State Bank on implementation of plan to simplify the administrative procedures in the field of banking establishment and operation under the Resolutions of the Government on simplification of administrative procedures under the management of the State Bank of Vietnam.

Article 20.Implementation organization

Chief of Office, Head of banking inspection and supervision agency, Heads of units under the management of the State Bank, Directors of branches of State Bank in provinces and cities, Chairman of Executive Board, Board of members and General Directors (Directors) of Vietnamese credit institutions are liable to execute this Circular./.

For the Governor

The Deputy Governor

Nguyen Phuoc Thanh

* All appendices are not translated herein.