DECREE

ON ORGANIZATION AND OPERATION OF FOREIGN BANK BRANCHES, JOINT-VENTURE BANKS, BANKS WITH 100% FOREIGN CAPITAL, AND REPRESENTATIVE OFFICES OF FOREIGN CREDIT INSTITUTIONS IN VIETNAM

THE GOVERNMENT

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

Pursuant to Vietnam State Bank Law No. 01/1997/ QH10 of December 12, 1997, and Law No. 10/2003/ QH11 of June 17, 2003, Amending and Supplementing a Number of Articles of the Vietnam State Bank Law;

Pursuant to Credit Institutions Law No. 02/1997/QH10 of December 12, 1997, and Law No. 20/2004/QH11 of June 15, 2004, Amending and Supplementing a Number of Articles of the Credit Institutions Law;

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

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

This Decree provides for organization and operation of foreign bank branches, joint-venture banks and banks with 100% foreign capital, and representative offices of foreign credit institutions in Vietnam.

Article 2.- Application of legal provisions

Organization and operation of foreign bank branches, joint-venture banks, banks with 100% foreign capital and representative offices of foreign credit institutions in Vietnam shall comply with the provisions of the Credit Institutions Law, the provisions of this Decree and other relevant provisions of Vietnamese law; in cases where treaties to which Vietnam has signed or acceded to contain provisions different from the said provisions, the provisions of such treaties shall apply.

Article 3.- Forms of organization

1. Foreign banks shall be allowed to operate in Vietnam in the following organizational forms:

a/ Foreign bank branch;

b/ Joint-venture bank;

c/ Bank with 100% foreign capital.

2. Foreign credit institutions shall contribute capital to and/or purchase shares from credit institutions operating in Vietnam according to regulations of the Government and the guidance of the State Bank of Vietnam (hereinafter referred to as the State Bank).

3. Foreign credit institutions may open representative offices in Vietnam.

Article 4.- Interests and obligations

Foreign bank branches, joint-venture banks, banks with 100% foreign capital, representative offices of foreign credit institutions and their employees shall have their rights and legitimate interests protected and be obliged to comply with Vietnamese laws.

Article 5.- Licensing competence

1. The State Bank has competence to grant licenses for the establishment and operation of joint-venture banks or banks with 100% foreign capital; and licenses for the opening of foreign bank branches or representative offices of foreign credit institutions in Vietnam.

2. The State Bank shall grant licenses in accordance with the provisions of this Decree and other relevant provisions of Vietnamese law.

Article 6.- State management, inspection and supervision

1. The State Bank is the body performing the state management, inspection and supervision of the organization and operation of foreign bank branches, joint-venture banks, banks with 100% foreign capital and representative offices of foreign credit institutions in Vietnam.

2. Ministries, ministerial-level agencies, and People's Committees at all levels shall, within the scope of their respective tasks and powers, have to perform the state management of foreign bank branches, joint-venture banks, banks with 100% foreign capital and representative offices of foreign credit institutions in Vietnam in accordance with the provisions of law.

Article 7.- Interpretation of terms

In this Decree, the following terms shall be construed as follows:

1. Foreign bank means an organization established under foreign laws and conducting banking operations as its main and regular operations.

2. Parent bank means a foreign bank owning over 50% of charter capital of a bank with 100% foreign capital operating in Vietnam or having a branch operating in Vietnam.

3. Country of origin of a foreign credit institution means the country where the foreign credit institution is established.

4. Foreign bank branch means a dependent unit of a parent bank, which has no legal person status according to Vietnamese law and has all of its obligations and commitments in Vietnam secured in writing by its parent bank.

5. Joint-venture bank means a bank established in Vietnam with capital contributed by the Vietnamese party (including one or several Vietnamese banks) and the foreign party (including one or several foreign banks) on the basis of a joint-venture contract. The joint-venture bank shall be established in the form of limited liability company, be a Vietnamese legal person and headquartered in Vietnam.

6. Bank with 100% foreign capital means a bank established in Vietnam with 100% foreign-owned charter capital, of which over 50% must be owned by a foreign bank (parent bank). The bank with 100% foreign capital shall be established in the form of limited liability company, be a Vietnamese legal person and headquartered in Vietnam.

7. Representative office of foreign credit institution means a dependent unit of a foreign credit institution, which shall be based in Vietnam, operate under a license for the opening of representative office and relevant provisions of Vietnamese law. Representative offices of foreign credit institutions shall not be allowed to carry out business activities in Vietnam.

8. License is a term used to refer to collectively or assorted licenses: license for the opening of foreign bank branch, license for the establishment and operation of joint-venture bank, license for the establishment and operation of bank with 100% foreign capital and license for the opening of representative office of foreign credit institution, granted by the State Bank.

9. Allocated capital means the amount of capital allocated by the parent bank to its branch operating in Vietnam.

10. Charter capital means the amount of capital stated in the charter of a joint-venture bank or a bank with 100% foreign capital.

11. Actual value of allocated capital or charter capital is determined to be the allocated capital or actually contributed charter capital plus (minus) undivided profits (losses not yet handled) and funds deducted from after­tax profits.

12. Transaction place means a location outside the head office of a foreign bank branch for carrying out limited transactions with customers according to regulations of the State Bank.

Article 8.- Licensing conditions

1. To be granted licenses for the opening of foreign bank branch, licenses for the establishment and operation of joint-venture bank, licenses for the establishment and operation of bank with 100% foreign capital, foreign banks must meet the following general conditions:

a/ They commit no serious violations of regulations on banking activities and other provisions of laws in the country of origin within three latest years before application for license;

b/ They have experience in international activities, ranked by international credit-ranking institutions at a level capable of fulfilling financial commitments and operating in a normal manner even when there are unfavorable developments in the economic situation and conditions;

c/ They achieve the minimum capital safety ratio and safety assurance ratios according to international practice;

d/ Competent supervisory and inspection agencies of the country of origin are capable of supervising all operations of the foreign banks on the basis of general review of such operations according to international practice; make commitment to cooperate with the State Bank in managing and supervising operations and exchanging information.

2. Apart from general conditions stated in Clause 1 of this Article, in order to be granted a license for the opening of branch, foreign banks must meet the following conditions:

a/ Conditions prescribed in Clause 2, Article 106 of the Credit Institutions Law;

b/ The foreign bank must have total assets equivalent to at least USD 20 billion in the year preceding the year of application for license.

3. Apart from general conditions stated in Clause 1 of this Article, in order to be granted a license for the establishment and operation of joint-venture bank or a license for the establishment and operation of bank with 100% foreign capital, foreign banks must meet the following conditions:

a/ Conditions prescribed in Clause 1, Article 22 of the Credit Institutions Law;

b/ The foreign bank is permitted by competent authorities of the country of origin to participate in establishing a joint-venture bank or a bank with 100% foreign capital in Vietnam;

c/ The foreign bank must have total assets equivalent to at least USD 10 billion in the year preceding the year of application for license;

d/The foreign bank must make a written commitment to the State Bank on its readiness to provide financial, technology, administration, direction and operational supports for the bank with 100% foreign capital or joint-venture bank to be established; to ensure the actual value of such bank's charter capital not lower than the legal capital level and comply with all regulations on operation safety issued by the State Bank.

4. To be permitted to open a representative office, foreign credit institutions must meet all conditions stated in Clause 3, Article 106 of the Credit Institutions Law.

Article 9.- Procedures and dossiers of application for licenses

1. Foreign banks or foreign credit institutions must make dossiers of application for license in two sets each, one in Vietnamese and the other in a common foreign language. The set of dossier in a common foreign language must be consularly legalized. Vietnamese copies and translations must be certified by Vietnamese public notary according to the provisions of law on public notary.

2. Pursuant to Article 108 and other relevant articles of the Credit Institutions Law and the provisions of Article 8 of this Decree on licensing conditions, the State Bank shall issue detailed guidance on procedures and dossiers of application for license.

3. Within 90 days after the date of receipt of complete dossiers of application for license, the State Bank shall grant or refuse to grant licenses. In case of refusal, the State Bank must give written explanations therefor.

Article 10.- Contents of licenses and amendment and supplement thereto

1. The State Bank shall specify the contents of licenses granted to foreign bank branches, joint-venture banks, banks with 100% foreign capital and representative offices of foreign credit institutions.

2. Any amendment and supplement to the contents of licenses shall be decided in writing by the State Bank. The State Bank's decision on amendments and/or supplements to the content of the license shall constitute an integral part of the license.

Article 11.- Operation duration

1. The operation duration of foreign bank branches, joint-venture banks, banks with 100% foreign capital or representative offices of foreign credit institutions shall be specified in their licenses and counted from the date of signing of such licenses.

2. The maximum operation duration of foreign bank branches, joint-venture banks or banks with 100% foreign capital shall not exceed 99 years; the maximum operation duration of foreign bank branches shall not exceed that of their parent banks.

3. The operation duration of representative offices of foreign credit institutions shall not exceed that of foreign credit institutions.

Article 12.- Extension of operation duration

1. When wishing to extend the operation duration, foreign bank branches, joint-venture banks or banks with 100% foreign capital must submit dossiers of application therefor to the State Bank at least 180 days before the expiry of their operation duration, or at least 60 days for representative offices of foreign credit institutions. Dossiers of application for extension of operation duration shall be made according to regulations of the State Bank.

2. The State Bank shall consider each time of extension of operation duration. Each extension shall not exceed the current operation duration specified in the license.

3. Within 90 days after the date of receipt of complete dossiers of application for extension of operation duration, the State Bank shall give written approval or disapproval of such extension. In case of disapproval, the State Bank must give written explanations therefor.

Article 13.- Fees for licensing and fees for extension of operation duration

1. Foreign bank branches, joint-venture banks, banks with 100% foreign capital and representative offices of foreign credit institutions must pay fees for licensing and fees for extension of operation duration according to regulations of the Ministry of Finance.

2. Procedures for payment of fees for licensing and fees for extension of operation duration shall comply with the guidance of the State Bank.

Article 14.- Announcements in newspapers

At least 30 days before the planned date of inauguration of operation, foreign bank branches, joint-venture banks or banks with 100% foreign capital must make announcements in three consecutive issues of a central newspaper and a local newspaper of the locality where they are headquartered. Such announcement shall contain essential contents of the license, the business registration certificate and the planned date of inauguration of operation.

Article 15.- Conditions for operation inauguration

Before operation inauguration, foreign bank branches, joint-venture banks or banks with 100% foreign capital must meet all the conditions stated in Clause 1, Article 28 of the Credit Institutions Law and comply with regulations of the State Bank. Particularly, foreign bank branches are not required to comply with the requirement on charter provided for at Point a, Clause 1, Article 28 of the Credit Institutions Law.

Article 16.- Operation inauguration

1. Within 12 months as from the date of grant of licenses, foreign bank branches, joint-venture banks, banks with 100% foreign capital or representative offices of foreign credit institutions must inaugurate their operation.

2. If unable to inaugurate operation within the time limit stated in Clause 1 above, representatives of foreign banks, joint-venture parties or foreign credit institutions must make a written request for extension of the time limit for operation inauguration and send it to the State Bank at least 30 days before the expiry of the said time limit.

3. The State Bank may consider and extend the time limit for operation inauguration for no more than 6 months, or no more than 3 months for representative offices of foreign credit institutions.

Article 17.- The charter

1. The contents of the charter of the joint-venture bank or the bank with 100% foreign capital shall comply with Clause 1, Article 30 of the Credit Institutions Law and regulations of the State Bank.

2. Joint-venture banks and banks with 100% foreign capital may implement their charters as well as any amendments and supplements thereto only after they are approved by the State Bank.

Article 18.- Languages used in transactions

Documents used in official transactions of foreign bank branches, joint-venture banks, banks with 100% foreign capital and representative offices of foreign credit institutions with Vietnamese individuals and organizations must be in Vietnamese or both Vietnamese and a common foreign language.

Article 19.- Administration, direction and control

1. Foreign bank branches, joint-venture banks and banks with 100% foreign capital shall perform administration, direction and control under Section 3, Chapter II of the Credit Institutions Law, the specific provisions of this Decree and the guidance of the State Bank.

2. Foreign bank branches in particular shall not have to comply with the provisions of Articles 37 and 38 of the Credit Institutions Law; concurrently, the provisions of Articles 36 and 40 and other articles of the Credit Institutions Law concerning the Management Board or the Control Board shall not be applicable to foreign bank branches.

Article 20.- Internal supervisions and control system

Foreign bank branches, joint-venture banks and banks with 100% foreign capital shall set up internal supervision and control systems and conduct internal supervision and control under the provisions of Section 4, Chapter II of the Credit Institutions Law and the guidance of the State Bank.

Article 21.- Provisions on operation safety

1. In the course of operation, foreign bank branches, joint-venture banks and banks with 100% foreign capital shall comply with the provisions on restrictions for ensuring safety in operations of credit institutions in Section 5, Chapter III of the Credit Institutions Law, the specific provisions of this Decree and the guidance of the State Bank.

2. Foreign bank branches may apply lending and guarantee limits specified in Article 79 of the Credit Institutions Law on the basis of own capital of the parent banks when they have strictly complied with the provisions of Clause 1 above on restrictions for ensuring safety and their parent banks also satisfy safety assurance ratios according to international practice.

Article 22.- Actual value of allocated capital, charter capital

1. Foreign banks, joint-venture banks and banks with 100% foreign capital shall ensure that the actual value of allocated capital of foreign bank branches, charter capital of joint-venture banks and banks with 100% foreign capital at least be equal to the legal capital as prescribed.

2. The State Bank shall specify the handling of cases where the actual value of allocated capital of foreign bank branches, the charter capital of joint-venture banks or banks with 100% foreign capital is lower than the legal capital.

Article 23.- Transfer of profits, assets overseas

The transfer of profits and/or assets overseas of foreign bank branches, banks with 100% foreign capital or foreign parties to joint-venture banks shall comply with Article 112 of the Credit Institutions Law and relevant provisions of Vietnamese law.

Article 24.- Finance, cost-accounting, reporting

The regime of finance, cost-accounting and reporting of foreign bank branches, joint-venture banks and banks with 100% foreign capital shall comply with the provisions of Chapter IV and Articles 110 and 111 of the Credit Institutions Law, the specific provisions of this Decree and the guidance of the State Bank.

Article 25.- Contents subject to notification

Foreign bank branches, joint-venture banks and banks with 100% foreign capital must report in writing to the State Bank on the following contents:

1. Annual financial status and operations of the parent bank or the foreign bank to the joint venture;

2. Division, separation, merger, consolidation, acquisition, liquidation, bankruptcy and dissolution of the parent bank or the foreign bank to the joint venture;

3. Change of name, relocation of head office of the parent bank or the foreign bank to the joint venture;

4. Change of big shareholders, in the Management Board or Executive Board of the parent bank or the foreign bank to the joint venture;

5. Any abnormal changes greatly affecting the organization and operations of the parent bank or the foreign bank to the joint venture.

Article 26.- Inspection, supervision by foreign parties

1. Competent supervision or inspection agencies of the countries of origin, parent banks and foreign banks may inspect and supervise operations of foreign bank branches, joint-venture banks and banks with 100% foreign capital operating in Vietnam. Before conducting inspection or supervision, competent supervision or inspection agencies of the countries of origin shall notify in writing the State Bank of the content and the intended time of start and end of inspection or supervision.

2. Within 90 days after the date of termination of inspection or supervision, parent banks, foreign banks, foreign bank branches, joint-venture banks and banks with 100% foreign capital must send inspection or supervision reports and reports on inspection or supervision results to the State Bank.

3. If, during inspection or supervision, detecting mistakes and abnormal operations which are likely to adversely affect the operations of foreign bank branches, joint-venture banks or banks with 100% foreign capital, parent banks or foreign banks must immediately notify in writing the State Bank thereof.

Article 27.- Special control, bankruptcy, dissolution, liquidation

1. Special control, bankruptcy, dissolution and liquidation of foreign bank branches, joint-venture banks and banks with 100% foreign capital shall comply with Chapter V of the Credit Institutions Law, the specific provisions of this Decree and the guidance of the State Bank.

2. Prior to bankruptcy, dissolution, termination of operation, foreign bank branches, joint-venture banks, banks with 100% foreign capital or representative offices of foreign credit institutions shall comply with regulations of the State Bank and relevant provisions of Vietnamese law.

Article 28.- Information and confidentiality

Foreign bank branches, joint-venture banks and banks with 100% foreign capital shall exchange information and keep information confidential under the provisions of Chapter VI of the Credit Institutions Law, relevant provisions of law and the guidance of the State Bank.

Article 29.- Independent audit

Foreign bank branches, joint-venture banks and banks with 100% foreign capital shall conduct independent audit under the provisions of Section 2, Chapter IX of the Credit Institutions Law, relevant provisions of law and the guidance of the State Bank.

Article 30.- Conversion of organizational form

1. Joint-venture banks may be converted into banks with 100% foreign capital or vice versa.

2. Conditions, procedures and dossiers for conversion of organizational form provided for in Clause 1 of this Article shall be specified by the State Bank.

Article 31.- Reorganization

1. Reorganization of foreign bank branches, joint-venture banks or banks with 100% foreign capital, including division, separation, merger, consolidation, acquisition, must be approved in writing by the State Bank.

2. Conditions and procedures for application for approval of division, separation, merger, consolidation or acquisition provided for in Clause 1 of this Article shall be specified by the State Bank.

Chapter II

FOREIGN BANK BRANCHES

Article 32.- Operation network

The opening of transaction points outside the location of foreign bank branches shall comply with regulations of the State Bank.

Article 33.- Relocation of foreign bank branches

1. Foreign banks may relocate their branches within provinces or centrally run cities or to others.

2. Conditions, procedures and dossiers for relocation of foreign bank branches shall be specified by the State Bank.

Article 34.- Conditions for opening more branches

1. Conditions for foreign banks to open more branches:

a/ Conditions stated in Clauses 1 and 2, Article 8 of this Decree;

b/ Existing branch(es) operates or operate efficiently without violating regulations on safety in banking activities.

2. Dossiers and procedures for opening more branches shall comply with regulations of the State Bank.

Article 35.- Use of allocated capital

The use of allocated capital by foreign bank branches shall comply with regulations of the State Bank.

Article 36.- Capital contribution, share purchase

Foreign bank branches may contribute capital to or purchase shares from enterprises and other credit institutions only when they are so authorized by their parent banks and allocated capital for this purpose. The State Bank shall guide in detail the capital contribution and share purchase by foreign bank branches.

Article 37.- Finance, cost-accounting, general reports

Where a foreign bank has two or more branches operating in Vietnam, finance, cost-accounting and reporting of these branches, including tax declaration, payment and settlement, shall be summed up at one of these branches selected and registered by the foreign bank with the State Bank.

Article 38.- Management, direction

1. The general director (director) of the foreign bank branch shall represent the foreign bank branch before law, be responsible for all of its operations and run its day-to-day operations according to his/her tasks and powers in accordance with the provisions of the Credit Institutions Law and other provisions of law.

2. The general director (director) of the foreign bank branch shall not participate in managing and running other credit institutions or economic organizations.

3. The general director (director) of the foreign bank branch must satisfy the criteria specified in Clause 2, Article 39 of the Credit Institutions Law, shall be appointed and dismissed by competent persons of the foreign bank and must be approved by the Governor of the State Bank.

4. Where the foreign bank has two or more branches operating in Vietnam and conducting financial, cost-accounting and reporting activities, it must authorize the general director (director) of one of these branches to take responsibility before law for all operations of these branches in Vietnam.

Article 39.- Contents of operation

1. Foreign bank branches shall perform professional operations of commercial bank, development bank, investment bank or other types of bank as provided for in the Credit Institutions Law and the provisions of law on operations of such type of bank.

2. The State Bank shall specify the type and content of operation in the license granted to the foreign bank branch in accordance with the provisions of the Credit Institutions Law and in compatibility with the size, type and operation domain of the parent bank. Foreign bank branches in Vietnam shall not perform operations which their parent bank is not allowed to perform in the country of origin.

Article 40.- Blockading of capital, assets

1. In cases where it is necessary to protect the interests of money depositors, the State Bank may request foreign bank branches to deposit part or the whole of their capital and assets in the State Bank or another credit institution or organization in Vietnam designated by the State Bank to keep and manage such capital and assets.

2. The State Bank shall specify cases where it is entitled to blockade capital and assets of foreign bank branches.

Article 41.- Dissolution, termination of operation

Foreign bank branches in Vietnam shall be dissolved or terminate operation in the following cases:

1. Expiry of the operation duration: 180 days before the expiry of the operation duration indicated in the license, the parent bank does not submit a dossier of application for extension or submits such dossier but does not obtain approval of the State Bank;

2. Voluntary termination of operation: in this case, at least 180 days before the intended date of termination of operation of the foreign bank branch, the parent bank must send an application to this effect to the State Bank;

3. Foreign bank branches shall have their licenses revoked in the following cases:

a/ Upon the occurrence of one of the circumstances specified at Points a, b and e, Clause 1, Article 29 of the Credit Institutions Law;

b/ Failure to meet all the conditions specified at Points b, c and d, Clause 1, Article 28 of the Credit Institutions Law;

c/ Suspension of operation for 12 consecutive months.

4. The parent bank is dissolved or falls bankrupt.

Chapter III

JOINT-VENTURE BANKS

Article 42.- Operation network

Joint-venture banks may open transaction offices at the location of their head offices; open branches, representative offices and establish affiliated companies under the provisions of Articles 32 and 33 of the Credit Institutions Law and regulations of the State Bank.

Article 43.- The Management Board

1. The Management Board is the highest leading body of a joint-venture bank. The Management Board shall be composed of the chairman, the vice chairman and members. The vice chairman and other members of the Management Board must be approved by the Governor of the State Bank.

2. The Management Board shall have at least three members. The number of members of the Management Board shall be decided by the joint-venture parties on the basis of the contributed capital amounts of the foreign and Vietnamese parties to the joint-venture bank.

3. Members of the Management Board shall be those who have professional reputation and ethics and knowledge about banking operations as required by the State Bank and be other than those who are specified in Article 40 of the Credit Institutions Law.

4. The chairman and other members of the Management Board shall not authorize non-members of the Management Board to perform their tasks and powers. The chairman of the Management Board shall not concurrently be the general director (director) or deputy general director (deputy director) of the joint-venture bank and shall not be allowed to join in administering or directing other credit institutions, except credit institutions which are affiliated companies of the joint-venture bank.

5. Tasks and powers of the Management Board and its members and the working regime of the Management Board shall be specified in the charter of the joint-venture bank.

6. The term of office of Management Board members shall be agreed upon by the parties to the joint-venture bank but shall not exceed 5 years.

Article 44.- The Control Board

1. The Control Board of the joint-venture bank shall have the tasks of supervising financial operations, overseeing the observance of the cost-accounting and safety assurance regulations by the joint-venture bank, and conducting internal audit of operations in each period and domain for accurate assessment of business operations and the financial status of the joint-venture bank.

2. The Control Board of the joint-venture bank shall have at least 3 members, of whom one is the head and at least half of them work on a full-time basis. Where the Control Board has only 3 members, at least one of them must be a full-timer.

3. Members of the Control Board must meet requirements of professional qualification and ethics set by the State Bank, be other than those who are specified in Article 40 of the Credit Institutions Law, and be approved by the Governor of the State Bank.

4. The Control Board shall have an assisting unit and may use the internal supervision and control system of the joint-venture bank in performing its tasks.

5. Tasks and powers of the head and members of the Control Board shall be specified in the charter of the joint-venture bank.

Article 45.- The general director

1. The general director (director) of the joint-venture bank shall be the representative-at-law of the bank, unless otherwise provided for in its charter, be responsible before the Management Board for administering day-to-day operations according to his/her tasks and powers in accordance with the provisions of the Credit Institutions Law and other provisions of law, and must be approved the Governor of the State Bank. The general director (director) of the joint-venture bank shall not concurrently be the general director (director) or deputy general director (deputy director) of another credit institution, except credit institutions which are affiliated companies of the joint-venture bank.

2. The general director (director) and deputy general director (deputy director) of the foreign bank branch must satisfy the criteria specified in Clause 2, Article 39 of the Credit Institutions Law and be other than those specified in Article 40 of the Credit Institutions Law.

3. Tasks and powers of the general director (director) of the joint-venture bank shall be specified in the charter of the joint-venture bank.

Article 46.- Ratios and modes of contribution of charter capital

Ratios and modes of contribution of charter capital by the foreign and Vietnamese parties to the joint-venture bank shall be agreed upon by the parties and stated in the charter. The foreign party's contributed capital shall not exceed 50% of the charter capital of the joint-venture bank, except for special cases decided by the Prime Minister.

Article 47.- Transfer of contributed capital

1. The Vietnamese and foreign parties to the joint-venture bank may transfer their contributed capital amounts and must prioritize the transfer to other parties to the joint-venture bank.

2. The transfer of capital shall be subject to approval of the State Bank before it is effected. Dossiers and procedures of application for approval of capital transfer shall be specified by the State Bank.

3. In case of earning some profit from the transfer of capital, the transferor must pay tax thereon according to the provisions of Vietnamese law.

Article 48.- Division of profits and losses

The parties to the joint-venture bank shall divide profits and losses in proportion to the capital contribution ratios of each party, unless otherwise agreed upon by the parties in the joint-venture bank.

Article 49.- The managerial role of joint-venture parties

1. The parties shall participate in administering the joint-venture bank through their respective representative members in the Management Board according to regulations issued by the Management Board of the joint-venture bank; shall not directly intervene in the administration and direction of the joint-venture bank.

2. The joint-venture parties shall inspect and supervise the operations of the joint-venture bank and request the joint-venture bank to supply information and reports according to regulations issued by the Management Board of the joint-venture bank in accordance with the provisions of law.

Article 50.- Contents of operation

1. Joint-venture banks shall perform professional operations of commercial bank, development bank, investment bank or other types of bank as provided for in the Credit Institutions Law and the provisions of law on operations of such type of bank.

2. The State Bank shall specify the type and content of operation in the license granted to the joint-venture bank in accordance with the provisions of the Credit Institutions Law and in compatibility with the size, type and operation domain of the parent bank.

Article 51.- Dissolution, termination of operation

Joint-venture banks shall be dissolved or terminate operation in the following cases:

1. Expiry of the operation duration: 180 days before the expiry of the operation duration indicated in the license, the joint-venture bank does not submit a dossier of application for extension or submits such dossier but does not obtain approval of the State Bank;

2. Voluntary termination of operation if capable of paying off all debts and approved by the State Bank: in this case, at least 180 days before the intended date of termination of operation of the joint-venture bank, it must send an application to this effect to the State Bank;

3. Joint-venture banks shall have their licenses revoked in the following cases:

a/ Upon the occurrence of one of the circumstances specified at Points a, b, d and e, Clause 1, Article 29 of the Credit Institutions Law;

b/ Failure to meet all the conditions specified in Clause 1, Article 28 of the Credit Institutions Law;

c/ Suspension of operation for 12 consecutive months.

Chapter IV

BANKS WITH 100% FOREIGN CAPITAL

Article 52.- Operation network

Banks with 100% foreign capital may open transaction of cesatthe location of their head offices; open branches, representative offices and establish affiliated companies under the provisions of Articles 32 and 33 of the Credit Institutions Law and regulations of the State Bank.

Article 53.- Transfer of contributed capital

1. The capital-contributing members (including the parent bank) owning the charter capital of the bank with 100% foreign capital may transfer part or the whole of their contributed capital amounts to other capital-contributing members or other foreign organizations but must ensure that there is always a foreign bank owning over 50% of the charter capital of the bank with 100% foreign capital.

2. The transfer of capital shall be subject to approval of the State Bank before it is effected. Dossiers and procedures of application for approval of capital transfer shall be specified by the State Bank.

3. In case of earning some profit from the transfer of capital, the transferor must pay tax thereon according to the provisions of Vietnamese law.

Article 54.- The Management Board

1. The Management Board is the highest leading body of the bank with 100% foreign capital. It shall be composed of the chairman, the vice chairman and members.

2. The Management Board of the bank with 100% foreign capital shall operate under Article 37 of the Credit Institutions Law.

3. Tasks, powers and working regime of the chairman, vice chairman and members of the Management Board shall be specified in the charter of the bank with 100% foreign capital in accordance with the Credit Institutions Law and relevant provisions of law.

4. Members of the Management Board shall be those who have professional reputation and ethics and knowledge about banking operations as required by the State Bank and other than those who are specified in Article 40 of the Credit Institutions Law, and be approved by the Governor of the State Bank.

5. The chairman of the Management Board shall not concurrently be the general director (director) or deputy general director (deputy director) of the bank with 100% foreign capital and shall not be allowed to join in administering or directing other credit institutions, except credit institutions which are affiliated companies of the bank with 100% foreign capital.

Article 55.- The Control Board

1. The Control Board of the bank with 100% foreign capital shall operate under Article 38 of the Credit Institutions Law.

2. Tasks, powers and working regime of the Control Board shall be specified in the charter of the bank with 100% foreign capital in accordance with the Credit Institutions Law and relevant provisions of law.

3. The Control Board of the bank with 100% foreign capital shall have at least 3 members, of whom one is the head and at least half of them work on a full-time basis. Where the Control Board has only 3 members, at least one of them must be a full-timer.

4. The head and members of the Control Board must meet requirements of professional qualification and ethics set by the State Bank, be other than those who are specified in Article 40 of the Credit Institutions Law.

5. Appointment and dismissal of the chairman and members of the Control Board shall comply with the charter of the bank with 100% foreign capital and be approved by the Governor of the State Bank.

Article 56.- The general director (director)

1. The general director (director) shall be the representative-at-law of the bank with 100% foreign capital, unless otherwise provided for in its charter, be responsible for administering day-to-day operations of the bank.

2. The general director (director) of the bank with 100% foreign capital shall not concurrently be the general director (director) or deputy general director (deputy director) of another credit institution, except credit institutions which are affiliated companies of the bank with 100% foreign capital.

3. Tasks and powers of the general director (director) of the bank with 100% foreign capital shall be specified in its charter in accordance with the Credit Institutions Law and relevant provisions of Vietnamese law.

4. The general director (director) of the bank with 100% foreign capital must satisfy the criteria specified in the Credit Institutions Law and regulations of the State Bank. Appointment and dismissal of the general director shall comply with the charter of the bank with 100% foreign capital and be approved by the Governor of the State Bank.

Article 57.- Contents of operation

1. Banks with 100% foreign capital shall perform professional operations of commercial bank, development bank, investment bank or other types of bank as provided for in the Credit Institutions Law and the provisions of law on operations of such type of bank.

2. The State Bank shall specify the type and content of operation in the license granted to the bank with 100% foreign capital in accordance with the provisions of the Credit Institutions Law and relevant provisions of Vietnamese law.

Article 58.- Division of profits and losses

The founding capital-contributing parties of the bank with 100% foreign capital shall divide profits and losses in proportion to the capital contribution ratios of each party in the charter capital of the bank, unless otherwise agreed upon by these parties.

Article 59.- Dissolution, termination of operation

Banks with 100% foreign capital shall be dissolved or terminate operation in the following cases:

1. Expiry of the operation duration: 180 days before the expiry of the operation duration indicated in the license, the bank with 100% foreign capital does not submit a dossier of application for extension or submits such dossier but does not obtain approval of the State Bank;

2. Voluntary termination of operation if capable of paying off all debts and approved by the State Bank: in this case, at least 180 days before the intended date of termination of operation of the bank with 100% foreign capital, it must send an application to this effect to the State Bank;

3. They have their licenses revoked in the following cases:

a/ Upon the occurrence of one of the circumstances specified at Points a, b, d and e, Clause 1, Article 29 of the Credit Institutions Law;

b/ Failure to meet all the conditions specified in Clause 1, Article 28 of the Credit Institutions Law;

c/ Suspension of operation for 12 consecutive months.

Chapter V

REPRESENTATIVE OFFICES OF FOREIGN CREDIT INSTITUTIONS

Article 60.- Organizational structure

Foreign credit institutions may open representative offices in provinces and centrally run cities in Vietnam. They may open only one representative office in each province or centrally run city.

Article 61.- Relocation of representative offices of foreign credit institutions

1. Foreign credit institutions may relocate their representative offices within provinces or centrally run cities or to others.

2.Conditions, procedures and dossiers for relocation of representative offices of foreign credit institutions shall be specified by the State Bank.

Article 62.- Contents of operation

Representative offices of foreign credit institutions may carry out some or all of the following activities according to the provisions of their licenses granted by the State Bank:

1. Functioning as a liaison office;

2. Market research;

3. Promoting the elaboration of investment projects in Vietnam for foreign credit institutions;

4. Urging and monitoring the performance of contracts and agreements already signed between foreign credit institutions and Vietnamese credit institutions and enterprises, the execution of projects in Vietnam funded by foreign credit institutions;

5. Other operations in accordance with Vietnamese law when permitted by the State Bank.

Article 63.- Termination of operation

Representative offices of foreign credit institutions shall terminate operation in the following cases:

1. Expiry of the operation duration: 60 days before the expiry of the operation duration indicated in the license, the foreign credit institution does not submit a dossier of application for extension or submits such dossier but does not obtain approval of the State Bank;

2. Voluntary termination of operation: in this case, at least 60 days before the intended date of termination of operation of its representative office, the foreign credit institution must send an application to this effect to the State Bank;

3. They have their licenses revoked in one of the circumstances specified at Points a, b, and e, Clause 1, Article 29 of the Credit Institutions Law or when the foreign credit institution falls bankrupt or is dissolved.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 64.- Implementation effect

1. This Decree takes effect 15 days after its publication in "CONG BAO."

2. The Government's Decree No. 13/1999/ND-CP of March 17,1999, on organization and operation of foreign credit institutions and their representative offices in Vietnam and Decree No. 189/HDBT of June 15, 1991, of the Ministers' Council (now the Government) promulgating the Regulation on foreign bank branches and joint-venture banks operating in Vietnam and previous regulations which are contrary to this Decree shall cease to be effective.

Article 65.-Adjustment of organization and operation

Within 01 year as from the effective date of this Decree, foreign bank branches, joint-venture banks, banks with 100% foreign capital and representative offices of foreign credit institutions shall adjust their organization and operation in accordance with this Decree and regulations of the State Bank.

Article 66.- Handling of violations

If committing acts of violation of this Decree, foreign bank branches, joint-venture banks, banks with 100% foreign capital and representative offices of foreign credit institutions in Vietnam shall, depending on the nature and severity of their violations, be handled according to the provisions of Vietnamese law.

Article 67.- Implementation guidance

1. The Governor of the State Bank shall have to guide the implementation of this Decree.

2. Ministers, heads of ministerial-level agencies, heads of Government-attached agencies, and presidents of provincial/municipal People's Committees shall have to implement this Decree.