Circular 23/2024/TT-NHNN amend Circular 10/2016/TT-NHNN guiding Decree 135/2015/ND-CP on offshore indirect investment

CIRCULAR

Amending and supplementing a number of articles of the Governor of the State Bank of Vietnam’s Circular No. 10/2016/TT-NHNN of June 29, 2016, guiding a number of provisions of the Government’s Decree No. 135/2015/ND-CP of December 31, 2015, on offshore indirect investment

Pursuant to the June 16, 2010 Law on the State Bank of Vietnam;

Pursuant to the January 18, 2024 Law on Credit Institutions;

Pursuant to June 17, 2020 Law No. 61/2020/QH14 on Investment;

Pursuant to the December 13, 2005 Ordinance on Foreign Exchange; and the March 18, 2013 Ordinance Amending and Supplementing a Number of Articles of the Ordinance on Foreign Exchange;

Pursuant to the Government’s Decree No. 70/2014/ND-CP of July 17, 2014, detailing a number of articles of the Ordinance on Foreign Exchange and the Ordinance Amending and Supplementing a Number of Articles of the Ordinance on Foreign Exchange;

Pursuant to the Government’s Decree No. 135/2015/ND-CP of December 31, 2015, on offshore indirect investment;

Pursuant to the Government’s Decree 102/2022/ND-CP of December 12, 2022, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Foreign Exchange Management Department;

The Governor of the State Bank of Vietnam promulgates the Circular amending and supplementing a number of Circular No. 10/2016/TT-NHNN of June 29, 2016, guiding a number of provisions of the Government’s Decree No. 135/2015/ND-CP of December 31, 2015, on offshore indirect investment.

Article 1. To amend and supplement a number of points, clauses and articles of Circular No. 10/2016/TT-NHNN

1. To amend and supplement Clauses 2 and 3, Article 3 as follows:

a/ To amend and supplement Clause 2 as follows:

“2. Foreign institution having a program on bonus provision of overseas issued stocks means an institution established under a foreign law (below referred to as foreign institution).”

b/ To amend and supplement Clause 3 as follows:

“3. Institutions implementing programs on bonus provision of overseas issued stocks (below referred to as institutions implementing programs on bonus provision of stocks) means institutions established and operating in Vietnam, including:

a/ Foreign institutions establishing their commercial presence in Vietnam in the form of foreign-invested economic institutions; branches; representative offices; or executive offices of foreign investors to business cooperation contracts;

b/ Economic institutions having relationship with foreign institutions in the form of holding shares or capital contributions or in other forms in accordance with Vietnam’s law.”

2. To amend and supplement Article 8 as follows:

“Article 8. Principles of implementing programs on bonus provision of overseas issued stocks

The implementation of programs on bonus provision of overseas issued stocks must adhere to the following principles:

1. Programs on bonus provision of overseas issued stocks with participants being employees who have the Vietnamese citizenship may only be carried out by institutions implementing programs on bonus provision of stocks.

2. Foreign-currency proceeds from dividends and other lawful earnings related to programs on bonus provision of overseas issued stocks shall be transferred to employees having the Vietnamese citizenship via program implementation accounts specified in Article 12 of this Circular.

3. Regulations on foreign exchange management and income tax payment obligation and other relevant regulations must be complied with.”

3. To amend and supplement Article 9 as follows:

“Article 9. Forms of bonus

1. Direct provision of bonus stocks.

2. Other forms of bonus provision of stocks overseas which do not give rise to cash flows to foreign countries.”

4. To amend and supplement Article 10 as follows:

“Article 10. Rights of employees having the Vietnamese citizenship

1. To participate in programs on bonus provision of overseas issued stocks under terms and conditions of foreign institutions that are not contrary to Vietnam’s law.

2. To receive foreign-currency proceeds from dividends and other lawful earnings related to programs on bonus provision of overseas issued stocks which must comply with Clause 2, Article 8 of this Circular.”

5. To amend and supplement Article 12 as follows:

“Article 12. Opening and use of program implementation accounts

1. An institution implementing a program on bonus provision of stocks shall open 1 (one) program implementation account in order to conduct collection and payment transactions under Clauses 2 and 3 of this Article.

2. Collection transactions include transactions for collection of dividends and other lawful earnings related to the program on bonus provision of overseas issued stocks.

3. Payment transactions:

a/ Payment for sale of foreign-currency amounts to licensed credit institutions for transfer into Vietnam-dong payment accounts of employees who have the Vietnamese citizenship participating in programs on bonus provision of overseas issued stocks;

b/ Payment for transfer into foreign-currency accounts of employees who have the Vietnamese citizenship participating in programs on bonus provision of overseas issued stocks;

c/ Other lawful payments related to programs on bonus provision of overseas issued stocks.”

6. To amend and supplement Point c, Clause 1, Article 13, and Point c, Clause 1, Article 15 as follows:

“c/ A copy of the notice of certification of the fulfillment of tax obligations at the latest time in accordance with the current tax laws;”

7. To amend and supplement Point b, Clause 2, Article 22 as follows:

“b/ The State Bank shall issue a written certification of, made according to the form provided in Appendix 17 to this Circular, or refuse to certify, the dealing limit registration no later than May 15 every year. In case of refusal to certify the dealing limit registration, the State Bank shall reply in writing, clearly stating the reason.”

8. To amend and supplement Clause 2, Article 23 as follows:

“2. Within 5 (five) working days after receiving an application for registration of a temporary dealing limit, based on the practical offshore indirect investment in the preceding year and the safe investment ratio of the institutional dealer, the State Bank shall issue a written certification of, made according to the form provided in Appendix 18 to this Circular, or refuse to certify, the dealing limit registration for such dealer. In case of refusal to certify the registration, the State Bank shall reply in writing, clearly stating the reason.”

9. To amend and supplement Point b, Clause 2, Article 24 as follows:

“b/ The State Bank shall issue a written certification of, made according to the form provided in Appendix 19 to this Circular, or refuse to certify, the registration no later than May 15 every year. In case of refusal to certify the registration, the State Bank shall reply in writing, clearly stating the reason.”

10. To amend and supplement Clause 2, Article 25 as follows:

“2. Within 5 (five) working days after receiving an application for registration of a temporary investment entrustment undertaking limit, based on practical undertaking of offshore indirect investment entrustment of the preceding year of the entrustment undertaking institution, the State Bank shall issue a written certification of, made according to the form provided in Appendix 19 to this Circular, or refuse to certify, the temporary entrustment undertaking limit registration. In case of refusal, the State Bank shall reply in writing, clearly stating the reason.”

11. To amend and supplement Clause 2, Article 26 as follows:

“2. To check and preserve documents and records related to collection and payment transactions conducted on dealing accounts, entrustment undertaking accounts, and program implementation accounts produced by customers in order to ensure that foreign exchange services are provided for proper purposes and in accordance with law.

Licensed credit institutions may only conduct collection and payment transactions via program implementation accounts on the basis of:

a/ Checking and collating information and documents related to the programs on bonus provision of stocks and participation in the programs of employees who have the Vietnamese citizenship provided by the institutions implementing the programs under Point b, Clause 2, Article 28 of this Circular;

b/ Requesting the institutions implementing the programs on bonus provision of stocks to provide documents proving that they comply with this Circular’s provisions on electronic reporting to the State Bank (a screenshot of the latest report shall be sent to the State Bank’s email address) before providing foreign-currency services to the institutions implementing the programs (except programs on bonus provision of stocks implemented in Vietnam for the first time).”

12. To amend and supplement Point b, Clause 2, and add Clause 4 to Article 28 as follows:

a/ To amend and supplement Point b, Clause 2 as follows:

“b/ Produce and add dossiers, documents and records as requested by the licensed credit institution where the institution implementing the program on bonus provision of stocks opens the program implementation account related to the participation in the program of employees who have the Vietnamese citizenship, including: a document showing the relation between the foreign institution and the institution implementing the program on bonus provision of stocks; a written description of the program on bonus provision including major contents on the form and time of bonus provision; and the list of employees who have the Vietnamese citizenship entitled to participate in the program, and other relevant documents (if any).”

b/ To add Clause 4 as follows:

“4. In case the institution implementing the program on bonus provision of stocks terminates its operation or is dissolved, before its termination or dissolution or closure of the program implementation account which has been opened under Article 12 of this Circular, the institution implementing the program shall settle interests related to the program for employees who have the Vietnamese citizenship and transfer all proceeds for employees who have the Vietnamese citizenship participating in the program via the program implementation account.”

13. To add Clause 5 to Article 29 as follows:

“5. To assume the prime responsibility for, and coordinate with related units of the State Bank in, handling issues related to offshore indirect investment within the scope of this Circular.”

14. To amend and supplement Article 35 as follows:

“Article 35. Reporting by institutions implementing programs on bonus provision of stocks

Every month, by the 12^th day of the subsequent month of the reporting month at the latest, institutions implementing programs on bonus provision of stocks shall send to the State Bank their reports on the implementation of such programs, made according to the form provided in Appendix 16 to this Circular, for employees who have the Vietnamese citizenship. The data cut-off time shall be counted from the first day through the last day of a month. Such report shall be sent by the electronic means to the email address at [email protected] of the State Bank and sent in the paper form to the State Bank.”

Article 2. To supplement, replace and annul a number of articles of, and appendices to, Circular No. 10/2016/TT-NHNN

1. To annul Article 11.

2. To annul, replace and add a number of appendices as follows:

a/ To annul Appendix 02;

b/ To replace Appendix 16 with Appendix 16 to this Circular;

c/ To add Appendices 17, 18, 19 and 20 to this Circular.

Article 3. Responsibilities for organization of implementation

The Chief of the Office, Director of the Foreign Exchange Management Department, and heads of units under the State Bank, credit institutions, foreign bank branches, and related organizations and individuals shall implement this Circular.

Article 4. Implementation provisions

1. This Circular takes effect on August 12, 2024.

2. After one year from the effective date of this Circular, programs on bonus provision of stocks providing bonus in the form of stock warrant with preferential conditions of which the registration has been certified by the State Bank before the effective date of this Circular may only be implemented in other forms of bonus provision of stocks overseas without giving rise to cash flows to foreign countries.-

For the Governor of the State Bank of Vietnam

Deputy Governor

PHAM QUANG DUNG

* The Appendices to this Circular are not translated.-