Decision No. 48/2013/QD-TTg of August 1, 2013, on compulsory contribution of capital to or purchase of shares from credit institutions under special control

THE PRIME MINISTER

Decision No. 48/2013/QD-TTg of August 1, 2013, on compulsory contribution of capital to or purchase of shares from credit institutions under special control

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to June 14, 2005 Civil Code No. 33/2005/QH11;

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

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

At the proposal of the Governor of the State Bank of Vietnam,

The Prime Minister promulgates the Decision on compulsory contribution of capital to or purchase of shares from credit institutions under special control.

Article 1. Scope of regulation

This Decision provides the contribution of capital to or purchase of shares from credit institutions under special control by the State Bank of Vietnam or other credit institutions designated by the State Bank of Vietnam.

Article 2. Subjects of application

1. The State Bank of Vietnam (below referred to as the State Bank).

2. Designated credit institutions.

3. Credit institutions under special control, except credit institutions with 100% charter capital owned by the State.

4. Credit institutions requested to participate in management and administration.

5. Other organizations and individuals involved in compulsory contribution of capital to or purchase of shares from credit institutions under special control.

Article 3. Interpretation of terms

1. Compulsory capital contribution or share purchase means contribution of capital to or purchase of shares from a credit institution under special control by the State Bank or another credit institution designated by the State Bank.

2. Designated credit institution means a credit institution designated by the State Bank to compulsorily contribute capital to or purchase shares from a credit institution under special control.

3. Credit institution having capital contributed or shares purchased means a credit institution under special control that has capital contributed or shares purchased compulsorily by the State Bank or a designated credit institution.

4. Credit institution requested to participate in management and administration means a credit institution requested by the State Bank to participate in managing and administering a credit institution having capital contributed or shares purchased compulsorily.

5. Special control means the placement of a credit institution under the State Bank’s direct control because this credit institution is at risk of insolvency due to weak management and administration.

Article 4. Competence to decide on compulsory capital contribution or share purchase

1. The State Bank Governor may designate credit institutions to contribute capital or purchase shares or may directly do so if other credit institutions fail to satisfy the conditions specified in Clause 1, Article 7 of this Decision.

2. A credit institution under special control may have its capital contributed or shares purchased compulsorily if it fails to satisfy the conditions specified in Clause 2, Article 149 of the Law on Credit Institutions or when the State Bank identifies that the credit institution’s accumulated loss exceeds the actual value of its charter capital and reserve funds as demonstrated in the latest audited financial statement and that the credit institution’s operation termination is likely to make the system of credit institutions unsafe as prescribed in Clause 3, Article 149 of the Law on Credit Institutions.

Article 5. Determination of actual value of charter capital and amount to be added to charter capital

1. Based on the results of independent audit of the financial status and actual value of charter capital and reserve funds of a credit institution during special control or at another time decided by the State Bank, the Special Control Board shall submit to the State Bank Governor for decision on the actual value of charter capital and reserve funds of such credit institution and the capital amount to be added to reach the legal capital and comply with regulations on safety in banking operations.

2. The State Bank Governor shall decide on the capital amount which the designated credit institution or the State Bank needs to contribute or purchase, and forms and time of capital contribution or share purchase.

Article 6. Forms of compulsory capital contribution or share purchase

1. The designated credit institution shall compulsorily contribute capital or purchase shares in cash or through the transfer of part or the whole of the debit balance of other deposits and loans at the credit institution under special control.

The designated credit institution shall use its charter capital and reserve funds to contribute capital or purchase shares in accordance with law.

2. The State Bank shall contribute capital or purchase shares in cash or through the transfer of part or the whole of the debit balance of special loans or refinancing loans (if any), and may use its issued debt instruments to contribute capital or purchase shares.

Article 7. Conditions on designated credit institutions and credit institutions requested to participate in management and administration

1. A designated credit institution must satisfy the following conditions:

a/ Having a healthy financial status and sufficient capital to contribute capital and purchase shares at the request of the State Bank;

b/ Fully complying with regulations on safety in banking operations;

c/ Having control and internal audit systems compliant with the State Bank’s regulations;

d/ Being capable of managing, administering and restructuring the credit institution that has capital contributed or shares purchased.

2. A credit institution requested to participate in management and administration must satisfy the following conditions:

a/ Having a healthy financial status and fully complying with regulations on safety in banking operations;

b/ Having management and administration officers qualified to manage and administer the credit institution that has capital contributed or shares purchased;

c/ Having a network of branches nationwide.

Article 8. Support policies for designated credit institutions

Based on practical conditions of a credit institution under special control, the State Bank Governor shall consider and decide to provide supports for the designated credit institution during the time it contributes capital to or purchases shares from the credit institution under special control through:

1. Providing refinancing loans.

2. Providing special loans.

3. Allowing the designated credit institution to provisionally apply banking safety indicators other than those required for normal credit institutions for a specified period of time.

4. Providing other supports to help the designated credit institution overcome unexpected temporary difficulties.

Article 9. Powers and responsibilities of the State Bank in compulsory capital contribution or share purchase

1. The State Bank has the following powers:

a/ To request the credit institution under special control to hire an independent audit organization for assessing the financial status and determining the value of the credit institution and actual value of its charter capital and reserve funds at the time of special control or another time as appropriate;

b/ To decide on the actual value of charter capital and reserve funds of the credit institution under special control based on audit results, and determine the amount to be added to the charter capital through capital contribution or share purchase to reach the prescribed level and ensure safety in banking operations;

c/ To request convention of the General Meeting of Shareholders or Members’ Council to publicize the results of independent audit, the State Bank’s decision on the financial status, actual value of charter capital and reserve funds, amount to be added to the charter capital, and compulsory capital contribution or share purchase by the designated credit institution or the State Bank;

d/ To request shareholders to publicize the use of stocks and restrict the transfer and use of stocks and capital contributions for fulfilling civil obligations of shareholders, capital contributors and related organizations and individuals during special control and restructuring;

dd/ To request the credit institution under special control to transfer capital contributions and shares; and to request capital contributors, major shareholders and shareholders holding the right to control and dominate such credit institution to transfer capital contributions and shares to the State Bank or designated credit institution;

e/ To designate another credit institution to contribute capital to or purchase shares from the credit institution under special control under Clause 1, Article 4 of this Decision; to designate and terminate the participation of the credit institution requested to participate in management and administration in case the State Bank directly contributes capital to or purchases shares from the credit institution under special control;

g/ To decide on the transfer of capital and shares in the credit institution having capital contributed or shares purchased by the designated credit institution or the State Bank after the credit institution having capital contributed or shares purchased resumes its normal operation;

h/ Other powers as prescribed by law.

2. The State Bank has the following responsibilities:

a/ To exercise the rights to represent the owner of state capital at credit institutions having capital contributed or shares purchased by the State Bank;

b/ To direct the formulation and approval and supervise the implementation of plans to restructure credit institutions having capital contributed or shares purchased;

c/ To direct the convening of the General Meeting of Shareholders or meeting of the Members’ Council to elect members of the Board of Directors, Members’ Council and Control Board and resolve on new charter capital levels for submission to the State Bank for approval;

d/ To approve the new charter capital levels of credit institutions under special control after capital contribution or share purchase;

dd/ To regularly report on the operation of credit institutions having capital contributed or shares purchased and the results of capital contribution or share purchase to the Prime Minister.

Article 10. Powers and responsibilities of designated credit institutions

1. A designated credit institution has the following rights:

a/ The shareholder’s rights of a credit institution having capital contributed or shares purchased;

b/ To transfer shares or capital contributions after the restructuring of the credit institution having capital contributed or shares purchased is completed;

c/ Other powers provided by law.

2. A designated credit institution has the following responsibilities:

a/ To assign professionally capable and qualified officers to join the Special Control Board and take over the tasks of the Special Control Board after obtaining the State Bank Governor’s approval of compulsory capital contribution or share purchase;

b/ To assign officers to participate in managing and administering credit institutions as requested or decided by the State Bank Governor;

c/ To participate in formulating, and organizing the implementation of, plans to restructure credit institutions having capital contributed or shares purchased;

d/ To closely coordinate with the State Bank in organizing compulsory capital contribution or share purchase and implementing plans to restructure credit institutions having capital contributed or shares purchased;

dd/ To make regular reports at the request of the State Bank.

Article 11. Responsibilities of credit institutions requested to participate in management and administration

1. To assign officers to manage and administer credit institutions having capital contributed or shares purchased as requested or decided by the State Bank Governor.

2. To participate in formulating and implementing plans to restructure credit institutions having capital contributed or shares purchased.

3. To closely coordinate with the State Bank in organizing compulsory capital contribution or share purchase and implementing plans to restructure credit institutions having capital contributed or shares purchased.

4. To make regular reports at the request of the State Bank.

Article 12. Powers and responsibilities of the Board of Directors and Members’ Control of a credit institution under special control

1. The Board of Directors and Members’ Council have all the tasks and powers provided in Articles 63, 67 and 72 of the Law on Credit Institutions.

2. The Board of Directors and Members’ Council have the following responsibilities:

a/ To convene the General Meeting of Shareholders or meeting of Members’ Council on an irregular basis at the request of the State Bank;

b/ To clearly determine the actual value of shares and capital contributions of each shareholder and capital contributor in line with the State Bank Governor’s decision on the actual value of charter capital and reserve funds of the credit institution;

c/ To cooperate with the Special Control Board in organizing the implementation of instructions of the Special Control Board and the State Bank in the process of managing and administering the operation of the credit institution and organizing compulsory capital contribution or share purchase;

d/ To take responsibility for risks and losses directly caused by them to the credit institution.

3. Within 30 days after receiving the State Bank’s request, the General Meeting of Shareholders or meeting of the Members’ Council must be organized on an irregular basis and adopt the following issues:

a/ The independent audit organization’s report on audit results of the financial status and actual value of charter capital and reserve funds;

b/ The State Bank Governor’s decisions on handling the financial issues and violations of the credit institution;

c/ Compulsory capital contribution or share purchase and its methods;

d/ Other issues at the request of the State Bank.

Article 13. Powers and responsibilities of owners, capital contributors and shareholders of a credit institution under special control

1. Owners, capital contributors and shareholders of a credit institution under special control have the following powers:

a/ To receive sufficient information on the independent audit organization’s assessment of the financial status and actual value of charter capital and reserve funds;

b/ To request the Board of Directors, Members’ Council, Control Board and general director (director) to clarify matters related to the operation of the credit institution;

c/ To request the Control Board to clarify violations and losses caused by such violations;

d/ To exercise the rights of shareholders and capital contributors within the actual value of their shares and capital contributions.

2. Owners, capital contributors and shareholders of a credit institution under special control have the following responsibilities:

a/ To accept the independent audit organization’s assessment of the financial status and actual value of charter capital and reserve funds;

b/ To strictly comply with the State Bank’s requests concerning restrictions in the use and transfer of shares, stocks and capital contributions during the special control and implementing the restructuring plan;

c/ To jointly incur and share losses of the credit institution according to regulations on responsibilities of enterprise owners;

d/ To take responsibility for the risks and losses directly caused by them to the credit institution;

dd/ To transfer shares and capital contributions to the State Bank or a designated credit institution at the request of the State Bank;

e/ To participate in the General Meeting of Shareholders or meeting of the Members’ Council to adopt issues falling within the competence of the General Meeting of Shareholders or Members’ Council.

Article 14. The General Meeting of Shareholders or Members’ Council of a credit institution having capital contributed or shares purchased

Within 30 days after compulsory capital contribution or share purchase is completed, a credit institution having capital contributed or shares purchased shall convene the General Meeting of Shareholders or meeting of the Members’ Council to adopt the new charter capital level, revised charter, election and removal from office of members of the Board of Directors, Members’ Council and Control Board, the restructuring plan, and other important issues.

Article 15. Withdrawal of capital from credit institutions having capital contributed or shares purchased

1. Capital must be withdrawn from a credit institution having capital contributed or shares purchased in the following cases:

a/ The credit institution has resumed its normal operation under the restructuring plan;

b/ The credit institution is redeemed by investors or merged with or consolidated into another credit institution after obtaining the State Bank’s approval.

2. Capital may be partly or wholly withdrawn through the transfer of shares or capital contributions to new investors in accordance with law, ensuring publicity and transparency.

3. The State Bank Governor shall consider and approve withdrawal of capital from credit institutions having capital contributed or shares purchased.

Article 16. Coordination responsibility of agencies and People’s Committees at all levels

Related agencies and organizations and People’s Committees at all levels shall, within the ambit of their functions and powers, coordinate with the State Bank in the process of conducting compulsory capital contribution or share purchase according to this Decision, the Law on Credit Institutions and current law.

Article 17. Handling of violations

All violations of this Decision must, depending on their nature and severity, be administratively handled or examined for penal liability in accordance with law.

Article 18. Effect

This Decision takes effect on September 20, 2013.

Article 19. Implementation responsibility

1. The State Bank Governor shall guide and organize the implementation of this Decision.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, chairpersons of Boards of Directors, chairpersons of Members’ Councils and general directors (directors) of credit institutions, and related organizations and individuals shall implement this Decision.-

Prime Minister
NGUYEN TAN DUNG